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Land Value Tax - Interesting Possible Update

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If I understood it correctly, Andy Wightman (an expert on LVT) said that if LVT replaced Income Tax, a £200k home would have a tax rate of £3-4k per year.

If that is right, then surely any party that implemented it would sweep into power.

One could also envisage LVT reducing house prices from where they are now, but I guess that would mean the LVT would have to rise slightly in response.

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If I understood it correctly, Andy Wightman (an expert on LVT) said that if LVT replaced Income Tax, a £200k home would have a tax rate of £3-4k per year.

If that is right, then surely any party that implemented it would sweep into power.

One could also envisage LVT reducing house prices from where they are now, but I guess that would mean the LVT would have to rise slightly in response.

It'd be like council tax though - set at a particularly and not likely to be changed, wouldn't it?

Otherwise it's have to be tweaked every week.

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I don't know. It probably outlines it better in here:

http://www.andywightman.com/docs/LVT_england_final.pdf

What a load of shit:

76. Secondly, it is worth remembering that the Inland Revenue managed to survey over
10.5 million units of property covering 56 million acres of land in under five years in
preparation for the implementation of Lloyd Georgeʼs Finance (1909-10) Act 1910.
This mammoth task was carried out with pen and ink, paper maps and notebooks,
one hundred years ago

yes, but at what cost would it be in current day?

80. Regular valuation is vital to accurate LVT assessments. Business premises are
already valued every five years and there is no reason why residential and other land
cannot also be valued regularly

Again - what cost? It would be an ongoing exercise and one that no one would welcome.

Staff recruitment, pensions, etc would make this a hugely expensive and stupid idea.

86. Transitional arrangements can be introduced that will allow property owners who are
asset rich but cash poor to defer payment of LVT until death or sale. Other
possibilities include the power to elect to remain with existing council tax regime until
the end of the transition period or until sale of the property. Such schemes will need
to be carefully designed, but in the longer term, LVT will discourage the underoccupation
of housing and promote downsizing. The reluctance to downsize is one of
the market failures in the current housing market.
That's not going to be popular with anyone. And will almost certainly make people sellign probate hosues feel they NEED more money for the houses.
You only have to look at the threads there've been on here about people selling dead relatives houses to see even people who WANT a HPC still think people should get a good price for a deceased's house.

There doesn't need to be a tax on houses, we just need people to pay their income tax on what they actually earn. And that's companies and people alike.

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Seems like he's linked to the Young Peoples Party (never heard of them till now), interesting housing policy http://www.yppuk.org/p/manifesto.html#HP

We would turn the clock back to the 1950s and 1960s, when house prices were low and stable and housing standards were rising rapidly. This was achieved by a combination of more new construction (of private and social housing); sensible lending controls and mortgage rationing; higher taxation of residential property (Schedule A and Domestic Rates) and tightly regulated rents in the private sector. Houses were just somewhere to live, if you could afford somewhere nicer, then you bought it for the enjoyment value and not as an investment.

The bitter irony is that older generations - who benefitted enormously from all this - pulled up the ladder in the early 1970s, when the level of owner-occupation first passed the fifty percent threshold. Since then, the prevailing trend has been NIMBYism; selling off council housing; lax lending and subsidised interest rates; significantly reducing taxes on residential property; and tearing up most tenant protection legislation. All in the name of Baby Boomers making unearned windfall paper gains in the house price game. Houses are no longer seen as somewhere to live, they are seen as investments which are expected to increase in value every year - this has ruined our savings culture, because those on the ladder dis-save by doing mortgage equity withdrawal and first time buyers are forced to take out huge mortgages which soak up all the income which they could otherwise have saved.

...

Trouble is flicking through their other policies they do seem somewhat idealistic and perhaps inconsistent, one thing really caught my eye is that they plan on scrapping something that doesn't exist and hasn't for decades - the "road fund licence" which was abolished in 1955. I doubt many people in their teens, 20's or 30's use that term (they seem to use car tax or road tax), it's always seems to me that it's smart-**** over 40/50's that use it whilst trying to sound clever, whilst not being aware that it's actually called Vehicle Excise Duty.

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93. Liability for LVT falls on the owner of land (the freeholder) but where there are
leaseholders on long leases, then an apportionment will need to be calculated to
cover the value of the unexpired portion of the lease

So people with a 999 year lease will have to pay what?
And that'll have to be recalculated every year or if shorter leases are extended.
So the local authorities who often own the freehold will have to cough up?
And those in part-ownership pay nothing? And those in flats?


It sounds like the equivalent of IDS's UC. Madness.

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If I understood it correctly, Andy Wightman (an expert on LVT) said that if LVT replaced Income Tax, a £200k home would have a tax rate of £3-4k per year.

If that is right, then surely any party that implemented it would sweep into power.

One could also envisage LVT reducing house prices from where they are now, but I guess that would mean the LVT would have to rise slightly in response.

Something like that. There's a calculator here: http://kaalvtn.blogspot.co.uk/p/tax-calculator.html

The problem is any mainstream political discourse describes LVT as another tax, rather than as replacing income tax and others, and also ignoring that personal allowances and welfare would still exist (or parallel incorporation of a citizen's income which amounts to the same thing but in a fairer way).

Sarah - Not really. Everything can valued and banded on area and size. Then annual observations on any changes in rents make ongoing adjustments pretty straightforward.

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£4k on a £200k house.
Well in 50 years (certainly possible for me to live until I'm 90ish) by the entire value of my house would be owed in LVT.
And that's not counting the fact it'd go up at least £1000 each time they revalue houses due to cost of valuation service.

