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Thursday, 6 May 2021



Government loses, house prices rise 

In a very intelligent analysis of an SDLT ‘holiday’ in 2010-12 Anne Bolster[1] looked at the effect on prices and transactions when First-Time Buyers (FTBs) were exempted on purchases up to £250,000. 

The result: maybe 2% more FTBs were coaxed onto the market, so transactions hardly increased. She recons that it cost the Government £160,000 for each extra FTB so coaxed to buy a house costing not much more. 

The relief had the effect on prices of FTBs paying more, with the sellers pocketing the increase.

So the Coalition Government of 2010 wasted £300 million trying to ‘help’ a very few FTBs, at great cost. It did help sellers by pushing up prices, just like all the other ‘Help to Buy’ schemes. 

There is only one slight crumb of comfort we can take from this fiasco. This analysis would never have happened if the Coalition Agreement between the Conservatives and Liberal-Democrats had not mandated it. 

It makes one weep to think that this doesn’t happen as a matter of routine on all political wheezes and gimmicks, but then politicians like to hide the evidence of their blunders. 

Thank you Ms. Bolster, and thank you Mr Clegg for demanding the review. Don’t hold your breath for another such review.

One thing you can say for Stamp Duty, is that it is quick and easy for politicians to change it. 

Altering rates of Stamp Duty does not call out screaming opposition from either the newspapers or the tax-paying electorate.

[1] Bolster, Anne (2011) Evaluating the impact of stamp duty land tax of first time buyer’s relief HMRC Working Paper 13 London pdfHML a gem of a paper!

Wednesday, 21 April 2021



Andrew Morton, lead author at the C.P.S. — the Tory-supporting Centre for Policy Studies, has produced two well-researched reports on fixing the housing crisis. They are

- Help to build: An emergency plan to support housing supply  and The housing guarantee

Of course Morton falls in to the simplistic economists’ idea that you cure high prices by increasing supply. Being a Tory think-tank, it’s the Local Authorities ‘failure’ to provide enough house-building plots with Planning Permission (PP) that are to blame for the shortfall in supply.

[Read the previous blog-post to see why this is balderdash and piffle. Housing has long been an investment good, not a normal market consumer good. Prices of houses are screamingly high, but boosting supply won’t fix it anytime soon UNTIL the flaw in the market is fixed.]

In fairness, Morton has been hard on the house-building industry, too. Surprising when the construction industry are such big donors to the Tories. In this he is critically joined by Liam Halligan who did a puff-piece on the CPS Reports in The Telegraph 18/4/21. Both Morton and Liam slate the house-builders for building poor quality housing, too slowly, not enough variety of types of housing. The house-builders fail to train skilled workers and invest little in productivity or product improvement.

Bravo to Liam and Morton for ‘biting the hand that feeds them’, but the situation is so dire that it has to be said. Read the Reports, read Liam’s book. The housebuilding industry, for perfectly rational reasons of self-preservation really is as bad as this.

[For my part, I don’t blame them. It is the very peculiar nature of their industry that forces them to act this way. Only politicians can correct the repeated blunders of policy that created the incentives for builders to produce too little of their crap product and be able to charge such high prices.]


There has been some increase in the number of houses built, but way less than PPs granted.

What’s gone wrong? It seems the volume builders are quite happy to monopolise the available building land with PP. This makes life difficult for the SME builders, so freezing out the only real focus of competition in this whole rotten house-building game.

It gets worse: Despite holding vastly more plots with PP, the Big Boys like Persimmon make no effort to build more. It is not their business model to do so. Flooding a local market with new houses might drive the market down, which is the last thing either the builders or existing home-owners want!

So rather than accept his build-more theory is wrong, Morton doubles down.

It’s hard not to see that this is a clear repudiation of the ‘build more and the prices will come down’ theory. But instead of seeking the real cause, Morton tries to find ways of forcing the housebuilders to make more use, more quickly of their PPs. This involves convoluted schemes, and puts the onus on the despised Local Authorities to implement them. (Or, as cynics might point out, to make them the scapegoats for the inevitable failures.)

Don’t be surprised if Morton’s Sticking-Plaster on the festering housing market doesn’t work.

As he said in the Help to Buy Report

“costly schemes to try to prop up the entire £7.2 trillion value of the UK residential sector…[are] unsustainable, which means just delaying the pain”

At least he realises the pain is caused by propping up the value of ALL houses!

What would be the effect of Plot Value Charging?

: If, say, two-thirds of that £7.2 tn value is in land values, that’s a theoretical £5 tn to play with. So 2 ½ % of £5 tn would yield £125 bn in LVT revenue.

