BUILD BEAUTIFUL HOUSES AND ALL WILL BE WELL!

Here’s a very pleasant short film which explains the Housing Problem using some clever graphics 
Why Houses Cost So Much (link to film)

Yes, of course, it's Land prices that cause house prices to go up so much.
But no,  the politicians have no interest in lower prices. 
That would only destroy the equity of the current crop of home-owner-voters.

Yes, if building more is the solution, you can’t blame the locals for objecting. 
Not only do they lose their pleasant views, they will have a great big ugly estate of new houses dumped on them!

If only, they built beautiful houses, then no-one would object.
Really? The Accordia Housing Development in Cambridge is said, by the speaker to be so good that the NIMBYs loved it!

More information about Accordia, Cambridge Housing Estate

FALLING HOUSE PRICES Nightmare on Downing Street

‘Affordable housing’ ‘Help-to-Buy’ — these are just some of the ways politicians pretend to tackle the housing crisis. They know that there is a crisis — too few homes available to buy, and the price of houses spiralling beyond the reach of many hard-working, just-about-managing families.

The one obvious political solution to the crisis would be to engineer a crash in the housing market. What happened in 1988-97 would do nicely! Instead of the average house costing FIVE times average earnings (1990) it dropped to a much more ‘affordable’ THREE times earnings.

THE ARITHMETIC of Converting SDLT to a Land Value Tax (LVT).

 Average SDLT Revenue per Transaction 2005-2015

(These are my own calculations based on figures in previous references)

The effect of Converting the 1-off SDLT into an annual LVT

SDLT is a drag on the housing market, and can discourage some people from putting their home up for sale. Two of the worst features of SDLT could be fixed straight away.

—Instead of a lump sum at the time of the sale, there will be a much smaller on-going payment based on the land-value of the plot.

—Regular movers, the heroes of the flexible economy, will be freer to move because they won’t be hit by a big SDLT every time they move.

Will the politicians, especially the Chancellor approve of this change?

That would depend on the rate of LVT to be charged.

To keep the Chancellor of the Exchequer happy we should try to be ‘revenue neutral’ — generating as much tax revenue as before. Let’s look at the sums.

I’ve done the calculations and this is what I recon should do the trick

and the slogan might be

“House-buyers: Don’t pay a big lump of SDLT now! Spread your payments out as a yearly charge of just one-half of one percent of the value of the plot of land your house is built on!”

Politicians will also be very keen to know how the switch from SDLT to LVT affects different households. They all remember the Great Poll Tax fiasco, and would be horrified of a repeat.

‘Winners & Losers’ is the name of this game.

Winners from tax changes are happy to quietly pocket their bonus. Losers will scream blue murder — and in the case of the Poll Tax it brought down the Prime Minister.

While “No SDLT and an annual LVT at ½%“  may sound modest, it hides a nasty  surprise for many house-buyers and would not be much of a bargain. In my next posting I’ll look at ways that this particular political time-bomb could be diffused.

ABOLISH STAMP DUTY and replace it with LVT

What is politically possible? Change the most hated taxes first:

Where is the best place to start on the long journey to implementing LVT?

Demanding total implementation of LVT straight away is totally unrealistic. No politician is going to back it. Instead, let’s be a bit crafty and look for an easy win — replace an unpopular tax on housing with a little bit of LVT.

There are many taxes on housing — Council Tax, Inheritance Tax, Capital Gains Tax, care home costs or Stamp Duty. Which tax is hated the most? 

This is what the great British public think about the fairness or unfairness of a selection of taxes[1].