LIAM SAYS NO! TO LAND VALUE TAXATION

Another posting on Halligan’s excellent HOME TRUTHS book on rescuing the housing market

Why would he say a thing like this (page 248)

“A ‘Georgist’ land value tax requiring high annual payments from all landholders, whilst scrapping most other taxes, would not help to solve the UK’s housing shortage. Many landowners do a superb job of looking after our rural environment and are far from wealthy – caring for the land in part from a sense of obligation and duty. They should not be taxed simply for land ownership.”

Phew! A definite No! to LVT then. Obviously I’m disappointed with this. From the depth of his understanding of the Housing Crisis that Liam has shown, I hoped he would have leapt at the perfect ‘Golden Mean’ solution of LVT. But no.

I will examine this quotation in two parts: Firstly I will explain how silly his statement above is. Then I will try to fathom out why such a smart guy as Liam would say such a thing.

MY GENERAL THEORY

of drastically reducing all PLOT PRICES and

hence FIXING the housing market

as the only way to have cheaper, better and above all MORE dwellings

I've been thinking about Liam Halligan's excellent book Home TRUTHS. Has he produced a narrowly focussed special theory of why house prices are soaring, and I’ve got the GENERAL theory? [I know! This makes it sound like Einstein--but bear with me. I think I am on to something]  

Supply in the Housing Market isn’t just New Build. As I explained previously

Second-hand properties are the MAIN Supply to the Market. Using an iceberg metaphor, I’m going to explain why concentrating on new-build and the effect of Planning Permission on Land values, doesn't give a complete explanation of the workings housing market.

Imagine the value of all the housing plots aggregated into one huge mass. This is the total of land value. Next think of this plot-value mass as a bit like the proverbial iceberg. While most commentators obsess about the tiny fraction that is visible ABOVE the waterline, the huge un-noticed bulk BELOW remains unexamined. Big mistake, because it is the main bulk of the iceberg, the totality of plot (land) values that swings the market.

An iceberg — 10% above the waterline, 90% below — that’s comparable to the housing market. In normal times 10% of houses on the market are new build, 90% of the supply to the market comes from existing stock. 

[think of the Iceberg as all the plots of land on which homes are built, represented by their value/price as an ice crystal. So the whole iceberg is the total value of all the plots both for new-builds and existing dwellings]

Part 3 of my Comments on Liam Halligan’s excellent book HOME TRUTHS

RESTORING THE FULL UTHWATT—

LIAM’S NOBLE ENDEVOUR

Once upon a time there was a gallant knight from Ballarat by the name of Sir Augustus UTHWATT. And lo! During the dark days of the War against the Nazis did he labour alongside his fellow grandees Sir William Beveridge (born in India) and Lord ‘Rab’ Butler. Later the more proletarian Welshman Aneurin Bevan  joined their deliberations.

Beveridge as we all know laid the foundations for Full Employment and the Welfare State. The second B—Butler introduced free secondary schooling for all (and Grammar schools too). The third B—Bevan is probably best loved and remembered of all, for he is beloved as founder of our wonderful National Health Service. Since 1945 these three great B’s have been revered as founders of the new era of a civilised, caring state that still persists, despite the ravages of time and the forces of evil.

  

                    

But who nowadays remembers Augustus Uthwatt? It was his Report that inspired the 1947 Town & Country Planning Act (TCPA). It was a conscious effort to improve on the (largely) failed promise at the end of the First World War, that there would be “Homes Fit For Heroes” as Lloyd George promised for the troops when they came back. http://socialhousinghistory.uk/wp/wp-content/uploads/2017/04/Homes_Fit_For_Heroes.pdf

Uthwatt recommended a system of Planning Control and Green Belts together with a tax to reclaim the windfall gains resulting from Planning Permission. 

‘SUPPLY’ IN THE HOUSING MARKET IS NOT JUST NEW-BUILD

MOST HOUSES-FOR-SALE ARE SECOND-HAND

Part 2 of my commentary on Liam Halligan’s excellent book HOME TRUTHS

           As I wearily had to point out to my students, time after time, Supply in the housing Market is not just or even mainly about new-built housing. Eighty per cent, four out of every five houses on the market are second hand, pre-owned, have a single owner-occupying vendor behind them. I’m afraid Liam falls into this trap throughout the book. He is not alone.

LIAM LOSES THE (P)LOT

In his excellent book, Home Truths, Liam Halligan lays out in ten graphs of  what’s wrong with the Housing Market (In Ch2), and very good it is too. But I think he missed out the ultimate 11^th graph which compares House Prices with Land Prices:  

Liam's missed a trick, and a blindingly obvious conclusion here. He should have explained that it is not HOUSE prices that are rising, it’s the price of the PLOT the house stands on that is rising much more sharply. 

 Read on