With comparable houses now the same price in all parts of the UK, with much lower mortgages and mortgage interest payments, houses become ‘affordable’ to the many, nay the Majority. Banks shrink, the Chancellor has revenue enough to get rid of all other property taxes, and more.

That’s what ‘fixing the housing market’ really means

 Full reference for Morton’s two reports

Morton, Andrew (Jun 2020) Help to build: An emergency plan to support housing supply  London; Centre for Policy Studies Help to Build: An emergency plan to support housing supply - Centre for Policy Studies (

Morton, Andrew (Apr 2021) The housing guarantee London; Centre for Policy Studies  The Housing Guarantee - Centre for Policy Studies (


Saturday, 17 April 2021




Yes, it has always been the case that, overall, there is more than enough housing accommodation in the UK, even in England. True much of it is in poorer areas with few jobs. But even within reach of flourishing areas, there may be more houses than needed, certainly more rooms in houses than are strictly needed.

That shouldn’t be a problem. This is a free country. If you want two houses or two cars or three or four televisions, that’s your privilege. But over-housing and empty properties are a sign that a house is not just a consumer product, it is an asset, too.

The hated ‘Bedroom Tax’ was the Tories response to this situation. Naturally it only hit poorer people in social housing. What I’ll propose will not have that intentional evil aspect!

Who owns houses kept empty for speculation, or keeps on living in over-sized homes?

--BTL landlords hoarding because holding costs are trivial. Build new and the BTL landlords will grab a lot of it, especially London properties.

--Grannies in oversized family housing because they like the idea of leaving loads of money to their children. Can’t we get Granny to show more compassion for the young?

One sensible and practical fix, one pie-in-the-sky fix.

For the btl landlords – a practical fix

As David Renton in the Guardian 10Apr21 explained why BTL landlords are so rampant in the housing market.

For some time, it has been government policy to privilege the interests of private landlords over other homeowners. This process began in the mid-1990s when banks introduced buy-to-let mortgages, which assessed buyers’ creditworthiness on the rental yield from the property, rather than their existing income. Easy finance gave landlords an advantage over first-time buyers.

Buy-to-let landlords have also enjoyed tax relief: mortgage interest relief, and a wear-and-tear allowance. The tax breaks have diminished in comparison to what they once were, but the broad picture remains the same. Although the UK’s 2.5 million landlords are a small minority, because the market has been loaded in their favour, they were responsible for 18% of all residential property purchases by the end of 2019.

 The problem BTL causes

Apart from the obvious ‘crowding out’ of private home-buyers, because (as I explained in my previous blog link )

 Because housing has an asset-class, there is every incentive to hoard. Sure the extra income from rent is attractive, but it is a common observation that in boom times for house prices, your house can earn more than you (in capital appreciation)

The special fix for BTL

The 2.5 million landlords are neither popular, nor are they politically important. It is unlikely their advocates and protectors, the Tories, would interfere with their money grubbing schemes. But for all other political parties, landlords are any easy target. It’s not hard to identify who they are, because rent is income, and income means Income Tax.

The Fix: As before switching Stamp Duty to Land Value Tax is easy at point of sale, in the case of BTL even more so, and even less likely to cause street protests like the Poll Tax riots!

Even more helpfully, BTL already attracts much higher rates of SDLT, 3% extra  on top of ‘normal’ Stamp Duty since 2015. So it can kick in straight away for new BTL’s at more than double the 0.3% of Plot Value I suggested earlier.  (

So a starting Plot Value Charge rate of say 0.75% payable by the landlord is entirely practicable.

This can be retro-fitted to all previous rented property, with owners of multiples first in line. Annual uprating, the bugbear of many property tax systems would be far less contentious, politically.

Note: some private landlords are nice to their tenants, keeping rents low, helping when need arises. This applies especially when the landlord has a single tenancy, even more so when the landlord/lady lives in the same house. Sadly such benign tenancies may be swept away by these proposals.

FOR LINGERING GRANNIES – A pie-in-the-sky fix

The author of the Guardian article goes on to identify the other great category of housing-hoarders – the ‘lingering grannies’

Now let’s consider the situation for older homeowners who aren’t landlords. Hundreds of thousands of them save money in their 70s or beyond, long after retirement, not because they want to have an extravagant lifestyle but for the sake of the generations who come after them. If their plan is to help their children buy a house then rising house prices are of no benefit – it obliges them to save more, as ever more money is going to be needed to provide a deposit for their children’s first home.

