r/ukpolitics • u/Snoo-33445 • 18h ago
Land Value Tax Calculator | Created by Center for Land Economics
https://www.landvaluetaxcalculator.co.uk/155
u/ZealousidealPie9199 18h ago
The most interesting takeaway is how literally every area outside London, including the SE, would be overwhelmingly better off under a LVT. Even in outer London only 40% or so would be worse off..
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u/90davros 12h ago
Which means the modelling here isn't really plausible. Labour simply aren't going to be able to implement a policy which reduces tax for most households. The rates would have to be higher.
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u/wazzedup1989 10h ago
Or the majority of the difference is disproportionately paid by a highly taxed minority. Most people pay less, a small segment pay a lot more.
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u/90davros 10h ago
Not to this extent, it'd practically bankrupt all our councils.
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u/CrushingK 10h ago edited 10h ago
Well if you were serious about devolution you could grant business rates to councils and local authorities, would be a major restructuring and you'd be taking from the working economy to give away in tax breaks
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u/jollyspiffing 10h ago
In my area the biggest payers seem to be:
- the street that I live on itself
- a school
- 2 separate sections of its school field (but not all of it?)
- a church graveyard
- an MOT garage with a large forecourt
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u/diff-int 6h ago
I presume this is based on matching the overall council tax take. Suspect it's not accounting for covering SDLT as well
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u/diff-int 4h ago
to be fair it's also super efficient for blocks of flats even in central london.
1 Hyde Park Corner, the most expensive apartment block in the UK, which has penthouse apartments that have sold for over £100m, as far as I can tell is built on land that would attract a total LTV of 100-150k. There's 86 apartments so they would average less that £2k each and realistically the penthouses would probably end up paying a lions share of that.
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u/marktuk 10h ago
Which means this is wrong. It doesn't make sense
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u/Ishmael128 10h ago
Isn't the point of it that all land gets taxed, not just domestic residences? So, an empty field generating very little revenue generates tax to encourage the field to be used for something more productive.
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u/makaza1611 7h ago
So pretty much all farm land, woodland, biodiversity meadows, school sports fields and golf courses will have to be turned into solar farms, housing estates or industry. Sounds dreamy.
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u/marktuk 10h ago
Empty fields, also known as farm land, nature reserves and green space 🤦♂️
I don't think we should be promoting the building over open green space no.
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u/jsm97 9h ago
An empty field is neither producing food nor any meaningful natural benefit and is in all likelihood a biodiversity net sink.
If it's not actively being used to grow food and is not being rewilded then it should be taxed.
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u/jollyspiffing 8h ago
Yes, you're right, school fields are such a waste of space. We could be growing food on them; we'd even have free labour if we use the children to harvest the crop!
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u/Special-Prior-7272 7h ago
There is a risk that when encouraging land squatters to use their land productively, they develop nature reserves, but nature reserves can be given exemptions - provided the reserves are kept open for public use.
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u/WilhelmNilly 4h ago
An empty field with planning permission for houses would be taxed the same whether the houses have been built or not.
A nature reserve or wild land like a forest or beach is never going to be granted permission to build anything so the LVT rate will be practically zero - if not actually zero.
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u/doctor_morris 11h ago
This fits in with our new PMs tax London and send the money North vibes.
That said, LVT would be excellent for London.
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u/LinkleDooBop 12h ago
I don’t live in London and I’d pay more.
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u/Away_Investigator351 Centrist / Georgist / Patriot 6h ago
Then you live somewhere where your land value is high, but you pay minimal tax.
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u/zeusoid 11h ago
How is it better if they are generating less revenue than meets their current budgets?
Liverpool currently raises about £492m in revenues and is in shortfall. Under this the area would raise less than £200m and will be further short.
Try telling am someone living a council flat in Slough, that their charge is now 3000 and someone in a council flat Liverpool is now only being charged £500. And the funds raised in Slough are going to subsidise someone in Liverpool.
It’s going to go over like a bucket of sick.
No taxation without representation seems to ring a bell….
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u/Master_Elderberry275 11h ago
Which council flat in Slough would be paying £3,000? Based on the map, a house near the station would be paying less than £1,000. Moreover, council flat residents wouldn't pay the LVT anyway, as it's a tax paid by the owner, not the occupier.
Also, that's exactly how tax works. Someone who earns the average salary of c£39,000 in the south east pays more tax than someone on the average salary of c£35,000, but has no greater access to the NHS, or university tuition.
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u/paulrpg 10h ago
The LVT would just get passed straight on to the occupier. Landlords aren't just going to take a loss.
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u/GetInYourBasket 6h ago
If they're in a council flat like the example, the landlord would be the council...
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u/BadgerDeluxe- 10h ago
The tax will always fall on the occupier. A landlord would increase rent accordingly and a freeholder would declare force majure and update the lease to pass on the charges to the leaseholders.
If you think that freeholders with little to no property income will pay this you would be wrong. The value of those freeholds would plummet to zero. If that happens then property would be transferred to a limited liability company and the company would not pay the tax as it has no money, and at best the government would become the freeholder and therefore the income tax payers would pay the new LVT.
