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Friday 8 October 2021



How Ireland nearly achieved LVT  An Example of a nearly-there policy in Ireland.

There could never have been a better time than 2012 in Ireland for the introduction of LVT or Site Value Tax as they prefer to call it. Back in 1978 there had been the hurried decision to abolish domestic rates following a rash promise during an election (!). 

It was soon realized that this was a mistake and a form of property tax needed to be re-introduced. The result of the 2007 Irish General Election was a coalition, with the Green Party as one of the junior partners. 

All agreed that there should be a property tax, but it was the Greens who specifically advocated Site Value Taxation (SVT). By 2009 a Commission on Tax had reported which saw merit in SVT, but opted for Property Market Value as the basis for the new tax. 

In early 2010 a new coalition government made its proposal in its Renewed Programme for Government. This time, under pressure from all parties, SVT was the preferred option. 

Then in late 2010 the Great Financial Crash exploded on Ireland. The economy shrank by 8%, revenue from property taxes, mostly Stamp Duty on sales, collapsed. Government finances looked dire. 

This is the classic Shock Doctrine territory made famous by Naomi Klein. This is when, in the wake of the crash, the neo-cons move in to pick over the stricken economy, advising governments to privatise utilities, reduce taxes on the rich, crush the power of the trade unions. When, in post-crash Ireland a high powered outside group (which became known as The Troika) started issuing edicts, they included the ill-fated introduction of water charging through a privatized company. 

More promising was the Troika’s requirement to introduce a property tax.

Conditions in 2011 then, could not have been more promising for SVT/LVT. There was a crisis, and more tax revenue was desperately needed. The two previous coalition governments had plumped for a property tax based on SVT. A big bad external group (The Troika) was pressing the government to introduce some form of property tax, so could be blamed if anything went wrong.

So what happened next? 

Has Ireland adopted LVT? No. Instead in July 2013 a ‘Local Property Tax’ was introduced at 0.18% of the property’s value, payable to central government. 

In some ways this is an attractive alternative. Taxing the value of the house plus the land captures the land element. Clearly where land is the major value-factor in highly sought-after  locations, most of the tax accrues to the land or plot price. 

The fact that, unlike the UK Council Tax it is charged at the same rate, whatever the house value. That the tax is collected by central government will appeal to many LVT advocates. Indeed there is a campaign afoot[1] to introduce something similar in the UK.

But what had happened to the Irish coalition government’s enthusiasm for SVT?  The design practicalities of the new tax were handed to an ad-hoc Inter-Departmental Group of Civil Servants. 

They produced a Report Design of a local property tax for the Irish Government 2012. They were well aware of the political impetus behind SVT, yet in their wisdom and experience they produced the following rebuttal of SVT. I reproduce here in full, because I think every land-taxer and Georgist should know what hurdles especially administrative must be overcome before a proper SVT/LVT can be implemented. 

Comment: If we cannot overcome these objections at such a propitious time then the project that we hold dear — Land Value Taxation — is a Dead Duck. So why did Ireland flunk the introduction of LVT/SVT and bring in a property-value(price)-based tax instead? 

Read how the Administrators steered the Government onto a flat-rate national Property Tax..


Here verbatim and in full[2] is the case against SVT (and in favour of a market value/price tax). Read it and maybe weep; how do we overcome these perfectly rational arguments?


“3.3 Site value versus market value

3.3.1 Both residential market value and SVT meet a number of important policy criteria. The arguments for SVT are outweighed by the likely difficulties in ensuring acceptance by taxpayers, i.e., arriving at values that are evidence based, understandable and acceptable to the public in addition to complexities and uncertainties in the valuation effort necessary to put an SVT in place. 

3.3.2 In contrast, under a market value approach applied to housing, the market value of a residential property is related to the characteristics of the building itself, the site on which it is located and the characteristics and amenities of the neighbourhood. There will be a relationship between the market value of a house and benefits to the owners in terms of enjoyment of the amenity value of the properties. The question – “what is the value of my or our house or apartment?” - is a relatively simple and well understood concept.

3.3.3 The 2009 Commission on Taxation considered both approaches. They concluded that “while seeing the economic rationale for land value tax...” that “it may not be a pragmatic approach to the restructuring of our property tax system”. The Commission recommended in favour of market value of residential properties (housing unit and site) as the basis of assessment.


Simplicity and transparency

3.3.4 Any tax needs to be kept as simple as possible for both the taxpayer and the tax administration. Full market value is a tried and tested basis of assessment that is internationally accepted, and by implication, readily understood by taxpayers all over the world. At any point in time, most home owners will have a reasonable sense of the market value of the home in which they live by reference to recent sales and to officially and privately published data on house price movements. Where there is doubt in individual cases, estimates can be obtained from professional auctioneers or valuers.

3.3.5 In the case of SVT, property owners would have great difficulty in dealing with a valuation exercise which conceptually separates the buildings on the site from the site (for tax purposes) in circumstances where their predominant understanding and interest lies in the market (or resale) value of their residence. Similar challenges would arise for auctioneers and valuers. The SVT system would not be as transparent or meaningful to taxpayers as market value.

3.3.6 It has been suggested to the Group that one approach to determining site value might be to use information on transactions in residential property (market value) and, by applying econometric techniques, identify the implicit value of sites. This approach would fail the simplicity and transparency test. Site values would be opaque to taxpayers, leading to high volumes of contested valuations and appeals. This would undermine significantly the acceptability of the tax. It would also be somewhat paradoxical to use a basis of assessment (site value) that is mathematically derived from the alternative basis of assessment (residential property value).