For these people, the benefit of high house prices never materialises (they aren’t planning to sell their own home), but the cost to their family is only too real. It compels the younger members of their family to live in cramped housing, to have less money than they should, and to spend their days working excessive hours so that they have no time for older relatives.”

So appeal to the good nature of the grannies?

“What the left needs to do is to get people to see that the obstacle to housing justice is not individual home ownership…. [Do it] for the sake of individual homeowners who want the generation below to find a home of its own.  …. [Accept] a fall in house prices: a diminution of [your] capital and security in retirement.

Holy cow! There must surely be a better fix than appealing to good natures? How about tax-breaks for the over-housed elderly? How about Local Authority officials who can assist the move as a Social Service. Official because the old folk are (quite reasonably) suspicious of financial sharks and con-men.


Ref for this article

Monday, 12 April 2021


Why the Bank of England authors are deluding themselves (and their bosses and the Treasury).

To repeat what they said

 No, house prices are not a credit-fuelled bubble. Thanks to the long-run in interest rates (and rising incomes) house-prices and rents are actually a bit cheaper than you’d expect.”

The source of this amazing conclusion is a Bank of England paper “UK house prices and three decades of decline in the risk‑free real interest rate” by David Miles and Victoria Monro. [M&M] So this is a credentialed paper from an authoritative source. David Miles is a professor at Imperial and on the BoE ‘expert committee’. This is the credible, logical, rational voice of economic orthodoxy!”

THIS DOESN’T FEEL RIGHT — houses are, if anything, a bit too cheap — SO WHY IS THIS WRONG?  Let’s go through it.

M&M (the authors Miles and Munro) falsely  assume the British house-buying and -renting public are indifferent between renting and buying. Wow! So much for Thatcher’s great Home-Owning Democracy! Of course the British love owning their homes. An Englishman’s home is his Castle, as the saying goes.

Now there is a place where the inhabitants take a rational (in economic terms) decision between renting and buying. That is Germany where they differ in two significant ways:-

         —NO house-price inflation. Look at M&M’s Fig. 2, In Germany incomes have risen just as much, or more than in the UK and interest rates if anything have generally been lower than here as well. M&M fail to explain why this should be, apart from vague comments about elasticities. If they can do it, why can’t we?

Highly regulated tenancies. Not for them the ‘evict-on-a-whim’ landlord-friendly situation described by Chloe Timperley in Generation Rent.

Another unstated falsehood by M&M is to assume that Housing is a normal consumer good. Actually, Shelter (Housing) along with Food and Clothing are not just consumer items, they are basic necessities. Thanks to the efforts of entrepreneurs and engineers food and clothing are cheap and plentiful. It is as Galbraith once said “The greatest failure of Capitalism” that housing, decent or otherwise, is beyond the reach of a large part of the British population because it is too expensive. That House Prices should be stabilized or reduced is a consequence of it being  a basic humanitarian necessity.

Also un-commented on by M&M is the strange anomaly—a product which has tripled its (real) price while the quality of the product is the same.

What sort of house you get for your money in 2021 is the same, often worse than in the 1980s. Most (80%+) of house sales are of second-hand properties so many are from the 1980s or older! New-builds are notoriously getting smaller. Compare this to every other consumer product. Invariably they becoming more technically capable year-on-year, and get cheaper! It’s called ‘Progress’, so why doesn’t it apply to the housing market?

What M&M fail to point out is that Housing has become more of an ASSET class rather than a consumer product, and a different form of economic analysis should be applied. This is why we have a Housing Crisis. Housing needs to become more of normal consumer item, less of an investment vehicle.

As Steve Keen (2021) puts it (why asset markets such as housing are not like ‘normal’ consumer goods markets

Once the role of credit in aggregate demand is understood, it’s easy to extend this to asset markets, in which credit plays a major role. With mortgage debt as the main means by which houses are purchased, there is a causal relationship between new mortgages—or mortgage credit—and the house price level. 

There is, therefore, a link between change in mortgage credit, and change in house prices (Zhang and Bezemer 2014). The same logic applies to change in margin credit, and change in stock prices. The correlation between change in mortgage credit & change in house prices since 1971 is 0.64, while the correlation between change in margin credit and change in Shiller’s CAPE index since 1990—when margin debt began to rise again after 50 years of being below 0.5% of GDP—is also 0.64.” (p40  The New Economics: A ManifestoApril 2021 pre-pub pdf) 

Figure 11: Change in household credit and change in house prices (Correlation 0.64)


This type of borrowing for house-purchase that drives asset price bubbles, and does precious little benefit to benefit society. We need means by which this kind of borrowing can be discouraged, while lending for productive purposed can be enhanced.

