Thank to everybody who voted and to Alice Cook for linking. Most people agreed that "A single derelict house in an otherwise fully occupied street" would, all other factors being equal, be worth more than "A derelict house in a whole street full of derelict houses."
This is borne out by experience and is factually correct, but I may just as well have asked "Which house is worth more - a well maintained house in a street full of occupied, well maintained houses OR a well maintained house in a street with one or two vacant, derelict houses?", the answer is of course the former. Or I might have asked "Which house is worth more - one near the railway station OR one that is half an hour's walk away?", or "Do houses sell for more when interest rates are high OR when they are low?"
Those who visit this site regularly may know where this is headed, or indeed think that I ask leading questions. That's not true actually - I don't work backwards from some personal agenda, I just ask the same questions that I have asked myself over the years (and there are factually correct answers to all this) so that I can explain why I think the way I do.
The point being, that even though people say that they own their houses because 'they have paid for them', a large part of the value of your house does not derive from what you have paid to the previous owner or the mortgage interest you have paid to the bank, it derives from what other people on the same street do with their houses, from local infrastructure and from the state of the economy in general, all factors completely out of the control of the home-owner and down to society in general, whether you see 'society' as a loose collection of individuals or as the legal embodiment of the common interest and collector of taxes to pay for public goods, i.e. the State.
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Anyhow, following a spat with Bruno Prior* in the comments to an earlier post, this week's Fun Online Poll asks "Who is best placed to decide what to build on any particular plot of land?"
* Bruno was not happy with the factual evidence that scrapping Business Rates relief for empty properties reduced occupancy costs to tenants as well as reducing the number of vacant business premises, and suggested that, instead of having a tax based on potential rental values, it would be better to "create a system in which, so far as possible, we align the preferences of the landlord and the community" without explaining how the system would work or how it would be better. I found this particularly disappointing as he contributes to/runs an excellent website called Picking Losers, whose motto is "Why governments' attempts to pick winners produce more losers than winners."
Monday 13 April 2009
Fun Online Poll Results: Derelict properties
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10 comments:
In the town closest to me you would pay good money NOT to live near the station!
S, agreed, there is a small area round stations that is usually tbe best place for shops and kiosks, but houses that back on to the railway suffer in value because of noise and vibrations.
Slightly jumping the gun on the poll, but I would assume it will come out as favouring the owner to be best placed to decide what happens to the land.
Which would support my theory of LVT, which is it is only fair if there are no planning rules. Because then the land usage is decided by the owner, and he/she is taxed on that usage, not some potential usage as decided by the govt.
If I could build a house on a piece of land I owned with no neccessity to get permission from the govt, then no land has any hope value for development. But if the State decides what is built where, it can decide that my land is now 'zoned' for housing and is worth millions, and I would be taxed as such, even if I do nothing. This disconnect between ownership, decision making and taxation is the nub of my opposition to LVT, if introduced under current planning rules.
As the owner of the land I should get to decide what happens to it, and be taxed accordingly, not taxed according to the whim of the State.
@ my first post - it just that the area around the station is a bit run down - in my town lots of cheapo DSS boarding hostels, dodgy pubs etc. Quite often the same in other towns I've noticed too.
S, agreed, planning restrictions should be scrapped as far as possible, that's an end in itself, with or without LVT.
As it happens, LVT would then be (even) fairer, but it's still two different ways of tackling the same problem.
it can decide that my land is now 'zoned' for housing and is worth millions, and I would be taxed as such, even if I do nothing.Yes, one of the purposes of LVT is to force economic development, rather than discourage it like most other taxes. The correct response in this situation is to sell the land to developers, pocket £millions (ideally free of CGT, or at least subject to a very low flat rate CGT), and send a nice note to the council planning folk thanking them for making you rich(er).
Sobers, Ed, if experience of the US states that do not have planning restrictions is anything to go by, farmland around the edges of cities is worth much the same as residential land at the edge of cities, which is why some builders are now selling back land to farmers at a modest loss.
So it's an intersting debate, but a red herring, really.
I am in a dilemma with LVT and planning restriction reform. Love LVT as something which will do for house price speculation. But not happy about planning stuff, as my house is in a to die for location.
So you see there you have it. I'd pay high LVT as is - good location etc, but some bastard could develop the fields around me. My LVT would then reduce but my glorious isolation would be ruined by development.
It's a conundrum. Especially as I really don't give a stuff about the value of my house.
L, agreed it's a dilemma, but that's better than a one-way bet.
"...I don't work backwards from some personal agenda..."
Oh, yes you do - and we know what it is, and the very next paragraph proves it.
And you go on to say that a large part of the "value" depends on "factors completely out of the control of the home-owner".
So, summing up, your suggestion is that we should be taxed on factors completely out of our control.
Sounds fair, doesn't it?
Not.
Anon, if you tax people on their own efforts (whether turnover, income or payroll taxes), then you discourage effort, enterprise etc. You may or may not consider that 'fair'.
If, OTOH, you make people pay for what they get, then they get what they pay for. That doesn't seem riotously 'unfair' to me. And unlike other taxes on spending, i.e. VAT, taxes on land values do not depress economic activity as land is in fixed supply.
So if the average home-owner in an average house pays a lot less VAT, NI, income tax and a bit more LVT, why is that so terrible?
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