3.3.7 In terms of administrative simplicity, both SVT and market value present similar challenges as well as requirements for comprehensive registers of market/site values. A comprehensive mapped register of all properties, including details of ownership, precise location, and value would be required for both. SVT would have the added mapping requirement of site size. The practical challenges in establishing and populating such a land register for either SVT or market value purposes would be substantial. However, it would be much easier and transparent to put in place and update a register of market values based on the ongoing flows of real time data derived from house (market value) sales.



3.3.8 As regards the equity challenges, it is very clear that the owners of more valuable properties would pay more under a market value-based assessment scheme for either site values or residential properties. Taxable values based on market valuations based on either sites or residences would generally be higher in urban as compared to rural areas. This is equitable to the extent that market value provides a measure of the value of a residential property to the owner, particularly in terms of its proximity to places of work and local amenities and facilities.

3.3.9 SVT does not meet the equity challenge nearly as well. Taxpayers are likely to have profound difficulty accepting taxation outcomes where, in directly comparable and neighbouring site situations, tax liabilities would be identical even though one housing unit was larger and could have a higher market value than the other.

3.3.10 There would be considerable difficulties in communicating to home-owners and land-holders that such a situation was fair. It would undermine the standing of the tax. 



3.3.11 An efficient tax system encourages the allocation of resources so that optimal economic output is achieved. Recurrent taxes on immovable property are the most “growth friendly” of taxes. As both bases of assessment deliver this outcome, they are both economically efficient.

3.3.12 According to its proponents, SVT offers many additional potential economic benefits over and above that of a traditional market value approach. These include:

• Encouraging the optimal productive use of land and preventing dereliction;

• Providing for a stable revenue base (housing prices are more volatile than land prices and land values tend to lag economic activity);

• Reducing the incentive for premature and excessive zoning of land, and would in effect be a tax on land hoarding and speculation, which it is argued by its proponents, would reduce the incentives for corruption;

• Encouraging the efficient use of existing properties, including imposing a tax penalty on vacant zoned sites or derelict properties; and 

• Providing a means whereby communities, local authorities and government can tax the benefits received by private landowners as a result of local or community investments which enhance the value of their lands.

3.3.13 While these additional benefits arguably shade the efficiency argument in favour of SVT as a resource tax, the 2009 Commission on Taxation recommended against it on the basis that in their view it would be very difficult to gain public acceptance. Despite the economic arguments advanced by its proponents, SVT systems are not used extensively internationally. 


References for this section

T. Callan, C. Keane, M. Savage, J.R. Walsh, April 2012, Analysis of Property Tax Options A report to the Interdepartmental Expert Group on Property TaxDublin; Economic and Social Research Institute

Jim O’Leary September 2018 How (Not) To Do Public Policy: Water Charges and Local Property Tax . Galway, NUI; Whitaker Institute for Innovation & Societal Change

Ronan Lyons(Identify Consulting For Smart Taxes Network), December 2011,  Residential Site Value Tax in Ireland An Analysis of Valuation, Implementation & Fiscal Outcomes

See also 2019 Review of the workings of LPT


Afterword: In a Review in 2019 (Review of Local Property Tax: The report of the Interdepartmental Group) the Irish Government noted that no revaluations of property had taken place since LPT was introduced in 2013. The amount collected thus remained almost constant, despite property prices rising over 80%. At inception in 2014 LPT yielded 1.2% of all Irish Government’s revenues; this declined to 0.8% by 2018. As for the ‘local’ element LPT amounted to a mere 9% of all revenues.

They did add some warm words about the beneficial effects of ad-valorem property taxes quoting Blöchliger (2015)

“Property tax also offers a policy instrument to support asset price stabilisation, through its role in dampening house price volatility and overall property market boom-bust cycle dynamics. Analysis by the OECD has found that lower levels of property tax, together with less frequent property valuation updates tend to be associated with a higher degree of property price fluctuations”. The ever-soaring Irish house prices are a testimony to the inability of the stunted LPT to ‘dampen house price volatility’!

The Irish Times on September 16, 2020 reports “Minister for Finance Paschal Donohoe has again deferred the revaluation date for the local property tax (LPT), …… Mr Donohoe has decided to defer the valuation date until November 1st 2021,” 


My Comment: Oh dear! Missed opportunity. How do we ensure that our proposals don’t fall into the same political trap, putting off unpopular decisions until ‘next year’?

REVALUATION IS GOING AHEAD! In the Irish Times Jun 2021

Houses will be revalued in November in line with the increase in property prices since 2013. This averages around 80 per cent plus although it varies from region to region.

To ensure that most homeowners do not face higher bills, the bands used to calculate what homeowners pay are being widened – by 75 per cent – and the rate at which the tax is charged is being cut . If this had not happened, the revaluation would have meant payments would have soared.

As it is, most current bills – about 53 per cent– will remain as they are. About 11 per cent will actually fall but 33 per cent will rise by €90 and three per cent will rise by more. This variation is due to different trends in house prices across the country.

Houses will be revalued later this year on a self-assessed basis and payment amounts will change next year. The impact will vary between regions and within regions because of the different rate of house price increases depending on location, type of property and so on,


[1] A report from the Rowntree Foundation made such a proposal in 2014

[2] Design of a local property tax Report of the Inter-Departmental Group  Irish Government 2012

Monday 13 September 2021


 He [Kevin McCloud] finds it “iniquitous and hugely corrosive” that land values in the UK are so high because companies hoard land and drip-feed it into the market. 

What’s really needed is a complete radical state-controlled distribution of land and a removal of land profit from the equation. 