To be fair M&M realise that the usual nostrum for solving the housing crisis – ‘Build More’ – is a non-runner.

(on p4) “But low supply elasticities  - the focus of a great deal of attention [they mean sluggish housebuilders] – could not in itself account for more than a part of the rise in prices. Were the supply elasticity for new house building in the UK much higher, the rise in house prices generated by very low interest rates would likely still have been significant.”

 Inheritance spreads the wealth?

M&M contend that so long as we leave more than we have inherited, the accumulation of 'equity' benefits Society.

Housing as an asset—not as good as it might be

I have explained this elsewhere. You may withdraw equity, but that's only borrowing, usually at penal rates of interest. A house is not very 'fungible'--you either sell the whole thing, or you don't. Unlike shares is is difficult to sell part of a house.

Asset-status creates incentives for a backward house-building industry

The last thing the home owners, esp the owned-mortgage-free lot want to avoid is a flood of newer cheaper better houses. The house-builders are happy to comply, and provide their customers exactly what they want.

Hoarding as a rational strategy another reason why Build More won’t work. Good article in Guardian about landlords hoarding property, plus some silly suggestions for elderly home-owners as a ‘cure’ Landlord power is not just bad for tenants. It harms homeowners, too

But what is the asset that house-buyers crave? It is the value of the PLOT of course Unless we focus on plotvalue there is no way out of the housing crisis.

The Death of the Home-Owning Democracy, no more spreading the wealth. Dying anyway rate of O-O down from 71% to 63% ? So much for no bubble, reasonably priced houses! I’m going to look more closely at this shibboleth. Is the HOD such a good thing? It’s obviously good for the Tories as ?greedy rentiers vote Tory as the protector of unearned wealth?

Householders indifferent between owning or renting? Piffle


from IpsosMori 2017 election. How Britain voted in the 2017 election | Ipsos MORI. Home owners including those who own outright are still in the majority.

Percent by tenure in 2018. Total housing stock 23,534,000 homes, of which

Owned outright            34.4 %

Owned with Mortgage   29.3 %

Social Renting              16.9 %

Private Renting            19.4 %

 (Source English Housing Survey data on tenure trends and cross tenure analysis - GOV.UK (

 The Reference for this blog Miles, David &  Victoria Monro (Dec 2019)UK house prices and three decades of decline in the risk‑free real interest rate Staff Working Paper No. 837 Bank of England


Monday, 5 April 2021



The long decline in real rates of interest was used to justify half of the inflation-busting rise and rise of house prices in the UK. That was in the first Part of my commentary on the Bank of England paper “UK house prices and three decades of decline in the riskfree real interest rate” by David Miles and Victoria Monro.

 The other half of the can be explained away because we have become are a lot richer in the last 33 years since 1980s. In technical terms Income Elasticity of Demand for Housing is measured at 1.3. This means that for every extra £100 you earn, you can be expected to spend £130 extra on housing. (This is a generally agreed figure, not controversial).

 This gives rise to a curious conclusion: Housing as measured by economists is not a necessity, it is a luxury item!

( Explainer for those a bit rusty on economic theory: When Income elasticities of demand are greater than one, consumers will buy proportionately more of a particular good compared to a percentage change in their income. Consumer discretionary products such as premium cars, boats, and jewellery represent luxury products that tend to be very sensitive to changes in consumer income)

There is no bubble here: How did Miles & Munro reach that conclusion?

 So you want somewhere to live? Rent or buy? Let’s assume that, so long as costs are equal you don’t mind which. Here’s the logic used by the authors Miles & Munro of the Bank of England to show there is no bubble.

 “…we use a widely used model of the housing market to show that the sharp rise in house values [true] and substantial decline in rental yields [true] can be reconciled with a fundamental equilibrium [in the assumption of house-buyer indifference].

 “rational expectation would plausibly have been that average real rents would grow at around the rate of real incomes. How much might reasonable people have expected real rents to grow? Figures show that average rents have been stable relative to incomes.

 “…[Thus] house prices would have been expected to grow in line with average future real incomes. [and as you can see from the graph rents have not risen more than incomes]

è  “….there is no evidence for a `bubble' here.


Conclusion (by Miles & Munro)

“The conclusions are stark — since 1985, the observed decline in index-linked gilt yields and other changes in the cost of home ownership are associated with an increase in house prices of around 90%; income rises account for about a further rise of 80% - between them these factors account for all of the observed rise.”

SO I’M WASTING MY TIME? Houses are not over-priced. The price of houses does not need to be stabilised or reduced by Squeezing the Banks, Land Value Tax, or even Land Nationalisation. Pushing for change is pointless?