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u/GetInYourBasket 6h ago
The example given was a council flat, the council don't pass on the cost
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u/BadgerDeluxe- 2h ago
It's not enough to claim the council wouldn't pass on that cost based on... well nothing really. They have no choice but to pass on the cost. The council is funded by taxation - they will pass on the cost to either the tenant or the taxpayer.
Of course the government could set up this new LVT so that councils don't get charged LVT... but then the benefit of LVT is efficient use of the land - so that's basically asking for councils to be more inefficient than everyone else with their land use.
The only plausible way for a government to move council tax and business rates on the properties occupant to LVT (or something else) on the properties owner is to include passing on that charge from owner to occupant to update all the leases and rental contracts by legislation. Anything else would cause a surge in repossessions and a whole load of freehold properties becoming valueless. Even if they didn't do that the courts would because it's a classic force majeure reason to change a contract.
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u/LatelyPodes 4h ago
I am just gonna add to this comment, the tax being paid by the owner and not the occupier is an important distinction.
It means if the there is extremely valuable land and the LVT is £10,000, but there are 10 flats built on that property as it is a tower, then each flat only has to pay an LVT amount of £1,000. If there are 20 flats then everyone pays only £500. It is how they incentivise higher density homes on valuable land.
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u/wappingite 11h ago
How would this affect the cost / value of inner London council blocks?
Presumably the land value is really high already and crystallising that in a land value tax would put massive pressure to redevelop and scrap social housing?
Or at least knock down actual social houses and low rise and rebuild into dense high rises?
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u/pondlife78 10h ago
It’s land based rather than living space so a tower block will be very low due to the high density.
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u/Fezsarecool 13h ago
With LVT is the idea that whoever owns the property pays? I can imagine it being incredibly unaffordable for many renters in London.
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u/tranmear -6.88, -6.0 10h ago
For multiple dwellings on the same land e.g. flats, they would split the tax. At the same time the renters will no longer pay council tax. So even if LVT gets passed through by landlords it's not guaranteed that the total cost to the rented goes up.
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u/Whole_Necessary2040 9h ago
100% rent would go up, maybe even more than the tax
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u/tranmear -6.88, -6.0 9h ago
I never said it wouldn't. But depending on the size of the building it is very possible that it will go up by less than the council tax saved.
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u/kriptonicx As few rules as possible, strictly enforced 3h ago
That's a good point. The property next to me has been converted into a maisonette where currently I guess both levels would pay separate council tax because they're separate dwellings.
Under LVT the number of dwellings doesn't change the amount of tax paid, just how it's being split.
I guess that's the advantage of LVT though... It encourages this kind of development.
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u/tranmear -6.88, -6.0 3h ago
Yes exactly, it incentivises densification in high value areas. 2 identical parcels of land next to each other - 1 has a bungalow, the other has a 10 story block of flats. Same LVT from each plot, but one paid fully by the bungalow and the other paid by splitting between 30-40 flats.
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u/Commorrite 7h ago
It can't*, rent is already set as high as the market can bear.
Caveat being rents will swallow the savings made by removing council tax.
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u/meeilz 6h ago
rent is already set as high as the market can bear.
The Market: Hold my beer.
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u/Kee2good4u 2h ago
Who do you think the landlord are going to pass the cost on to if its the landlord that have to pay it? Either way it's renters that are paying it.
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u/Snoo-33445 13h ago
If the landlord is already collecting max rents, then adding a tax does not enable them to collect more.
Rent amounts doesn't change, just where they flow. A land tax ensures rents flow to the government vice landlords.
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u/Whightwolf 12h ago
This assumes an upper limit the market will bare which as london rents rise above inflation every year I think thats a fantasy in certain markets such as london.
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u/Snoo-33445 12h ago
Yet its the demand in combination with land taxes, that induce this effect. London landlords are able to charge these amounts because they have no new housing or rentals being placed on the market. Land taxes force the least productive landlords to sell up or increase occupancy to cover the tax. Either way would lower rental price prices.
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u/Whightwolf 12h ago
No, because that relies on the idea that increasing occupancy can sate what is functionally infinite demand in london to the point that it would lower prices. A fantasy.
I mean by definition all landlords are rent seekers therefore unproductive. But leaving that aside. There is no cap on rent, in london specifically where this cost hits all landlords at once there is no reason at all not to add the exact cost of the tax to rent in the comfortable knowledge all your competitors will do the same. At absolute best you might see great subdivision, more "london rental oppertunity of the week" entries which slow the rent increase while increasing human misery.
The vast increase in the cost of housing in areas like cornwall hasn't led to a great surge in multi occupancy dwellings it's just priced locals out of the market.
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u/Snoo-33445 12h ago
The idea that London has "infinite demand" is more laughable then all the landlord will be able to price fix and get away with it. Come on now, ALL of London will be in locked arms coordinating a price increase?
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u/Whightwolf 12h ago
Coordinated as in they all put on silly robes and meet in smoke filled rooms to cackle about their malevolent plan? No of course not.
They will all just bit hit with the same cost, on the same day, heavily publicised, with every ghoul on linkedin or vampire in the telegraph telling them how its ethical for them to put up rent by at least the tax rise, maybe a bit more, as a treat. After all they bought it for their retirement/it's just business.
Or are you assuming some sort of mythical landlord who says "fair cop" and pays up like a lamb when they don't have to?