You can't tax money people don't have.

You can tax what they spend and what they earn.
Taxing money people don't have, is surely the insanity of the emperor's new clothes.

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It sounds like the equivalent of IDS's UC. Madness.

But don't you think it would be fairer for the average citizen (and perhaps for most), that taxing wealth (mainly tied up in housing) would be better than taxing work?

It would have the added benefit of reducing speculation on housing.

I'm sure some boffin could create an algorithm which could estimate land values given data from a wide range of sources (remember, we're just talking about the value of the land, not the building on top of it).

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Sarah - Not really. Everything can valued and banded on area and size. Then annual observations on any changes in rents make ongoing adjustments pretty straightforward.

So you're measuring the change in something that will be changed by the sum of what you measure?

Will it take into account rents on houses having posh flooring? (Apparently people will pay £700 for a house pcm for one with posh wooden floors, but not one with cheap laminate)

Without comparing like for like, then houses with no investment will be measured the same as those who have £££ spent on them regularly. Which is also insane.

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But don't you think it would be fairer for the average citizen (and perhaps for most), that taxing wealth (mainly tied up in housing) would be better than taxing work?

It would have the added benefit of reducing speculation on housing.

I'm sure some boffin could create an algorithm which could estimate land values given data from a wide range of sources (remember, we're just talking about the value of the land, not the building on top of it).

So the value of the land is affected by what?

Building six houses in one bit of land that had one house on - would that mean the 6 houses paid 16/6 of the LVT?

How would local area influence it? Are you saying a house next to a fire station and gas storage tank is worth the same as the same bit of land out in fields?

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But don't you think it would be fairer for the average citizen (and perhaps for most), that taxing wealth (mainly tied up in housing) would be better than taxing work?

Increase inheritance tax and remove loopholes if you want to tax housing and land.

It makes as much sense as huge student loans does.

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£4k on a £200k house.

Well in 50 years (certainly possible for me to live until I'm 90ish) by the entire value of my house would be owed in LVT.

And that's not counting the fact it'd go up at least £1000 each time they revalue houses due to cost of valuation service.

You can't tax money people don't have.

You can tax what they spend and what they earn.

Taxing money people don't have, is surely the insanity of the emperor's new clothes.

This is instead of Income Tax!

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I'm sure some boffin could create an algorithm which could estimate land values given data from a wide range of sources (remember, we're just talking about the value of the land, not the building on top of it).

I'll counter that one with every computer system the govt has tried to run for the last umpteen years.

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I'll counter that one with every computer system the govt has tried to run for the last umpteen years.

Well, the Income Tax/Tax credits system is needlessly complicated. Better to replace it with a single tax.

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Well, the Income Tax/Tax credits system is needlessly complicated. Better to replace it with a single tax.

Why not one we already have rather than a new one that's quite barking mad?

All those people who were on tax credits won't be paying any LVT either.

Edited by SarahBell

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81. All that needs to be done to value land alone is to adopt the familiar Residual method
based upon the following process:
• valuation of the property (market price of land and buildings)
• less depreciated replacement costs of the buildings
• equals land value.

That doesn't sound easy at all. That's not a fly-by visit, or aerial photo measurement.

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So you're measuring the change in something that will be changed by the sum of what you measure?

Will it take into account rents on houses having posh flooring? (Apparently people will pay £700 for a house pcm for one with posh wooden floors, but not one with cheap laminate)

Without comparing like for like, then houses with no investment will be measured the same as those who have £££ spent on them regularly. Which is also insane.

Why would the change be changed by the measure? If you're implying that with a LVT suddenly land would have to put to more productive use (rather than landbanking or similar) which may affect value/utility, that's the whole point. The other point is only the plebs pay income tax, so this eliminates that skew.

I don't think you're getting what LVT is. It's about the site premium within rental value, not whether one house has nice flooring or not. i.e. comparing equivalent houses in different areas to strip out the site or location premium. In other words you take a house and see what it would rent for. Add in council tax to give a total rental value. Then from that you strip out the location premium vs other areas by subtracting the house/maintenance element. It's that residual land premium value which is used for banding and application of LVT as a relative % depending on the type of property.

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93. Liability for LVT falls on the owner of land (the freeholder) but where there are
leaseholders on long leases, then an apportionment will need to be calculated to
cover the value of the unexpired portion of the lease

So people with a 999 year lease will have to pay what?

And that'll have to be recalculated every year or if shorter leases are extended.

So the local authorities who often own the freehold will have to cough up?

And those in part-ownership pay nothing? And those in flats?

It sounds like the equivalent of IDS's UC. Madness.

I thought the old rates system work in a similar manner i.e two property's in the same place one leasehold one freehold the lease hold one would pay less in rates ,i could be wrong but i can vaguely remember my grandmother say thats why she move two doors down the road ( same house build but cheaper rates) in the early eighties....she was not a happy bunny when poll tax come in a year or so later

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£4k on a £200k house.

Well in 50 years (certainly possible for me to live until I'm 90ish) by the entire value of my house would be owed in LVT.

And that's not counting the fact it'd go up at least £1000 each time they revalue houses due to cost of valuation service.

You can't tax money people don't have.

You can tax what they spend and what they earn.

Taxing money people don't have, is surely the insanity of the emperor's new clothes.

Again, no. Someone asset rich who genuinely can't afford it and doesn't want to just move could defer payment and rolling costs will be paid from the sale of the house on death, or it could be deducted from pension entitlements like paye. Also, like now there'd be a personal allowance so those in less expensive places would probably fall below the pa threshold anyway.

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