 M&M (the authors of this paper) do some sensitivity analysis especially of elasticities and conclude that maybe the price rise need not have been +156% above inflation, it might have been as low as +40%.

 M&M make no attempt to explain why TWO of the G7 countries in their study had NO nett house price increase in their 33-year study. Why have Japan and Germany finished up with real houseprices the same today as they were in the 1980s?




Reference for this blog: Miles, David ,&  Victoria Monro (Dec 2019)UK house prices and three decades of decline in the riskfree real interest rate Staff Working Paper No. 837 Bank of England


Friday, 2 April 2021



No, house prices are not a credit-fuelled bubble. Thanks to the long-run in interest rates (and rising incomes) house-prices and rents are actually a bit cheaper than you’d expect.

The source of this amazing conclusion is a Bank of England paper “UK house prices and three decades of decline in the riskfree real interest rate” by David Miles and Victoria Monro. So this is a credentialed paper from an authoritative source. David Miles is a professor at Imperial and on the BoE ‘expert committee’. This is the credible, logical, rational voice of economic orthodoxy!


Here is the ‘money-shot’. As you can see long-term, real, gilt, risk-free interest rates have been sinking year-on-year in an almost straight line. The authors have great fun mocking the Cassandras whose forecasts of inflation and rising interest rates, especially after bouts of QE have turned out so wrong.

 Nobody expected the steady decline of interest rates!

 What this means for the housing market

 How much you can afford to pay for a house depends on three things according to David Miles’ 1994 model — he is the doyenne of these things.

    1. elasticity of supply and demand.

    2. changes in real incomes, and

    3. user cost—how much it costs to buy and run a home.

 Elasticities are fairly stable, so long as market conditions remain much as they are, I’ll deal with the effect of rising real incomes on demand for housing in the next blog.

 So User Cost is the main focus here, and of course the main cost of buying a house is the size of the mortgage payments. So Miles and Munro do their sums and reach the following conclusion:—

 House prices in the UK have risen +156% in the 33 years from 1985-2019 but just over half of that rise is an illusion. Because of falling interest rates, which have led to cheaper mortgages home-buyers can service much bigger loans. There is of course a sting in the tail.

 If interest rates were to rise by 1% then expect house-prices to crash by 20%

 But the authors (like all the experts before them) expect stable and continuing interest rates. As a consequence house prices will not fall.

 This paper is closely argued and fairly easy to follow (until it lapses into algebra). Read it, but pay attention to the rich detail. The Reference for this blog Miles, David ,&  Victoria Monro (Dec 2019)UK house prices and three decades of decline in the riskfree real interest rate Staff Working Paper No. 837 Bank of England

Miles, D (1994). ”Housing Financial Markets and the Wider Economy”. John Wiley

Tuesday, 23 March 2021



Yes (almost) PART 2. PERVERSE TAX EFFECTS WITH THE WRONG INCENTIVES — UK property taxes are the third LEAST EFFECTIVE at damping down surges in house prices. UK taxes make a bad situation WORSE.

Fair enough! The UK may have the heaviest tax burden on property, but it doesn’t have the worst performing. That prize goes to Japan, then the US.

This comes from some clever analysis by the OECD, on "The stabilisation properties of immovable property taxation". These guys have used advanced econometric techniques to squeeze some tentative answers from a huge international set of data. No doubt their methods could be challenged, recast with different techniques and maybe others might have come up with different results. But for now this is what an independent well-funded, respected organisation has come up with. tortured the data from a rang

Economic Stabilisers In economics it is well known that some taxes, such as VAT act as stabilisers against inflation. Because the tax rises in proportion to the price charged the total price rises faster. This is the principle behind the plastic bag levy, and the reason why the public accepts ‘sin taxes’. Pushing prices up faster than the market price deters consumption.

Turning the argument around — if we must have taxation, then it is better if it encourages more of what we want. Do we want to slow down or stop faster-than-inflation property price rises? Make sure whatever tax is levied supports this aim.


No not a mis-print! Slovenia and Slovakia, two new breakaway European states are highlighted as having property taxes which are best at stabilising prices. According to the OECD Report their property tax regimes are best in slowing down house price movements, up or down. 

Something like VAT would be a stabilising tax. As prices rise, and without any need to change rates, so the tax take increases. The discouragement to the purchaser is proportionate to the price rise.


In the naughty corner, Japan’s property taxes are the worst for making the swings up and down in  house prices even worse. Then comes the USA, followed by Great Britain! Despite us having the highest burden of property taxes here in the UK, the taxes are inflicted in such a bad way as to make house-price rises and falls more extreme.