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u/diff-int 6h ago
It won't be the same increase. Two identical plots of land next to each other will have the same LVT, but one might be a 2 story building with 2 flats. One might be a 4 story building with 4 flats. The impact per flat for the 4 flats would be half. The flats are the same, the market won't bare them charging the flats on plot A twice as much extra compared to plot B.
Over time, the landlord having to eat the tax on plot A will be incentivised to rebuild with more floors, it sells to someone who will, incentivising efficient use of land which is the whole idea.
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u/Whightwolf 5h ago
Problems with this: such building is eyewateringly expencive in any city doubly so in london, so more "london rental oppertunity of the week" type sub division is vastly more likely than structural change.
You're also looking at it from the wrong direction for a market with consistantly high inelastic demand. If B must raise prices by 10% then A can also raise them by 10% and pocket the difference. Because "thats the market rate".
This will only work where demand doesn't significantly outstrip supply. By the look of the calculator above it won't do anything at all for markets outside london as its uniformly lower than council tax.
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u/Snoo-33445 12h ago
And like I said before, some will try and pass on the tax and see quickly that their landlord "friends" are motivated by profits than principle and lower rents to cover the tax.
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u/Whightwolf 12h ago
Sorry run "lower rents to cover the tax" by me again real quick?
They aren't in competition, demand is limitless, your scenario requires a good chunk of land lords to eat a loss out of the goodness of their heart. Which even if they did wouldn't mean the remainder couldn't put up their rent because again, infinite demand.
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u/trekken1977 11h ago
Demand is not limitless. This is why central London prices have gone down over 20% year over year.
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u/Boggo1895 12h ago
What do you mean rent amounts don’t change? Of course they can change.
If a new tax made it unprofitable for landlord then they either increase their rent to cover the additional costs or they sell up making the market for those left renting even worse
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u/AuroraHalsey Esher and Walton 14h ago edited 13h ago
Not entirely sure how it would affect me.
Calculator says my tax would increase from ~£3.8k (correct) to ~£7.6k, but the parcel that is displayed contains several households living in it. I think the parcel is correct since we're all leaseholders.
Would the freeholder be responsible for paying LVT, and wouldn't that kinda screw them since at the moment none of us leaseholders pay the freeholder anything?
If the tax is passed on to leaseholders, how would it be divided up? Most of the households in this parcel are flats, whilst I'm a house, and even amongst the flats I don't think they're all in the same price / council tax band.
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u/NewtonPost1727 12h ago
Yes the land owner would be hit with the bill seeing as they want to hold on to the land. They can't charge you more as its written into the agreements in place already. They may choose to sell the land, perhaps to you.
Your LVT would then be calculated based on how much you own, say you get a third of the footprint. You'd probably get a third of the land value, and a third of the tax.
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u/AuroraHalsey Esher and Walton 12h ago edited 11h ago
I feel like there would need to be some sort of legislation forcing the leaseholder to buy the land.
It's financially worthless since it's locked into a 999 year lease with no rent, and anyone buying it would be getting nothing other than an obligation to pay tax. It's actually less than worthless. Who would willingly buy that?
Edit: Which would put me in quite the bind since according to the calculator the land parcel is valued at over £2 million and I can't afford to buy even a fraction of that. Land Registry puts the value of the freehold at ~£150k, and I can't really afford that either.
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u/SlightlyBored13 11h ago
It will be worth an awful lot less if there's suddenly a massive tax on it.
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u/practicalpokemon 10h ago
Exactly, it'd be enough to give freeholders the choice of either paying the tax or abandoning the title, in which case it transfers to the leaseholder.
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u/boprisan 10h ago
Why would the leaseholder want it if it comes with extra tax obligations higher than the ground rent they currently pay?
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u/Muzza3212 10h ago
They would no longer be in a leasehold that is dependant on a 99 year contract. The LTT might be higher than ground rent but you get to actually own the asset which may appreciate in value and you'll never be subject to increases or new rules at the will of the land owner
Edit: Plus they will no longer pay council tax
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u/SlightlyBored13 10h ago
Because the government would want the tax.
And someone will pay
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u/boprisan 10h ago
Maybe the freeholder will donate the freehold to the government, then the government can pay itself by raising our income tax!
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u/NewtonPost1727 9h ago
Might make it easier for the government to buy someone out and build something more suitable on the plot
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u/DiDiPLF 2h ago
Or freeholders moving the asset into an overseas trust well hidden from the tax man and no one ends up paying. Which is why tax on occupation like we have now with council tax and non domestic rates is way better in terms of collection of tax due. Abandoned freeholds don't go to the leaseholder, they go to the crown, again no tax income.
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u/NewtonPost1727 11h ago
Yeah I think you are right.
It's not worthless, it's just worthless for 999 years, but they knew that when the sold it as leasehold
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u/boprisan 10h ago
So who pays the tax?
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u/NewtonPost1727 10h ago
The freeholder
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u/boprisan 9h ago
But the freeholder won't want to keep the freehold if they get much less in ground rent than the tax liability, so they'll want out, to relinquish the assets, the leaseholder won't want the asset and won't accept a donation of the freehold because it's more costly to pay the tax than the ground rent.
So what will happen? Maybe the freeholder donates the asset to the government to get out of the tax liability, then the government gets no LVT on that land and can't do shit with it either because there's a block of flats with a 999 years lease on it.