That sounds nuts and Stalinistic, but it’s exactly what happens in Germany,” he says. 
“Since the war, our planning system unwittingly has worked in cahoots with capitalism to create an unsustainable development economy.” 

We’re “pretty much”, he says, the only country in the world to have so few major construction companies dominating the market. And they build the most cramped houses in Europe
“If you’re a housebuilder, the only way you can make some money and sell a house people can afford is to build really small ones. It’s awful.”


Thursday 19 August 2021


A good start, but then fluffs it!

Brian O'Neill on August 19, 2021, 8:01 am on Slugger blog

House prices in Northern Ireland are nearly 10% higher than they were last year. The average price for a house in Northern Ireland is £153,449.

While we are not seeing the insane prices we had during the last boom there is a huge demand for houses. Rental prices have also increased.

Rising property prices give homeowners the delusion that they are richer. They think they are sitting on a rising asset. But (he says)

 you can only realise the growth of the asset if you sell up and move out of the country.

>>NO! Trading-down esp. on retiring is also a great way of putting real money in the bank

 If you sell your house the house you want to buy will also have risen, making you no better off.

The key issue is Northern Ireland is a low wage economy and we need more homes for lower earners. If you are in retail or the service sector you could be paying 2/3s of your salary in rent or housing costs. This sucks money out of the economy because it will be money they can’t spend on other things like shops, going out and other services.

We need to do two things. (he says)

The first obvious one is to build more houses.


>>NO! Look south where this was proven to be an utter delusion. (OK, in the long-term, but fixing the market is the first thing that must be done)


The Housing Executive and the various housing associations need to get the finger out and just build more new developments. Money has never been cheaper to borrow. We should be looking at new techniques like offsite construction. Fast House up in Limavady are churning out houses in their factory. I would like to talk to someone in Fast House so if you are reading this give me a shout.


The second thing we need to do (he says) is put more controls on the rental market.


>>Probably. The landlord friendly regime, product of free-marketeers needs to be reined in. But vote-gathering Rent Control can be just as dangerous.


We need to stop middle-class people hoovering up houses to rent or pricing out locals in coastal areas. House prices in the North Coast are up 17% in the past year. I get it, you love your weekend breaks to Portrush but it is selfish to have a holiday home lying empty 11 months of the year when local families can’t get a home. Get an Airbnb instead.

If you pardon me while I rant for a minute. Dear middle-class people: stop buying houses to rent. Have people learned nothing from the last crash? 15 years ago every solicitor and accountant watched too much Homes Under the Hammer and thought they were buy-to-let superstars. Many were nearly destroyed in the property crash. But it seems people learned nothing and buy-to-let is coming back into fashion. Being a landlord is a pain in the hole and nowhere near as lucrative as you might imagine. I have no shortage of stories of friends who lost hundreds of thousands in the last crash. Many are still trying to pay off the loans. Stick your money in an Index Fund, you will get better returns with zero stress.

Houses are for people to live in. We need to stop thinking of them as piggy banks for the middle class.

>>Dim-witted article. Gets the point—Prices are Too High, but doesn’t really understand why. Then makes a bunch of useless suggestions.


Wednesday 11 August 2021



Democratization of home ownership meant that housing no longer was owned primarily by

absentee owners extracting rent, but by owner-occupants. As home ownership spread, new buyers

came to support the rentier drives to block land taxation—not realizing that rent that was not

taxed would be paid to the banks as interest to absorb the rent-of-location hitherto paid to absentee


Real estate has risen in price as a result of debt leveraging. The process makes investors,

speculators, and their bankers wealthy but raises the cost of housing (and commercial property)

for new buyers, who are obliged to take on more debt in order to obtain secure housing. That cost

is also passed on to renters, and employers ultimately are obliged to pay their labor force enough

to pay these financialized housing costs.

From North America to Europe, debt deflation has become the distinguishing feature of

today’s economies, imposing austerity as debt service absorbs a rising share of personal and

corporate income and thereby leaves less to spend on goods and services. The economy’s indebted

90 percent find themselves obliged to pay more and more interest and financial fees. The corporate

sector, and now also the state and local government sector, likewise are obliged to pay a

rising share of their revenue to creditors.

Investors are willing to pay most of their rental income as interest to the banking sector

because they hope to sell their property at some point for a capital gain. Modern finance capitalism

focuses on total returns, defined as current income plus asset-price gains, above all for land

and real estate (figure 1). Inasmuch as a home or other property is worth however much banks

will lend against it, wealth is created primarily by financial means by banks lending a rising proportion

of the value of assets pledged as collateral.

The fact that asset-price gains are largely debt-financed explains why economic growth is

slowing in the United States and Europe, even as stock market and real estate prices are inflated

on credit. The result is a debt-leveraged economy.

Changes in the value of the economy’s land from year to year far exceeds the change in GDP.

Wealth is obtained primarily by asset-price (capital) gains in the valuation of land and real estate,

stocks, bonds, and creditor loans (virtual wealth), not so much by saving income (wages, profits,

and rents). The magnitude of these asset-price gains tends to dwarf profits, rental income, and

wages. The tendency has been to imagine that rising prices for real estate, stocks, and bonds has been

making homeowners richer. But this price rise is fueled by bank credit. A home or other property

is worth however much a bank will lend against it—and banks have lent a larger and larger proportion

of the home’s value since 1945. For US real estate as a whole, debt has come to exceed equity for more than a decade now. Rising real estate prices have made banks and speculators rich, but have left homeowners and commercial real estate debt strapped.

The economy as a whole has suffered. Debt-fueled housing costs in the United States are so

high that if all Americans were given their physical consumer goods for free—their food, clothing

and so forth—they still could not compete with workers in China or most other countries.