 Economic de-stabilisers: What should we call taxes which make a bad situation worse? Trend exacerbators might be a good name but what about ‘Wobble-makers’?

Taxes which make things worse: The usual example given in the text books is UK whisky duty. Currently it is a flat-rate of £28.74 per litre of alcohol. This is the same amount whether it’s Aldi own-brand or Single-malt. This is good for discouraging alcoholism, but unless the Chancellor uprates the Duty every budget, its effect will be worn down by inflation.

Over the years neglecting to fully uprate duty on these flat-rate taxes has led to cheaper whisky and more alcoholism. That’s why the devolved administrations in Wales and Scotland are resorting to minimum pricing.


What is so good about the property taxes of the ‘SLOs’?

Here I am going far beyond the OECD paper. They merely report the fact of stabilising taxes. I can only draw very tentative conclusions about the property tax regimes. This is what Wiki tells us

Property Taxes in Slovenia: a bit vague, not much info

Property Taxes in Slovakia:

According to the type of property there are classified 3 kind of taxes: tax on land (land tax), tax on building (building tax) and tax on apartment (apartment tax). The amount of annual property tax is mainly dependent on the area of the occupied land(measured in sq. meters), purpose of the property, number of floors etc. The amount of annual tax rate is highly effected by the specific tax rates that are set by municipal authorities. “

A significant amount about Land Taxation here!

Property Taxes in Japan

Not very easy to find out, but there seems a lot of transaction taxes




Full citation Blöchliger, H., et al. (2015), "The stabilisation properties of immovable property taxation: Evidence from OECD countries", OECD Economics Department Working Papers, No. 1237, OECD Publishing, Paris,

The ‘al’ referred to are Hansjörg Blöchliger, Balázs Égert, Bastien Alvarez and Aleksandra Paciorek

Monday, 15 March 2021


 UK home-owners pay the highest property taxes

 Hansjörg Blöchliger is not a well-known name in housing market analysis, but under the aegis of the OECD he has produced TWO papers which add greatly to our understanding and insight. I’ll deal with the second paper in my next posting, but here I’m looking at his curiously titled

“Taking care of the unloved: Reforming the tax on immovable property”

Bizarre title! On this blog at any rate certain kinds of ‘tax on immovable property’ are loved and cherished! We love Land Value Tax or Plot Price Charge as I prefer to call it!

This is an OECD economics department working paper 1205, produced in April 2015.

[OECD Organisation for Economic Co-operation and Development is a 37-member rich countries’ club, excluding Russia and China. It produces high-quality research reports, which is the source used here.]

And here’s what the report shows about property taxes:

Just in case there is any doubt ‘GBR’ is the shorthand for us here in the UK. And GBR is the clearly the biggest loser, with the highest property taxes amongst all of these 37 economically advanced countries!

Let this be a warning to all Georgists! GBR already has the highest property taxes. Expecting LVT to yield fantastically higher amounts is wildly unrealistic.

But it is also a blessing: There’s a lot of tax revenue to play with. British taxpayers are used to paying more. Could the burden of tax be changed for the better?

Could moving the property taxes around, changing the way the tax falls do  something to fix the housing? Yes, but that’s for the next posting.

 International Comparisons

The Economist (Feb 2020) identified 3 countries where ‘the housing market broadly works’ — Singapore, Germany and Austria. Singapore is not in the OECD, but what of DEU (Germany) and AUT (Austria)?

DEU and AUT are both pretty low tax regimes, as are the two countries either side of DEU. They are SVN — Slovenia and SVK — Slovakia. I’ll have a lot more to say about these two ‘Slo’s next post!

So does low tax = housing market fixed? Some evidence here.

But what of the opposite? High tax = dysfunctional housing market? Maybe. As well as our homeland GBR, notice that JPN — Japan is also a high property-tax regime.



Full citation for this paper Blöchliger, H. (2015), "Reforming the Tax on Immovable Property: Taking Care of the Unloved", OECD Economics Department Working Papers, No. 1205, OECD Publishing, Paris,


Sunday, 14 March 2021


Two Chinese islands, Hong Kong and Singapore.

 Despite their rulers’ ignorance they have been amazingly successful at collecting land value, but have they fixed housing? 

We are very lucky to have someone like Andrew Purves to explain the particularly beneficial land-ownership situation in Hong Kong and latterly in Singapore. His book “No Debt, High Growth, Low Tax” is a real eye-opener, and should be read by anyone trying to implement LVT. It is all the more valuable because it is derived from field work in Hong Kong. 