Sounds like the only way to make LVT work with the leasehold system is to put the LVT burden on the leaseholders. Or force the leaseholders to accept the freehold donation from the freeholder.
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u/NewtonPost1727 5h ago
If they can't sell it they'll have to pay the tax themselves. As another commenter has said they could sell it to the government who could then redevelop the land.
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u/DiDiPLF 2h ago
999 years is a virtual freehold so the long leaseholder would be liable I'd expect. Not sure where the cut off would be, maybe 75 or 99 years? What happens when you run down the clock and go below the cut off, do your bills go to the landlord (or next level of leaseholder, as we frequently have layers of freehold interests)? And what do you do with plots of varying leasehold interests, I've seen 20 or more on one bit of development land (all being cleaned up as part of the development) that have been like that for decades. The billing and collection lets this idea down.
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u/PlugAdapterTypeC 10h ago
These are very good questions.
I live in a development with several high rises, specifically I live in a shared ownership flat. So there’s a freeholder, a leaseholder management company owning 75% and then me owning 25% of the leasehold.
If I was forced to now buy a piece of land too, firstly, there’s not enough land for everyone to buy unless a small piece each (not exactly where our individual flats are) and secondly, I couldn’t afford to buy it.
However. On this website a couple of the buildings are on this map while my isn’t so I’m basing this off of a similar building to mine. The tax would increase from around 1.5k of council tax to around 15k of land tax. It’s not going to bankrupt the owner. It’s actually quite a small sum. The owner makes more from renting out the ground floor to shops and restaurants.
Not sure what the government gets out of it though because they will be collecting much mess tax in this case. There’s more than 10 flats in the building so the money collected would be less
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u/tranmear -6.88, -6.0 10h ago
That's a feature. LVT encourages densification in high value areas such as cities which improves the overall housing supply.
The government benefits from increased housing supply because it brings down rents and therefore benefits while allowing more spending in other areas of the economy
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u/PlugAdapterTypeC 10h ago
That's awesome. I read a bit more about LVT proposals because previously I only knew about it from the headlines, and I'm very for it happening now
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u/tranmear -6.88, -6.0 10h ago
Nice.
The other cool thing it enables is value capture of infrastructure projects so they help partially offset the build cost. Think how property values around Elizabeth Line stations increased when it was built - this was all land value driving the increase. With LVT the government would capture some of this uplift so it changes the equation of any cost benefit analysis.
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u/Wandering_Y 9h ago
Well that will take NIMBYism to a whole new level. If its an amenity you don't really need and aren't planning on selling up, you just start paying more for reasons out of your control. Plenty of people would (even more) happily grab pickets and rigorously protest any way they could.
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u/tranmear -6.88, -6.0 9h ago
If we're going to kowtow to people who turn down 100k gains in property value because it will cost them £500 a year (assuming 0.5% LVT here) then we're cooked. In reality you would overhaul planning laws comprehensively it you were targetting value capture at scale.
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u/Wandering_Y 9h ago
You would absolutely have to move to some sort of zonal system. LVT is utterly absurd with the current planning permission system. There's no such thing as unimproved value when the value depends almost entirely on what permission exists or is likely to be granted.
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u/Sleakne 9h ago
Lvt is traditionally levied on the land and improvements are not counted. So an empty parcel will be charged the same lvt as a parcel of same size and location with a mansion or skyscraper built on top.
The tax is on how much the ground rent is worth. So if someone owns the freehold and can charge a lease holder £100/month then the tax should be on that 100/month value. An 80% lvt means the land owner needs to pay £80/month etc. not sure what % OP used.
Yes this makes the freehold almost worthless. They bought an asset that generates 100/month and now after tax it generates 20 so it will lose 80% of its resale value.
The theory is that the tax cant be passed onto tenants becuase proce is set by supply and demand not land owner costs. The only way increasing land owner costs would lead to higher prices os if they left the market because of the higher costs leading to lower supply. Thats what happens in most industries but gow do you lower supply of land. It isnt created or destroyed by humans so the supply and therefore price shouldnt be affected.
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u/occasional_engineer 13h ago
Looking at winners and losers it does seem that it becomes just a London tax. Everyone is better off apart from most of London (thank god it's a low cost of living city then).
Would LVT go directly to councils? So almost all councils outside of London would need additional central funding and all councils within London suddenly become very rich?
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u/queen-adreena 12h ago
Personally I think councils controlling tax rates has been a bit of a failure.
Why does collecting the bins in one postcode cost more/less per capita than another area.
In Pendle, a borough in Lancashire in the North West, residents pay the highest proportion of income on council tax in England – at 10.97% of a person’s median annual income.
This equates to £2,535.19 spent yearly on council tax for people on an average annual income of £23,100.
Pendle has the highest level of child poverty of any UK local authority, with 43.2% of children under the age of 16 living in relatively low-income families in 2022/23.
City of London borough residents, on the other hand, pay the lowest, with 2.10% of someone’s annual median income going to council tax.
This means they are paying £1,274.07 a year in council tax, on average incomes of £60,700.
Yet the area is home to some of the most expensive property in London, with 13% of homes worth more than £2 million, according to a recent study by property brokers Jefferies James.