That factor is a major reason why the US economy is deindustrializing. Thus, this policy of creating

wealth by financialization undercuts the logic of industrial capitalism.

Can be found at

Friday 16 July 2021


Read the Universal Declaration of Human Rights! 

Here’s the relevant section

      Article 25        Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

So yes, you do have a right to an adequate standard of living, and clearly that is NOT adequate for most youngsters to acquire a house. 

The rights-based solution, therefore, could be to increase the wages (living standards) of those under the age of 40,

OR should it be that


Our rulers have fulfilled their obligations for affordable food and clothing. Thanks to our wonderful socialist NHS, the universal right to medical care is covered.

But the cost of housing has been allowed to soar. This violates the basic human rights of most youngsters. It was careless governments which allowed this to happen, mainly by letting the banks print our money and lend incontinently, mainly on mortgages, based on the land-asset under our houses.



Monday 5 July 2021


        Those who do not learn from history 

                are condemned to repeat it. 

This applies not least to the immense financial and economic crisis into which the world has fallen. So what lay behind it? The answer is the credit-fuelled property cycle. The people of the US, UK, Spain and Ireland became feverish speculators in land. 

Today, the toxic waste poisons the entire world economy. 

In 1984, I bought my London house. I estimate that the land on which it sits was worth £100,000 in today’s prices. Today, the value is perhaps ten times as great. 

All of that vast increment is the fruit of no effort of mine. It is the reward of owning a location that the efforts of others made valuable, reinforced by a restrictive planning regime and generous tax treatment – property taxes are low and gains tax-free. So I am a land speculator – a mini-aristocrat in a land where private appropriation of the fruits of others’ efforts has long been a prime route to wealth. 

This appropriation of the rise in the value of land is not just unfair: what have I done to deserve this increase in my wealth? 

It has obviously dire consequences. 

First, it makes it necessary for the state to fund itself by taxing effort, ingenuity and foresight. Taxation of labour and capital must lower their supply. 

Taxation of resources will not have the same result, because supply is given. Such taxes reduce the unearned rewards to owners. 

Second, this system creates calamitous political incentives. In a world in which people have borrowed heavily to own a location, they are desperate to enjoy land price rises and, still more, to prevent price falls.

 Thus we see a bizarre spectacle: newspapers hail upward moves in the price of a place to live – the most basic of all amenities. 

The beneficiaries are more than land speculators. They are also enthusiastic supporters of efforts to rig the market. Particularly in the UK, they welcome the creation of artificial scarcity of land, via a ludicrously restrictive regime of planning controls. This is the most important way in which wealth is transferred from the unpropertied young to the propertied old. 

The rigged land market is the biggest single cause of this calamity. 

Third and most important, the opportunity for speculation in land both fuels – and is fuelled by – the credit cycle, which has, yet again destabilised the economy. 

In a superb new jeremiad, the journalist Fred Harrison argues that this cycle – with a duration of 18 years – was predictable and, by him at least, predicted.** In essence, he notes, buyers rent property from bankers, in return for a gamble on the upside. A host of agents gains fees from arranging, packaging and distributing the fruits of such highly speculative transactions. 

In the long upswing (the most recent one lasted 11 years in the UK), they all become rich together, as credit and debt explode upwards. Then, when the collapse comes, recent borrowers, the financial institutions and taxpayers suffer huge losses. This is no more than a giant pyramid selling scheme and one whose dire consequences we have seen again and again. 

It is ultimately, as Mr Harrison argues, a ruinous way of running our affairs. I have long been persuaded that resource rents should be socialised, not accrue to individual owners. 

Yet, as Mr Harrison tellingly remarks,

     “as a community we socialise our privately earned incomes (wages and salaries), while our social income (from land) is privatised.” 

Yet, whatever one thinks of the justice of this arrangement, the practical consequences have become calamitous. Do we want to start yet another credit-fuelled property cycle as soon as the debris of the present one is cleared away, some years of misery hence? 

If “a crisis is a terrible thing to waste”, here is an urgent case for action. Socialising the full rental value of land would destroy the financial system and the wealth of a large part of the public. That is obviously impossible. 

But socialising any gain from here on would be far less so. This would eliminate the fever of land speculation. It would also allow a shift in the burden of taxation. Perhaps as important, with the prospects of effortless increases in wealth removed, the UK might re-examine its planning laws. 

There is panic about the dire consequences of such a liberalisation of restrictions for the countryside. It is worth noting, however, how little is needed: an increase of just three miles in the radius of London would raise the capital’s surface area by 50 per cent. Would this really be the end of England’s green and pleasant land

I do not expect any government to dare to wean the English from their ruinous trust in land speculation as the route to wealth. But I can hope. It is bad enough that the result has been expensive houses and inefficient taxes. 

But it is surely far worse that such insane speculative fevers have ended up destabilising the entire global economy. Even if few know it, it is time for a change. 

FT 1 July 2021


A Political Fix for The English Housing Crisis.    Land Value Tax is the answer!

Why has there been so little progress on Land Value Taxation in England? With so much impressive moral, ethical and philosophical support for LVT, you’d think that governments would be delighted to bring it in. When economists from Ricardo onwards sing its praises then surely it must be a no-brainer; politicians and administrators should be clamouring to implement it. But no; since as far back as the 1909 People’s Budget, LVT has failed to be enacted. If, as I believe, LVT is the best and possibly only way to fix the housing crisis, I am keen to explore what is preventing it. But realism dictates that any proposal to change the tax system has to pass the practical politics test. Will any politician, wanting to be re-elected, stick his or her neck out to promote even a small amount of Land Value Taxation?