He has extended his analysis onto Singapore in a paper “Models of fair public ownership: lessons from Singapore and Hong Kong”. 

Put very simplistically, both places share a colonial heritage where first The Crown, then the local administration own practically every parcel of land. Of course land is made available for development — industry, commerce, transport and housing — but only as short-term (30 to 60 year) leases. The revenue from these leases makes up a healthy one-quarter to one-third of all government revenue. This, Andrew explains is the real secret of the economic success. All other forms of taxes — income tax, VAT, excise duties — are either much lower or non-existent. 

So what we have here is the happy fulfilment of many commentators dream scenario for fixing the housing crisis —Public Ownership of HouseBuilding Land. (See Ryan-Collins, Danny Dorling, Brett Christophers calling for public trusts, local authority ownership as well as state ownership. Even Halligan wants Land confiscation at current-use price). 

So has public/state ownership of all housing land ensured that Hong Kong and Singapore have achieved reasonably priced housing of good quality available in abundance? 

The Economist (Feb 2020 Housing Supplement) identified just 3 places in the world where ‘the housing market broadly works’ — Germany and Switzerland (which are well-known to us housing researchers) but also singled out was Singapore. The fact that 80% of Singaporeans live in government-built flats, because the subsidies are irresistible—but come with social controls (Economist headline 8.8.2017) is surprising. It suggests a highly controlled environment, which might not appeal to us westerners. 

If Singapore is a housing winner, what about the other nirvana of public-ownership of land, Hong Kong? On price of housing it is named as the most expensive in the world. Maybe that’s just for outsiders trying to buy in. How fares the largely Chinese population of 7 million? It could be worse, but due to massive government intervention in colonial days, sufficient tiny apartments are available, but at a price. 

So Hong Kong is, like the UK, another housing market failure. An observation: In fairness neither of these city-states have the familiar favelas — shanty towns built illegally on the outskirts. In all parts of the developing world, even ‘advanced’ South Africa these are commonplace. Favelas provide cheap housing for the many, but obviously not to the minimal level of decency you’d expect. 

One might wonder why these two paragons of public-land ownership virtue have either failed, or only achieved housing success through hyper-active government intervention ? As Andrew Purves has pointed out  (for me mainly in his exposition at an ALTER meeting in 2015), the administrators in both places don’t really know what they are dealing with. Yes, they realise these resource-poor over-crowded islands must provide the conditions for economic success. The land needs to be leased in a way which supports this. 

But drawing on Georgist ideas they could have gone much further. Land has obviously been leased at way below its full value. Leaseholders can sell their homes at far above the building value. If the authorities had acted like rent (profit) maximising landlords instead of economy boosters they could have achieved two things          

—higher revenues, making all other taxes superfluous. Indeed land-revenues might have been high enough for a citizens’ dividend, a form of basic income. (This is plausible given the ‘island-in-a-sea-of-prosperity’ position that these city-states occupy, akin to the parasitic role the City of London exerts over the UK.)           

— economic growth would have been even greater, in part because of lower labour costs, subsidised by the citizens’ dividend, and the low (reasonable) cost of housing. 

An even more intriguing Chinese-related possibility presents: That the gurus who guide the policy of the CCP realise this and apply it to the PRC generally. What an unparalleled advantage it would enable them to take. The capitalistic-rentier democratic US economy would be left for dead.

Wednesday, 17 February 2021

Taxes through the Ages: An entertaining tale from Dominic Frisby

A compelling case for LVT

Dominic is a lively explainer. Previously I read his 2014 book on Bitcoin. This time he’s doing the story of taxes right back to the dawn of civilisation. 

But it’s what Dom has to say about Money and Land that is most interesting. Yes, Land Value Tax crops up right at the start when he tells us why Hong Kong is such a low-tax entrepreneur’s paradise.

But on p144 Dominic pulls out a real gem

“Many people blame high house prices on lack of newbuild, and population growth. But in the 10 years between 1997 and 2007, though the population grew by 5%, the housing stock grew by 10%. (ref to Positivemoney). If house prices were a simple function of supply and demand, they would have fallen slightly over the period. Instead they tripled.

“Mortgage lending over the same period went up by 370% — a commensurate amount. It was the increased supply of money, through the issuance of debt, that caused house prices to rise.”

Brilliant! He gets it!

Only in the last chapter does Dominic make the case that the only way tax can work in future is by Land Value Tax. Like me, he doesn’t like this label.

Instead he calls it L U T — Location Usage Tax. [I’d coined Plot Value Charge for the same thing].

There follows an impassioned, but pretty standard case for LVT/LUT/PVC.