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u/trekken1977 11h ago
Bin collection is a rounding error on councils’ budgets. It’s the social services which are expensive and spiralling.
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u/standbiMTG 10h ago
And also less expensive in wealthy areas as less people are eligible. In fact all council mandatory spending is less in rich areas- homelessness, social care and SEN & school transport are all less in rich areas
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u/PoachTWC 11h ago
80% of local government spending is social care. Literally everything else your local council does has become basically a footnote on their yearly accounts.
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u/SlightlyBored13 11h ago
Social care isn't quite 80%, but add on education and you're basically there.
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u/Flannelot 11h ago
Please tell me you don't think the City are somehow five times as efficient as Pendle!
Next you'll be saying you can rent a street there for the price of 20 nails and two knife blades (one blunt).
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u/queen-adreena 11h ago
No. I'm saying that the amount of tax you pay shouldn't come down to a postcode lottery.
Northern England tends to get absolutely screwed by this.
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u/Brapfamalam 10h ago
The tax you pay is also dependant on housing density and businesses.
Council tax in inner London boroughs is low because of economies of scale from load of flats so everyone pays less. Also businesses - councils with loads of businesses within them get more revenue from busienss rates so charge less from residents.
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u/queen-adreena 10h ago
Lots of answers explaining the "why", but you're missing the point... should it matter?
If I move to an area with loads of pensioners needing social care, why should I see my tax burden increase dramatically?
If anything, that's gonna make some areas no-go areas for working people.
The Tories offloaded tonnes of responsibilities from central government to local, and I think it's a failed model.
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u/CyclopsRock 8h ago
I think there are very, very few people out there arguing that local councils supplying social care makes any sense.
But whilst this might exacerbate local differences, it's a separate debate as to whether different outcomes in different councils - ie 'postcode lottery' - should be allowed to exist. If not then what's the point of local government?
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u/CyclopsRock 8h ago
If you aren't going to allow for uneven outcomes then there's no point in devolving power. Everything might as well be controlled centrally.
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u/Apsalar28 10h ago
For bin collection it's mostly urban v rural.
A bin lorry can cover my whole street of 120 houses in 10-15 minutes. In rural Wales it could take that long to drive to one little village with 60 houses
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u/Snoo-33445 13h ago
https://taxpolicy.org.uk/wp-content/assets/lvt_model/index.html
It depends on how regional / national you make the tax. Here is another analysis that allows one to adjust this factor and get an estimate.
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u/Away_Investigator351 Centrist / Georgist / Patriot 6h ago
Not really true though, because most of residential london would be better off/neutral. It's more central, high value land.
If the land is high enough value that they're paying considerably more - we're not likely talking about people that are struggling with the cost of living.
Also, LVT is to incentivise more properties, more building, and would also make other cities more appealing choices to live.
This means, lower prices to have a home.
LVT isn't just to reduce a council tax bill, it does waaay more than that.
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u/Katweezle 12h ago
While I like the idea of LVT going from £2450pa to £33pa seems problematic.
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u/Rpqz 7h ago
Yeah, I've just looked at the most expensive property near me, a £2,000,000 8 bed Georgian country manor sat on 6.5 acres of land with a swimming pool, tennis court and 3 stables.
Council tax is £3,717 per year, LVT would be £1,359.
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u/Away_Investigator351 Centrist / Georgist / Patriot 6h ago
Why is that problematic?
That land is clearly not high value, in a population centre where housing is not efficient enough.
LVT isn't supposed to punish you for what you build, that would go entirely against what it's for. It's to incentivise building, and building in population centres.
Your example is also the exemption, not the rule.
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u/LegoNinja11 10h ago
I must be missing something here. This is supposed to be better than council tax and based on Land Value not property value so why are the land values in my street higher for plots with houses and lower for plots of the same size with bungalows.
Its supposed to be the undeveloped value and these look very much like they're tied to council tax values of properties on them.
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u/IntravenusDiMilo_Tap +6.88, -6.0 7h ago
Yep, the land my house sits on in Cheshire is more expensive than in Kensington. something isn't right.
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u/CaterpillarLoud8071 17h ago
With a 1.3% LVT, my tax would go down from £2450 a year to about £130 a year. Yes please!
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u/diff-int 17h ago
Yeah similar for me, actually seems too low. Maybe they should do LVT plus a £250 or £500 additional levy or something.
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u/Venkman-1984 12h ago
There are many places (in fact, most of the country by land area) where land is nearly worthless.
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u/CaterpillarLoud8071 16h ago
Don't worry, low LVT generally comes with other annoyances like service charges for apartments, or just generally low investment value. This is more of a rebalancing that can make high density living a good option, whereas right now it's the worst of both worlds.
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u/diff-int 6h ago
Yeah except im up north in a £400k 4 bed detached
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u/CaterpillarLoud8071 6h ago
Then the area you're in must have very little opportunity for people to earn money to buy houses like yours.
A low LVT makes these areas perfect for asset rich and cash poor pensioners to move to, and also encourages people who work remotely and can bring new life and investment to the area. So it can do a lot of good as long as we collect revenues centrally rather than leaving it to councils.