 What housing crisis? Prices gone mad.

Is there a housing crisis? Are houses too expensive, shoddy and too small? Is there a need for many more new houses, better suited to modern lifestyles? Of course there is![1] Recognising that there is a crisis, politicians love their wheezes claiming to ‘help’ homeowners, especially first time buyers. Unsurprisingly their schemes always have the same result—prices keep rising, making things worse. Most pundits use the clever throwaway line “To fix the crisis, build more houses!”. It is true that once a properly functioning housing market is established, then more newly-built houses and lots of them—millions more—will be the solution. But for now, in today’s warped housing market the ‘build-more’ solution simply cannot work[2]. Instead, what would help the market right now would be a drop in prices. Fix that first and then, in time, as I hope to show, the other features of the crisis—shoddy, pokey little homes, and far too few of them—can begin to be addressed.


But are there any popular policy options that might appeal to politicians, which will begin to bring down house-prices? My suggestion is that replacing one unpopular tax — Stamp Duty — with a small Land Value Tax would be both politically practical and bring down house-prices a bit. Once this small change has bedded in, politicians would then feel comfortable switching yet more property taxes to LVT. The hope is that, eventually, as more LVT is introduced house-price levels should come down, so that nearly everyone can afford to buy or rent a home in all parts of England[3].

 I have a lot to establish here. For a start, how could a switch from Stamp Duty to a small LVT be politically popular?  If it was enacted, how soon would it have any effect on house-prices? But before I get into the details of my proposal to use LVT to bring down prices, I’d like to review a few basic facts about house-prices and the housing market. This will probably be familiar to most readers of L&L, but please bear with me! There is a lot of mis-understanding out there about what is really causing ‘house-price’ inflation.

 The main driver of house price inflation — Land

Of course, it’s not house prices that are rising. A house is a man-made artefact, and depreciates from the day it is built. What is going up, and nearly always faster than inflation generally, is the price of the land the house stands on.

 Housebuilding Costs: Currently (2018) house-building costs are typically about £1400 per square metre[4], so a typical 90 m3-bed semi will cost about £120,000 to build in almost all parts of England. The good news is that this price (adjusted for inflation) has not increased over the years.  But the bad news is that unlike, say, cars, TVs or computers it hasn’t dropped either, but that’s a story for another time.

 Land prices are different.  There is huge variation in the price of a plot of land for housebuilding, and, as we all know, the price depends on its location. Unlike building costs, land prices have been increasing faster than inflation generally, faster even than ‘house-price’ inflation. This graph shows the picture: despite some ups and downs, the trend in land prices is ever upwards.

 But it’s not just newly-built houses that are affected by this land-price hyper-inflation.  The majority of all house-sales (80%+) are of second-hand properties. Their price is affected by land-values to an even greater extent. Since the house itself cannot be ‘worth’ more (apart from significant improvements),  the only explanation for the huge rises in ‘house’-prices is the inflation of the price of the plot of land it stands on.

 How is the price of a plot of land worked out? Does this sound like a silly question? It’s obvious how a loaf of bread, or a television set, or even a haircut gets priced. These things have a cost of production, and a value in use. Land is different. A plot of land generally costs next to nothing to produce and has little intrinsic value apart from its agricultural value. As readers of L&L well know, it is Society, not the land-owner that creates this price/value in the plot of land. Availability of land is to some extent limited by location; planning restrictions limit the supply of land even more, again societal value creation.

 But how do people manage to pay these ever-inflating prices for the land with a house? This is where the banking system comes in. Few house-buyers can afford to pay the full asking price, so a loan is needed. Banks, through their privilege to create our money, fund the mortgages that enable the buyers to pay for the land and the house that goes with it. Here’s how an economist Ryan Collins[5] explains it:

     Firstly, banks are not, primarily intermediaries: banks create new money when they make loans—as the Bank of England     recently made clear—so intermediation is a misleading term. Second, in advanced economies, the main activity that banks     engage in is domestic mortgage lending; not business lending. Thus, in the UK today the majority of new money created     for the purchase of existing land and housing—existing assets rather than new, productive assets that enable the economy to expand. And given the limited supply of new homes, the result has been systemic house price inflation well beyond the growth of the economy.”

 What is the big incentive to buy? It is not just the status of ‘home-owner’ that encourages the majority of the population to mortgage themselves  to the hilt to buy a house. There is a much bigger prize at stake. Because house prices always go up, or so it is said, we can all join in this racket, thanks to bank loans secured on the ever rising value of land. This the huge attractor, and is the basis for the ‘Great Home-Owning Democracy’ espoused by Margaret Thatcher. It’s all about getting rich on the uplift in value of the land. No effort or merit is required for this capital appreciation, all you need to do is own a piece of land in the right area with a house on it. Then watch your net wealth—house price minus outstanding mortgage—soar.


Three possible ways to fix the cost of land for housing: If the driver of high prices is the inflated cost of the plot of land the houses are built on, how might this cost be taken out of the price of the house? As I see it there are three possible fixes which should start to take land values out of house prices:

 One way might be to crush the banks’ ability to inflate land values through easy mortgage lending.  It’s been done before. Prior to the 1970s liberalisation, banks were discouraged from lending on mortgages. It was Building Societies that issued almost all the mortgages, and they were severely restricted, lending only the money they had on deposit. (This is a bit of an over-simplification, but true in essence). And it worked. As you can see from the graph, house prices remained fairly flat until 1972;  then came the first financial liberalisation allowing banks into the mortgage market. More easing of controls on banks followed—as did more house-prices booms.

