Across the road from my house, in a long terraced Victorian street, stands an imposing house in commodious grounds. Three stories high, a brick structure, Edwardian at a guess, the generous windows commanding a spreading view over eastern Bristol.
Well, would command. But the windows are shuttered and no-one is alive in there to enjoy the view anyway. The former lawn and garden have long since vanished under a horde of invading weeds and (this is the part that first puzzled me) the entire estate is surrounded by a formidable, and ugly, steel fence. An expensive fence, not something you would put around your home. Forbidding signs proclaim a mythical 24 hour vigilance. It is not that someone has just walked away. This place is on ice. Banked, I realised eventually, and gathering value as the growth in property values far outpaces interest rates.
This is simply wrong and where I come from it would not happen because of what you call Land Value Tax, probably a better handle than the vague ‘Council Rates’ we have in New Zealand but the same thing. They are the only tax we pay to maintain our councils and they are substantial.
Coming to the UK five years ago I experienced first hand the tyranny of the landlord, enabled and empowered by a chronic, inexplicable housing shortage. Why inexplicable? Because in every quarter of Bristol I constantly come across abandoned structures, some vast, wasting away on valuable land. Sturdy stone shells easily converted into thousands of apartments, often in reasonably attractive and desirable parts of the city. Big houses shuttered and empty, deteriorating office buildings in almost every part of most cities. Waste on a colossal scale.
How could this be? Slowly the penny dropped: they don’t tax land here. It was the only possible explanation and it turned out to be (mostly) true.
We simply don’t see this in NZ. In my home city of Auckland you can walk or drive for miles and never see an abandoned, deteriorating building – someone would own the land, unpaid rates would ruin them, the property would be seized and sold by the council to recover the lost rates and someone else would put it to use. Yes, that buyer would have to put in risk and work, probably the reason the UK’s banked properties stand idle. Development costs money. Landlording can be tricky in a country with well-established tenants’ rights. So much easier to park and forget. But in NZ the burden of council rates makes such development and usage unavoidable.
Why is this, to me, obvious solution to a desperate social problem scarcely on the political landscape? At first I was tempted to mutter darkly to myself about vested interests, but perhaps the simpler answer is that you British don’t see it. Since WWII you have grown up in a landscape littered by ruins. The abandoned house on the hill is a familiar literary trope. You simply don’t register that there is something fundamentally wrong about a Victorian factory, a house inherited by a distant, absent family member, just lying about the place unnoticed and unused. This is the way things just are. Or is it something else? I don’t know – you tell me. But waste on a grand scale it most certainly is, waste I have now seen in half a dozen English cities, and the simple remedy of Land Value Tax is standing in the wings waiting to fix it.
To be fair the government has not simply stood idle. Using the archaic mechanism of stamp duty, long since vanished from the NZ scene, they have moved to tax the purchase of second homes. This will not solve the problem, indeed may make it worse because it means that land bankers have to hang on to their empty properties even longer to wait for the investment to grow to where the profit from the eventual sale is still sufficient to justify the cost. Even worse, it applies only to residential properties. Buy an abandoned factory or office building and you’re fine. Bigger properties, potentially so many more homes.
The only real answer, a permanent and fundamental answer, is to make the holding of idle land and buildings uneconomic by taxing their value year after year.
There are downsides. During the late 20th century redevelopment of inner cities we saw elderly people rated out of their lifelong homes because the land on which they stood had been rezoned Commercial A, sending their rates through the sky. We are also rated on the value of the ‘improvements’, calculated on the rentable value of the buildings as they presently are. It can be argued that this is unjust, as it is the occupants, not the council, who have invested the resources to make those improvements. But the clearance of old housing stock in the wrong place to allow commercial centres to grow was inarguably necessary, and a pure land tax would avoid the injustice of taxing people for work done which has already cost them hard-earned resources.
But I promise you: it works in New Zealand and it will work here.
Just do it.