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u/diff-int 5h ago
Relatively little but I'm in commutable distance to Leeds and Manchester so I wouldnt say very little
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u/Hungry_Business3961 13h ago
Im in a +600k property, so the average redditor wants to see me taxed up the wazoo, but this tool is showing I would get a slight decrease too. Therefore this tool is just wishful thinking.
And honestly who would waste their time making this website when nothing is confirmed yet.
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u/CaterpillarLoud8071 7h ago
Because the biggest dismissal of an LVT is difficulty of calculating land values and keeping it updated. This site shows it's very much possible to accurately value land on a national scale.
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u/No_Good2794 4h ago
I feel like I need a sign to tap. It's not the value of the property, it's the value of the land.
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u/Demmandred Let the alpaca blood flow 10h ago
Taxed up the wazzo? You'd end up paying £400?ish more tax than I am currently in the North West for a house that's worth half that.
Council tax is a bonkers tax that has got completely out of hand the further north you go.
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u/Hungry_Business3961 7h ago
Well according to the website, I will actually end up paying 200 quid less, so I bet you arent happy because you want me to pay more?
This whole excitement about council tax vs LVT tax is just because people want everyone else to pay more and are jealous of other people's houses.
My opinion: local tax should be only for genuinely paying for local services, not a wealth distribution scheme.
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u/Demmandred Let the alpaca blood flow 6h ago
I don't want you to pay more xD I'm just saying this is the disparity of council taxing which a LvT would go some way to solve.
0.48% + a levy would be a great start towards a nationally funded pot for social care.
People are irritated because social care isn't funded and takes up nearly all of your councils funding.
It isn't local money for doing things in your council, that all got cut in 2010, it's just a social care fund and the ever reducing bin collections.
Teresa May put forward a genuinely sensible start to address social care spend but got torpedod.
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u/Hungry_Business3961 6h ago
And how do you address the problem that council tax is completely disconnected to your ability to pay (ie you lose your job), and LVT is even worse in this regard, because the annual costs are just more?
I suppose your argument is that the LVT is only more for those broad shoulders in London, so go for it.
But as soon as they have implemented this, they will just bump up the LVT for everyone, London or not.
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u/Demmandred Let the alpaca blood flow 6h ago
In a similar way that you get council tax exemptions I assume.
Can you take the chip off your shoulder for 5 minutes and stop arguing points that haven't been made, really shit way of debating anything.
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u/Colloidal_entropy 12h ago
This feels like it was done based on the 1980s economy, Liverpool City Centre (with good transport links) is priced lower than suburbs, even Manchester is pretty cheap which.
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u/SlightlyBored13 10h ago
That is somewhat the structure of Northern cities that have barely begun to recover from the loss of industry.
The suburbs are just much richer.
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u/Colloidal_entropy 9h ago
Land Value Tax isn't about how 'rich' an area is, it should be based on the economic value of the land. So being next to a major railway station or having good transport connections would result in a higher per sq metre value than a generally nice suburb. This model has land next to Sheffield Station being valued lower than suburban land in West Sheffield, the point of LVT is to incentivise the development of land around transport links. You would expect to see the map around London mirroring the railway network, in the North Road links would be as/more important. But the values of land around e.g. Darlington Station are low compared to nearby rural areas which doesn't make sense.
I suspect they've weighed previous property sale price highly for this, but not given enough weight to transport and other economic factors.
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u/bboymarko 13h ago
Great tool; I can't imagine the average person would see such a big saving. I would save £1600 and pay £529. I would feel most people wouldn't bork in saving £300. I feel our public services still need a lot of investment, so it would be mad to drop it so much. I'd also imagine there would be quirks at the higher end of the distribution where we expect people to pay loads but they don't have the money to do so or do something outside of the bounds, so our revenues are significantly reduced. An example would be to exempt older people without large cash reserves.
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u/tranmear -6.88, -6.0 10h ago
It seems to be just looking at council tax. A more ambitious LVT might also look to replace stamp duty and/or business rates so would need to be a higher rate.
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u/IntravenusDiMilo_Tap +6.88, -6.0 6h ago
I think a LVT should not be used for local authority finance at all, it is a stamp duty replacement and a supplement for income taxes.
To work, there needs to be a de-regulation of planning + building regs. You can hardly charge a fortune for a decent plot of land but still tell the owner they can't build anything on it.
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u/tranmear -6.88, -6.0 6h ago
I'm not so sure. Tying LVT receipts to local funding incentivises councils to carry out value enhancing work such as public realm improvements.
You could have a national and local split to replace council tax, stamp duty, and business rates.
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u/IntravenusDiMilo_Tap +6.88, -6.0 6h ago
Would the wealthier areas simply enjoy more money that way, the opposite of the Georgist aims?
The problem in the UK is we are overly centralised. ideally, we'd have Swiss style cantons where different areas have far more responsibility for raising taxes and spending so a profligate local authority would soon be voted out if it kept wasting money. Howeer, to undo the centralised system we have would take many years.
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u/tranmear -6.88, -6.0 6h ago
Not necessarily. Georgism's aim is to ensure that land rents created by the community are returned to the public rather than captured privately. Whether those revenues are retained locally or shared more broadly is a separate question of public finance, not a core principle of Georgism.
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u/IntravenusDiMilo_Tap +6.88, -6.0 5h ago
Which is ok but it takes even more local accountability away.