 Governments have been very reluctant to curb the power of the commercial banks to create the money to make loans, especially for mortgages. Even after the Global Financial Crash of 2008 there was a feeble but promising attempt in 2011 to levy a tax on bank deposits[6] but this is gradually being watered down. Instead, the Bank of England’s ‘emergency’ policy of Quantitative Easing has steamed on for ten whole years. The house/land price boom has resumed, fuelled by easy money. Politicians are clearly scared of bringing the banks to account.

 A second way to stop Land Values rising is for Government take over the ownership of the Land. That way the Government could collect all of the ground-rents which are the financial benefit of land-owning. True, this would deprive existing home- and land-owners of their unearned land-wealth appreciation, but it would provide a huge opportunity to reduce other forms of property taxation. But that’s Communism! So it is, but it’s also how the  economic powerhouses of Hong Kong and Singapore work. It may be a colonial legacy, and it might not be fully understood even by the local politicians, but it works very well[7]. There’s even a modern-day advocacy of an English ‘People’s Land Trust’ whereby the state or local authorities would gradually acquire the land under all the houses in the country[8]. It would work, but the State owning all the land? That really would be the road to serfdom. What politician would push for such a policy?

    But the one fix that I am sure will work is to introduce a Full-Value Land Tax. 

This way home owners retain all their rights to use their own land as they wish, but pay an annual ‘rent’ which reflects all the value that Society has created in the plot.  Land Value Tax would, of course, be used firstly, to eliminate all other property taxes.

Home-buyers and sellers will continue to be free to trade their properties in this new full-on LVT world. What they will discover is that the price for a house would be virtually the same in all parts of the country[9]. Brand-new houses would have a prices which reflected their build costs (typically £120,000). Because of the normal processes of depreciation, second-hand houses would be cheaper.

 In this hypothetical world of full LVT the price of the plots of land would be near zero. Since variations in LVT reflect the community-based value created in the land, in less affluent parts of England the LVT charge would be quite small, less than £100 per year. In suburban London it could be £10,000 a year or more. Although variable, an average LVT should be about £4,000 a year.

 As well as reducing and equalising house-prices throughout England I would anticipate further dynamic effects. Freed from the burden of land speculation, the house-builders would start competing to build better houses and more of them. This in turn would energise the private rented sector and even the social housing would benefit too (if it was still needed). This may sound like a ‘too-good-to-be-true’ fairy-tale, but it happened once before. During the 1930s more houses were built per year in England than any year before or since. These 1930s semis were well-built and are still an attractive buy today[10].  Given the right conditions, mostly cheap land, the housebuilders can do it! They can produce good quality housing in abundance at prices almost everyone could afford.

 But all this is only a hypothetical scenario. Is there any practical, politically savvy proposal that would be the first step towards this full-LVT world?

 Yes. Take one unpopular tax on property and replace it with a small amount of Land Value Tax.

When asked[11] the great British public thought that the most unfair tax of the lot is Inheritance Tax. Then going down the unfairness scale came Stamp Duty, TV Licence, Fuel Tax and VAT.  Taxes on Cigarettes and  Alcohol were deemed ‘fair’, as was National Insurance and Income Tax. Surprisingly, even Council Tax was felt to be fair-ish, which should be a warning of the political pitfalls in store for those wanting to switch it to LVT.

 So would getting rid ‘Death Duties’ — Inheritance Tax (IHT is the usual abbreviation), be the canniest political move[12]? IHT is certainly the most hated tax, so a switch to LVT might be easy.  I will make a suggestion for abolishing IHT later on, but for now I’ll stick with Stamp Duty or Stamp Duty Land Tax (SDLT) to give it its full official name in England. This should be the best and easiest tax to abolish and switch to LVT. As a bonus it even has ‘Land Tax’ in its name!

The politics of SDLT In an odd way Stamp Duty (SDLT) is ‘voluntary’ — you only pay SDLT if you choose to buy a house. SDLT also seems ‘fair’ because it attaches to a sum of money which is changing hands. The Chancellor of the Exchequer gets away with it because, at any one time, not so many voters are hit by SDLT. Only one or two million houses are bought each year, so only about two or three million voters get hit by SDLT.  Chancellor Osborne (2010-2016) was particularly cavalier with SDLT, changing the rates frequently, and gaining political kudos by imposing draconian rates on buy-to-lets and million-pound plus mansions. Unlike Thatcher’s Poll Tax in the 1990s, there were no mass protests in the streets against these steep rises in the top rates of SDLT. 

     The Economics of SDLT: Because it is paid up-front, house-buyers lose out. This discourages sellers too, with fewer houses being put on the market. Employment Economists have identified SDLT as drag on the job-market, stifling transactions. In their ideal world, workers would face few impediments to moving to where the jobs are. If this involves selling your house and buying another, then this tax discourages the free movement of labour. Since SDLT is imposed every time a house is bought, this is especially onerous on those heroes of the flexible labour market, the frequent job-changers and movers.

 So SDLT is both unpopular politically and a tax which badly warps market incentives. It is ripe for reform or replacement, but abolishing altogether would mean losing a very traditional, long-accepted tax.

 How best to bring in the new mini-LVT: At the next Budget it would be a straightforward to announce:

“As from next May 1st domestic property transfers will no longer be subject to Stamp Duty. Instead, there will be an annual levy on the land-value of the property of one-third of one percent.”

