In the midst of a housing crisis caused by the disastrous policies enacted by successive governments over the past 30 years or so, politicians are scrambling around for solutions. There have been repeated calls to rip up the green belts surrounding our towns and cities in order to find new land for housing construction. This pressure would be significantly eased if we made better use of our existing urban areas.
A fresh approach is needed to tackle the housing crisis, while also preserving our green spaces. At the heart of this approach should be a land value tax.
The introduction of a land value tax (LVT), an annual levy paid by property owners based on the value of their land, has long been Green Party policy. It featured in the Green Guarantee for the 2017 general election, as well as in the manifestos of several other parties. It could form part of a wider green tax shift focusing on the use of natural resources, for example a carbon tax, with the revenue being used to replace other taxes and/or fund a universal basic income.
This would be a progressive tax shift: analysis by Green MSP Andy Wightman shows that replacing council tax with LVT would lower bills for 83% of households in England. It would also help us deal with the massive wealth inequality between people with property and those without.
MEP and Green party speaker on the economy and finance Molly Scott Cato discusses the benefits of LVT in the documentary ‘The Taxing Question of Land’
Shifting the focus of taxation onto land would have several benefits. Firstly, it would improve the allocation of existing housing. It would lessen the appeal of snapping up properties in desirable locations as speculative investments to leave empty. Those people living in larger houses than they need would be incentivised – but not forced – to downsize, making it easier for young families to find suitable, affordable housing.
Secondly, LVT makes it costly to hold onto valuable land for speculative purposes, putting an end to land banking. It would ensure that land in city centres is put to good use and not left vacant or under-developed: LVT would encourage developers to either build on the land that they hold or sell it on to someone else who will.
“As land in the city centre has the largest monetary liability, the landowner will want to maximise the return on investment in order to pay it. The denser the building that sits on the land, the larger the revenue generated to pay for the same levy value.”
This would stop urban areas from spreading further out into the countryside, destroying wildlife and lengthening people’s commutes to work. The housing crisis isn’t just about building more houses; we need homes where people’s jobs are located. We need to make commutes more walkable and cyclable, helping us to reduce our reliance on cars and give us cleaner air.
Reducing urban sprawl in this way would also lessen the demand to build on productive farmland, which pushes farmers towards less productive locations.
This problem is exacerbated by the use of farmland as a tax haven to avoid inheritance and capital gains tax and farm subsidies given by land area, which encourage the inefficient use of agricultural land.
Inflated land prices caused by speculation push out genuine farmers. “Young newcomers to farming are prevented from buying land unless they have access to money from elsewhere”, writes farmer and LVT advocate Duncan Pickard. “The rising price of farmland is attractive to non-farmers who have money to invest. They are not concerned with the land’s productive capacity – they are hoping for increases in its price.”
Taxing farm land, instead of throwing subsidies at it, would encourage efficient use of the most productive locations. Land at the fringes – which is only profitable because of subsidies – could be allowed to return to nature.
For conservationist Peter Smith, founder and director of the Wildwood Trust, LVT is crucial to his ambition of rewilding the British countryside. “Land Value Tax is a rocket to put up the backsides of landowners & developers to make the most of what we have, in doing so we put all our human effort into building better housing on the land already developed, we will make farming and recreation ‘land efficient’ and thus create the space to rewild Britain and at the same [time] have great housing & jobs aplenty”, he says.
By improving the efficiency of urban land use and reducing the incentives for speculation, sub-marginal land would become cheaper, making it easier for local authorities or nature trusts like Peter’s to purchase land for conservation.
Farmer Duncan Pickard and conservationist Peter Smith explain the impact of our current tax system on the environment in ‘The Killing Fields’
A Fairer, Greener Britain
Confronted with a housing crisis, inefficient land use and climate change, we face a choice: do we stick with the tired, broken status quo that has brought us to this point or do we go in a new direction with bold, progressive ideas such as a land value tax?
We can build the houses we need, reduce air pollution and also return land to nature and wildlife. The time has come to put a land value tax on the agenda to end the housing crisis and build a fairer, greener Britain.Follow @PaulKnight85
Featured image: screenshot from ‘The Killing Fields’ via YouTube