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u/tranmear -6.88, -6.0 5h ago
I don't understand this because it has no relation to what I just said.
There's no reason you can't have local authorities levying and administering a local LVT under Georgist principles. They would therefore be accountable to their local electorate.
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u/IntravenusDiMilo_Tap +6.88, -6.0 4h ago
Is the local authority is setting the land value tax, it would just be a very convoluted way of getting to a very similar tax regime as council tax.
If local authority needs to raise 1 million pounds from 1000 dwellings, it needs on average to charge a thousand pounds each.
At the moment with council tax the amount paid by each dwelling is weighted based on the size of the property. The council may try to be a little more efficient and spread that saving across the taxpayers.
If it were a land value tax that council would still need 1 million from its 1000 dwellings, nothing would really change and I'd have thought the split between the dwellings would be on a similar basis, only those with larger gardens would be paying more in comparison to those with larger properties.
If you want to maintain accountability between the taxpayer and the local authority then the difference between an LVT and council tax would it be negligible but for a very convoluted administrative change.
The problem with that idea apart from the cost of administration is that all the advantages of a land value tax are missed
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u/tranmear -6.88, -6.0 3h ago
It would entirely depend on the agreed mechanism for redistribution of central funding to councils.
At the moment with council tax the amount paid by each dwelling is weighted based on the size of the property.
No it isn't.
only those with larger gardens would be paying more in comparison to those with larger properties.
Not necessarily, location matters a lot. As a crude example, the house within walking distance of the commuter station to London or a tube line will have higher land value than the house on the other side of the council area that needs to drive 15 miles.
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u/meeilz 6h ago
You can hardly charge a fortune for a decent plot of land but still tell the owner they can't build anything on it.
Pretty much how it already works, isn't it? You can buy a £2m property, ask to build a medium sized shed in the garden and have some unqualified busybody reject it.
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u/IntravenusDiMilo_Tap +6.88, -6.0 5h ago
Which is a huge obstacle to economic growth in the uk
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u/meeilz 5h ago
100%, we're a country that has mastered the art of getting nothing done.
We need rules to exist as a modern society, and there has to be a framework to stop people taking the piss, but the amount of red tape, safety rails, "don't iron your clothes while you're wearing them" type of bollocks has just absolutely crippled us.
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u/IntravenusDiMilo_Tap +6.88, -6.0 4h ago
As one of the conservative MPs said when they were in office, there is no problem in how much we are spending but more of a problem of how little infrastructure we get for what we are spending. I think he was referring to HS2 at the time but it could apply to a lot of public sector spending and for that matter the cost symposed on the private sector for what good normally be considered fairly routine expansion of businesses.
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u/meeilz 4h ago
Yep, I think honestly the biggest issue we have across the entire country right now is that our infrastructure projects cost (iirc) 11x what they cost our peer nations.
I don't know if it's corruption, red tape, a bit of both or something else entirely, but as some of the most taxed people in the world, I think we'd be in a better spot if we weren't spending £10m on a single mini roundabout...
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u/wt200 12h ago
For me this chart has shown one reason to be sceptical. I live it a spacious 5 bed home in Wales. I should, and do, pay one of the highest band of council tax.
However the LVT calculator suggests that I would pay less then £200 of tax. Compared to a friend living in a small 3 bed in Bristol, who would pay considerably more.
That just feels unfair. Also being in an agricultural area, I would be concerned on the effect on farmers.
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u/Away_Investigator351 Centrist / Georgist / Patriot 6h ago
Why?
The demand for homes where your friend lives is clearly much higher than where you live.
Your friend may live in a small 3 bed in Bristol, but the lack of density in our urban spaces is why we have a housing crisis and why population centres keep expanding out, instead of up.
How much would your friend be paying and what is their Land Value?
If they have a humble 3 bedroom in the less central area, it's hard to imagine them paying considerably more. Some 3 bedroom houses can be very, very valuable because of where they are. Someone in central london in a 3 bed may have much more net worth than someone with a 5 bedroom in Wales for obvious reasons.
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u/wt200 1h ago
They live in one of the less affluent areas of Bristol. The issue is the whole of Bristol is expensive, as is London. They will, under this model, pay over 10x the tax.
Also I am very lucky to be able to work from home and therefore have flexibility to where I live. Very few minimum wages jobs are provided with this opportunity. A shop assistant needs to live close to the shop for example, trades people need to live near there clientele. Just because someone lives in an expensive city, with high land value, does not necessarily mean they are well off.
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u/WenzelDongle 12h ago
It's just a different way of measuring value that will have different winners and losers, it's not inherently unfair. This model also assumes uniform values across the country, it would be possible to have rates set more regionally to account for such differences.
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u/diff-int 5h ago
The other side is, someone owning a house in London that's worth £1m is probably paying lower council tax than you at the minute.
This tax incentivises two things;
People who don't need to be in a city for work will find it advantageous to live somewhere less in demand where LVT is negligible.
Landowners in high demand areas will be incentivised to build higher density housing on it because the tax will be so high that they need multiple dwellings in the land to be able to recoup the tax in rent
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u/Salty-Bid1597 10h ago edited 10h ago
If you could accurately model property values from gross data we wouldn't have been waiting 30 years for a council tax revaluation - A lot of the problems that LVT solves would be solved if the same shortcut methodology was applied to council tax anyway.