The proposed mini-LVT replacement would, like SDLT, be a ‘voluntary’ tax, and would be a clean break with the old Stamp Duty. There would be no need for parallel trialling. So the campaign slogan to sell the change might be

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

 The first pseudo-problem that critics will jump on is: ‘How do you value land separately from the house standing on that plot of land? And what about flats, etc.?’ I used to teach real estate valuers, and I can tell you that they are perfectly competent and have years of experience and knowledge to do such valuations. Since the Land Registry will still be notified of all transfers, they, in collaboration with professional bodies like the Royal Institution of Chartered Surveyors could swiftly agree a protocol for calculating land values for 99% of cases, including apartments in blocks. The tiny remnant of difficult cases could be resolved through a Tribunal. Modern Data Analysis will help, too.[13]

 Where did I get the figure of one-third of a percent of the land value? We can assume that the Chancellor of the Exchequer aims to be  ‘revenue neutral’, and generate as much in tax revenue (about £8.5 billion) from the new mini-LVT as the old Stamp Duty before. I’ve done the calculations and a third of one percent levy on the value of the land would soon produce the same revenue stream as before.[14]

 How will the new annual LVT be paid? Stamp Duty is a national tax, so it would be reasonable to continue this, and make use of the usual income tax arrangements: LVT might mean no more than an adjustment in PAYE allowances.[15]  In this way the payment of the LVT is just another deduction in the monthly tax bill. Voters are far more aware of, and likely to complain about any big one-off tax demand. It is good politics to have taxes paid as a small steady amount.

 Avoiding the pitfalls:

Annual Re-valuation of Land Value Politicians might give less prominence to the fact that this would be a dynamic tax. The land-values would be subject to annual re-rating. Allowing several years if not decades before revaluation has been a major failing with many previous property tax systems. Politicians, in a state of funk ‘postpone’ the re-valuation, leaving an even worse problems for those who come after them. With the help of modern computer-based valuation techniques, annual (even monthly!) re-valuations of all land-values would be  easy and cheap to implement.


One positive implication of regular revaluations of land values could be a reduction in your LVT bill if local economic conditions worsen. On the other hand, home-owners who faced a major hike in their LVT charge because a new high speed transport link was proposed nearby would be less pleased. It’s always good politics  to make these changes up or down in the smallest possible steps. In this way the new LVT becomes a dynamic tax, based on the current and local economic conditions. This is crucial in sending the right market signals.

 Winners and Losers: To make any new tax easier to sell, politicians often look for some means to compensate the losers. In the case of the new LVT might it be advisable to add on allowances or exemptions?  Maybe there isn’t a problem. As I’ve said, this is a ‘voluntary’ tax. If you don’t want to pay it, then don’t buy a house or flat. Since the new LVT is a straight replacement for the old Stamp Duty there will be no need for parallel running while bringing it in. But is that enough, politically? Can we rely on homebuyers forgetting how the old SDLT worked? It was steeply progressive. A property costing less than £125,000 paid no Stamp Duty; to buy a million pound mansion in Chelsea would once have cost at 10s of £1,000s in SDLT. 

 This might become a political ‘bear trap’. A very modest proposal to investigate land-value taxation by Labour in 2017 General Election had the rabid right-wing press furious. Now imagine what they would say about my scheme: “Getting rid of Stamp Duty is just the first step towards Garden Tax” (and to be honest, that’s just what I would like to see!). If we do nothing to compensate losers, perhaps the fuss will soon die down. It’s new, and even for the losers it won’t cost much — £50 or £100 per year, scarcely visible when paid as an income tax deduction. Home-owners will soon forget that strange old beast that used to be called Stamp Duty, and anyway people have short memories for this sort of technical detail.

 How the new mini-LVT will bring down house prices The whole point of embarking on the political peril of ditching Stamp Duty and replacing it with a small LVT is to drive down House Prices.  So will a little bit of  LVT do the trick? How would it work, and by how much will prices fall? 

 First off are the benefits of abolishing an economically damaging tax. If Stamp Duty (SDLT) was abolished, according to one report[16] an additional 45,000 property-owners would be encouraged to put their houses on the market. Another report[17] is even more positive. Abolition of Stamp Duty should result in between 80,000 and 200,000 more houses on the market.  More sellers will increase the supply of houses which should result in house-prices coming down a bit. If this new, small LVT was to be extended to the housebuilders’ landbanks, this would create another nudge for them to get on and build.

 Secondly, LVT will bear down directly on land prices. Economic theory says that the rational reaction of the house-buyer should be to calculate that something like 10% of the Land Value[18] has been taxed away in perpetuity by LVT, so the ‘House Price’ (in the new reality it’s the building value + 90% of the Land Value) should be marked down. Instead, the ‘irrational’ house-buyers might be tempted to think “By not paying Stamp Duty I’ve got a bit more money to play with for now, so I can bid a bit higher.” Normal human beings don’t behave in the way that economists predict!

 Quite soon though, the penny will drop. The mortgage lenders, who should act rationally, will be well aware of the reduced equity caused by this partial LVT. If they don’t, then maybe the regulators will remind them, forcibly, by requiring the lenders to offer less by way of mortgage. Purchasers of property may be enthused at the lower pay-outs at the time of purchase, but it is the job of the lenders to curb their enthusiasm.

The final act: more properties to be subject to a mini-LVT, then make it all.

As the years roll by and more house are sold and bought, so yet more properties will be scooped up into this new mini-LVT net. The scope of mini-LVT can be extended in other ways too. Including property which is transferred free of charge, which at present attracts zero Stamp Duty, is one example. Then, after maybe ten or fifteen years, this mini-LVT it might apply to as many as three-quarters of all homes. It would then look odd that the remaining quarter of properties were tax-free. This would be the point when governments could include all properties in the mini-LVT net. (This was the technique used by governments to abolish tax relief on mortgage interest payments; it took more than 15 years to reduce it in slices, but in the end there was little complaint at its total abolition).