Missing, sad to say, is the By What Means?  Question. How do we get there? Where do we start? The 1909 People’s Budget was shot down by politics.

“But this is Utopia” says Dominic. [No need to answer these difficult yet vital questions!]

A highly commendable effort. A great read, with some real gems.

Read it, you’ll like it.

Full ref: Frisby, Dominic (2019) Daylight Robbery: How tax shaped our past and will change our future UK; Penguin Business

Tuesday, 19 January 2021



A brilliant campaign for worthwhile improvements

From their Website Council tax is broken. Help us fix it. - Fairer Share Campaign

Here's the gist of what they propose  (I'll add a version with comments later)

1. Council Tax to be replaced with a simple Proportional Property Tax, charged as a fixed flat percentage of property value of 0.48%, double that for second, empty and non-resident owned homes.

2.  Stamp Duty Land Tax (SDLT) on owner occupied property should be abolished. Stamp Duty should however remain in place for second home and non-resident buyers.

3.  Property tax should be collected directly from owners, not tenants.

4.  A deferral mechanism should be introduced for those owners genuinely unable to pay. 

5. The majority of reliefs and exemptions, including those for single occupants, second homes and empty homes be abolished. The ineffective and unfair “Bedroom Tax” should also be removed.
6.  A revaluation of all residential property must take place as soon as possible, with annual revaluations thereafter, using technology, based on their average value across the last three years.

7.  Property tax should also apply to undeveloped plots of land that have received planning permission to encourage developers to get on with  building not waiting for the value of the plot to increase.



1.  The confusing Council Tax band system should be replaced with a simple Proportional Property Tax, charged as a fixed flat percentage of property value. Based on extensive analysis, we recommend a flat rate of 0.48%, with a higher surcharge rate of 0.96% for second, empty and non-resident owned homes.

--This nationalises CT taking the last vestiges of independent fund-raising away from Local Authorities, a major political power-grab.
--There will be many winners in deprived areas from this, but the main losers will be in the affluent SouthEast and London. In many cases their loses will be huge. 

2.  Stamp Duty Land Tax (SDLT) on owner occupied property should be abolished. This would unleash a wave of housing transactions and help address the ongoing housing crisis. There is clear evidence that Stamp Duty is acting as a barrier to households that want to downsize, hindering the optimal use of existing property and making homeownership more expensive for all.22 Stamp Duty should however remain in place for second home and non-resident buyers.

--SDLT is a very bad tax, economically inefficient, hated by the taxpayers. It's abolition is highly desirable, but is the proposed PPT the best replacement?

3.  Property tax should be collected not from tenants, but directly from owners, who are in a better position to pay. This would bring England into line with international practice, and reduce administration for councils, due to there being fewer owners than individual properties (due to multiple ownership).

--A sop to the local council to make their job of collecting PPT easier! But shouldn't a national tax be collected by HNRC?

4.  A deferral mechanism should be introduced for those owners genuinely unable to pay. Tax and a modest interest charge could be paid at a later date or, if need be, upon sale of the home, thereby avoiding the debt issues that have plagued the collection of Council Tax.

--As always the 'lonely widow' will be used to oppose the change, so sensible to state this early on. 

5. Property taxation should be made simpler and fairer by abolishing the majority of reliefs and exemptions, including those for single occupants, second homes and empty homes. The ineffective and unfair “Bedroom Tax” should also be removed. These reliefs complicate the system and have unintended negative consequences

--Creates another category of losers. Quite right, but wise?

6.  A revaluation of all residential property must take place as soon as possible, with annual revaluations thereafter.23 Improvements in technology make this much more feasible than in the past. Properties should be taxed on their average value across the last three years, to ensure that increases in property value are subject to taxation.

--Annual revaluations are VITAL if the PPT is going to have a beneficial effect on the housing market. It is so easy for politicians to 'postpone' these, especially if big changes are threatened. So all praise to the authors of PPT for going for a smoothed 3-year average (elsewhere it was a 5-year average), so the annual change is gradual. But will this prevent mass-revolts by the home-owning voters?
--The old canard that the task of revaluing all 24 million properties annually is impossible has been blown away! Technology really can do it. I know, because I showed how multiple regression analysis made this possible 27 years ago in a paper in the Journal of Valuation! 

7.  Property tax should apply to undeveloped plots of land that have received planning permission from the local council. This would discourage developers who purchase land and refrain from building while they wait for the value of the plot to increase.

--Whacking the likes of Carillion is always good fun. But why do they hoard land? Not just for the fun of it, so this proposal doesn't solve their underlying difficulties.