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Sunday, 13 June 2021


 Is this a recognised method?

Thanks to the vast amount of reliable data on house-prices available on Zoopla and Rightmove, we can all join in the game of valuing our own and others’ houses and flats. Professional valuers have been taught[1] to call this the Comparable Method, and it is the basis for the all-important decision on selling price. In combination with the valuer’s local knowledge and intuition, this wealth of data means that the vendor can rely on an asking price that is trustworthy and achievable.

But what if the valuer is asked to split this valuation into a price for the house only, and a separate price for the market value of the land it stands on? Due to lack of data on house-building land sales, the comparable technique is difficult to apply. Any plot-value estimate is likely to be subject to wide error bounds. If this valuation was to be used for taxation purposes (which is the whole point of this essay!) it would be contestable at law, and cause bafflement to the property owner, who after all is the one who will be expected to pay any land-value tax.

 So two major obstacles to establishing plot values for land value taxation  are:—

1. The difficulty for valuers in estimating reliable and defensible land values.

2. The lack of acceptance or understanding of such values by the tax-paying owners.

 The Comparables Method works fine in a local context. Looking at house prices  regionally or nationally reveals huge differences between areas. This reflects, not so much differences in building costs, but the differences in plot values.

 Has anyone made use of this fact to extend the comparable method to establish the size of ‘locational effects’ nation-wide? It seems such an obvious way of identifying plot values relative to a datum value. If we can find the cheapest comparable houses nation-wide, then they must surely have been built on what is now the cheapest land.

 Using the value of the cheapest houses on plots of negligible value they can act as baseline for comparison. So a plot-valuation procedure could be as follows:

—First find the average sale price of a house-type in the cheapest area in the country. This gives us a base price for the house-plus-plot.

—Next, calculate the premium for a comparable house in another location. This is a measure of the plot value premium. This higher-than-cheapest price will include all the valued social, economic and scenic benefits at this location.

 Hence: for comparable houses

Sale price at location X     minus    Sale price in base-location


 Plot value at location X   

[assume negligible plot value in base location] 

How it might work

Examples of plot-valuing using base-location comparables

 Note: this is a quick and dirty exercise to show the method. In reality far more data would need to collected to provide defensible plot values.

 Where in the country are the cheapest houses?

According to Zoopla it’s Shildon in Co. Durham[2]

“The quaint town of Shildon in County Durham has retained its crown as Britain’s most affordable town”.

BASELINE SHILDON 1930s 3-bed freehold Semi-detached (better than bog-standard, but gives you some idea) College Street, Shildon DL4

For sale May 2021 at £120,000; 90 sq m (950 sq ft) frontage includes side parking. Cond. V. good.

Frontage: 10.5 m (estimated) Garden of average length.

Full details 3 bed semi-detached house for sale in College Street, Shildon, Durham DL4 - Zoopla

BASELINE:        SHILDON Co. Durham              £120,000 

Now to calculate local plot values from

comparable examples

MEDIUM PREMIUM  West Park Ave, Northfield, Birmingham

For sale May 2021 at £210,000

For details 3 bed semi-detached house for sale in West Park Avenue, Northfield, Birmingham B31 – Zoopla

From this I infer that the

Locational Plot Value of this property is £90,000 above Shildon baseline

(£210k minus £120k)


For sale May 2021 at £375,000; 112 sq m (1200 sq ft) Frontage 9 m (guesstimate) long garden

3 bed semi-detached house for sale in Quinton Road, Harborne, Birmingham B17 - Zoopla

From this I infer that the

Locational Plot Value of this property is £245,000 above Shildon baseline

(£375k minus £120k)

Although claimed sq m is 24% greater than Shildon, frontage is 17% less.



For sale May 2021 at £475,000; 81 sq m (869 sq ft) Frontage 7.5 m (estimate) average/long garden

3 bed semi-detached house for sale in Marsh Lane, Headington, Oxford OX3 - Zoopla

From this I infer that the

Locational Plot Value of this property is £345,000 above Shildon baseline

(£475k minus £120k)


For sale May 2021 at £1,095,000; 108 sq m (incl loft ext. 24 sq m) = 84 sq m equiv over 2 floors

Frontage 7 m (estimate) tiny garden part built over

4 bed semi-detached house for sale in Sandpits Road, Richmond TW10 - Zoopla

From this I infer that the

Locational Plot Value of this property is £975,000 above Shildon baseline

(£1,095k minus £120k)


This method of inter-regional comparables is straightforward, although it would need to be worked up in more detail.  It also should be understandable by the home-owner, who can then accept it as the basis for LVT.


1. Have I ‘re-invented the wheel’? Is this a well-known technique, already in the literature?

2. Do the results of my calculation make sense? Is this a viable plot valuation technique?

 [I am aware of the actual techniques used, for example in Denmark, to establish plot values. I also appreciate the excellent work by Tony Vickers to establish land-value contour maps. That is why I ask somewhat naively, “Could my suggestion, so easy to calculate, so intuitively understandable, actually work?”]

[1] Millington, A. F. 'An Introduction to Property Valuation', 2nd ed., Estates Gazette, London (1982)

[2] Revealed: the most affordable areas in Britain - Zoopla  Nicky Burridge March 18, 2021Zoopla

1 comment:

  1. Tony Vickers writesI’m not a valuer either but I know a lot of people who are, all over the world. There are many countries who use LVT and hence use land values in a legally defensible way. So it cannot be impossible. In Denmark, it is the value of the ‘improvements’ (what is put on land plots) that causes the vast majority of appeals against valuation, not the site value. Site values are in the public domain.

    The valuer we used for the Oxfordshire trial was ex-VOA and was totally unbiased – not a support of LVT but treated the job we asked him to do as a challenge. His conclusion was quite clear:

    “Valuations based on the undeveloped value of land present no special problems to a professional valuer”.

    The profession is resistant to change but many in it have told me that it is the lack of political will to do LVT and the poor institutional framework of the public bodies that own the data – plus the attitude of Treasury towards any large IT project – that are the problems. It is categorically not the technical difficulty. We have a tradition of doing land valuation in a very expensive way here: CAMA is far cheaper once the initial investment is made in the systems, which they did in N Ireland 15 years ago.

    As for the public, there is a minority – but a powerful and wealthy property owning minority at that! – who simply don’t want LVT at any cost. But the whole point of my PhD thesis (as someone with a background in mapping) was to show that once you can easily map what is happening to land values over space and time in a transparent way, it is going to show clearly what a dreadful trick is being played on the majority of us – being made to pay from hard-earned income for the wealth that the minority acquire with no effort.

    Hope that helps.