 Of course the final act will catch home-owners who not moved for a long time—typically  those symbolic victims, the lone elderly living on in a large family home. It is usual for proponents of LVT to offer some kind of exemption or exclusion for these hard cases.

 Or maybe we could do something  a bit cleverer, which would be attractive to these long-stayers. We could make them an offer which would be especially attractive to the property-rich, cash-poor. Invite such householders to be included in a higher rate LVT, but in return for exemption from Inheritance Tax and Capital Gains Tax. An especially attractive offer would be exemption from the ‘Dementia Tax’ (the confiscation of nearly all your property wealth to pay for your long-term stay in a care home). Just like the process of converting Stamp Duty into a small amount of LVT, these elective conversions will get home-owners familiar with the bargain. In time this could be expanded to include all home-owners.

 The final step: Turn Council Tax into an LVT This is a large and highly salient tax on property. It ripe for conversion to LVT, and for many Georgists it is the first tax they would like to convert. But this is a political minefield! English local property tax has gone through changes from the Domestic Rates, through Poll Tax and now Council Tax (CT). The charging system is highly politicised. But CT is important because it generates a significant amount of revenue. For this reason, I’d say that this should be the last tax to convert. In the long run, as home-owners get used to the LVT system they are then more likely to accept such a switch. By that time the real benefit of LVT — the emergence of a plentiful supply of good, cheap housing — will encourage them to welcome the final switch from Council Tax.

 What has been achieved by this process?

It may have taken 15 or 20 years in my scenario just to complete the final switch-over from Stamp Duty to a small Land Value Tax. Limiting my proposals to what is politically possible may seem craven, but does anyone remember all those post-WW2 attempts to capture the windfall gains from the grant of Planning Permission? The history of the Betterment Levy as it was sometimes called is instructive. First it was imposed by one government (usually Labour), then dumped when the alternative (Tory) party took power. This happened several times. All that remains now is the inherently corrupt ‘Section 106 agreements’ as a feeble attempt to capture windfall gains of landowners obtaining planning permission[19]. By using a slow but sure means to introduce a small rate of LVT, it should stable enough to withstand changes of government.

 A crucial advantage to the introduction of this small but continuing LVT is that the mechanisms and definitions for ‘land value’ become established. Beginning with a small number of cases, the methodology for valuation of the land under an existing house can be securely established. The general public, too, will become familiar with the concept of land value, and start to make more sane judgements about house prices, being as they are an amalgam of the depreciated value of the building and the societally-created value of the land it sits on. These are vital understandings that need to be brought home to the widest possible number of the electorate.


But what of my original claim to fix the English housing market, to make houses cheap and plentiful, and of superior quality? I am confident that once the initial slice of LVT is established and its beneficial effects take hold, voters will be clamouring for the politicians to replace ALL property taxes by LVT. The housebuilding industry too will be joining in, lobbying for LVT so that they can become a bigger and more honest businesses producing a cornucopia of good quality housing that their customers crave. It may take decades to get there, but unless we find an immediate political way to start on LVT, yet another 100 years of failure is in prospect.



Conall Boyle

Conall Boyle (b. 1942) taught urban economics to surveyors and estate managers at Birmingham City University. Now in retirement in Wales has various interests, including cycling and local history, but keeps returning to the mystery of the non-implementation of land value tax.   

[1] Danny Dorling (2015)  'All That is Solid: How the Great Housing Disaster Defines Our Times, and What We Can Do About it' gives a good account of the problems, although his ‘solutions’ are bit tame.

[2] If you want to know why “build more houses” is wrong please refer to :  And

[3] This article is mostly about the owner-occupied market for house in ENGLAND, because it is the biggest by far on these islands and it’s simpler for me to do calculations based on one property-tax regime. Other parts of the UK have different, devolved property taxes.

[4] Information from BCIS Building Cost Information Services operated by RICS


[6] I have written this up for Positive Money

[7] Andrew Purves (2015) No Debt High Growth Low Tax : Hong Kong's Economic Miracle Explained

[8] NEF paper 2018 Modern Land Reform Duncan McCann

[9] It has been suggested to me that LVT should be set at a little less than 100% of land value so that market incentives would apply, and also valuations could be established.

[10] I explored this in Boyle, Conall (1992) The housebuilding boom in England in the 1930s: Lessons for the 1990s? Proceedings of IAHS  (International Association for Housing Studies) September 1992 Birmingham.


[12] Note the irony: It was the same 1909 People’s Budget that passed both Death Duties and LVT. LVT was later dropped, but Death Duties survived.

[13] I know this because I was doing in the 1980s! Boyle, Conall (1984) An Expert System for Valuation of Domestic Properties. Journal of Valuation

[14] Detailed calculations in an article on my website of how I worked out the LVT which could be substituted for the one-off SDLT

[15] This idea was suggested to me by Tony Vickers of ALTER

[16] Centre for Economics and Business Research

[17] BEYOND THE CALL OF DUTY Why we should abolish Stamp Duty Land Tax By Ben Southwood. Adam Smith Institute Oct 2017

[18] I’m assuming here that something like 3% would be the ‘full’ rate of LVT which captures 100% of the land value. The dynamic effects of LVT are difficult to predict, and the hypothetical full-LVT rate could be lower.

[19] A good place to start on this sorry saga is Danny Dorling (2015)  'All That is Solid: How the Great Housing Disaster Defines Our Times, and What We Can Do About it' although he does not share my view on S106 agreements.