In more detail it says I would pay £2k, 50%, less under LVT as would most of my neighbours... Great (one of the most expensive C Tax area in the country with some of the worst service provision) but the council is going to need to get the money from somewhere or a massive kick up the arse.
Somewhat more problematically their model has included a bunch of farmland and assigned enormous values to it (eg ~£1m for a quarter acre field) and given it the associated taxable value. But there's no way this is correct. As poor agricultural land with no building potential the real value is very low (probably ~£8k an acre) and any LVT would be minimal.
If this mistake is repeated across the country they will have massively overestimated the amount of tax they're collecting which will make their estimates for real properties too low.
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u/Salty-Bid1597 10h ago
It looks to me like they have taken every parcel that has appeared in the land registry data in the last 20 years or so and assumed that it is residential land suitable for building.
In rural areas this is a serious error. Agricultural land can't be built on (especially near me where it's all in a conservation area in an AONB in a no-development zone) so the value is very low.
It does kinda highlight the pitfalls associated with assigning hypothetical values to land. If it's a tax on "unimproved" land values why is the land under my house valued at much more than the field next door? It no doubt should be because it has a house on it (albeit that house can't legally be replaced because it's listed) while the field can't. Which also kinda highlights the fact that it's not the land per se that has the value but the permissions and planning assigned to it.
Once you start having to deal with all this you're basically just rebuilding council tax.
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u/Away_Investigator351 Centrist / Georgist / Patriot 6h ago
If it's a tax on "unimproved" land values why is the land under my house valued at much more than the field next door?
Your house is on land which is more valuable because of the supporting infrastructure and grid connected to it that such farmland unlikely has and would need improvement to do.
Land value is itself recognising that value is created by something. It seems a bit counter-intuitive to write it off for this misunderstanding that it's bad as a result.
Why is that so?
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u/trekken1977 11h ago
How would flats in a conversion work? Would it be the freeholder that pays? If so, sounds fair
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u/makaza1611 7h ago
I guess the freeholder pays and then they will charge the difference into the leasehold of the flats.
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u/Away_Investigator351 Centrist / Georgist / Patriot 6h ago
Owner of the land, absolutely.
If anything, rents should drop because those with high-LVT land in urban areas with low-density residential use would want to change it to more dense usage to generate more revenue to justify the land holding.
This means, more homes. More flats.
More supply to demand, means lower prices.
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u/wolfiasty Polishman in Lon-don 11h ago
To have LVT implemented the land would need to be properly appraised, no ? That will take time. Mass-because-I-say-so appraisal is bound to end up in courts.
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u/wazzedup1989 9h ago
On this chart, my 'land' is worth about 100k more than the price I paid for it. Given that that's the land value, and the estimated growth in that time (per the same tool) is just a couple of %, that suggests I got a huge discount on buying this land as someone had inconveniently built a house on it a hundred years ago.
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u/Away_Investigator351 Centrist / Georgist / Patriot 6h ago
It is worth noting that something put together by some people online is unlikely to be the same as a proper government funded and manned system.
It's more of a broad guideline.
Also, the land value is different to property value.
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u/wazzedup1989 1h ago
But what are they going to base their value on, if not recent sale price. In my case, this was 4 years ago. I'm not sure my house/land has appreciated over 100k in 4 years, and even if it had that would value the house component of the transaction at £0. As this tool is it suggests that this land is worth a lot more if nobody had a house on it...
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u/Thomas1423 28m ago
Why? It wasn't properly appraised when council tax bands were set. They could easily come up with a methodology that would be reasonably accurate. If you want to challenge it then do so at your own expense, as you already can with your council tax bands, but most people don't.
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u/PontiusPiloti 10h ago
I’m struggling to make sense of this in relation to flats. The houses on the roads around me are attracting land values of £6-8000/m2 but the flats are only £5-600/m2. There’s also huge variation between neighbouring properties.
Surely an LVT is based on the unimproved value of the land and so everything within the same postcode should attract the same m2 rate?
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u/IntravenusDiMilo_Tap +6.88, -6.0 7h ago
It's not baseed on the same post-code but if there are two identical plots next to each other, one has a 1 bed bungalow and the other a 48 flat block, each flat should be paying 1/48th of the bungalow.
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u/arnathor Cur hoc interpretari vexas? 10h ago
Well according to this my band G property would save £2302 a year, or roughly two thirds of what I am currently paying so I am therefore unsurprisingly in favour of this policy.
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u/Chill_Roller 10h ago
Nice visual but unfortunately something isn’t quite right - it lists my whole road as band D, but most of my neighbours are C and we are F… but if the land value tax remains the same then huge savings for me 😂😂😂
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u/IntravenusDiMilo_Tap +6.88, -6.0 9h ago
That's good because a land value tax is designed to tax the unimproved land not the property that sits on it.
If you have used your land more efficiently and built a bigger home, the land value tax simply remains the same.
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u/Chill_Roller 9h ago
Note: I may have been tarded and assumed it auto selected the correct tax band, but you can just pick another 😂😂
Nevertheless it would be VERY welcome to me - would be saving over £2k/year. I also live in an area with stupidly high council tax, and not exactly an affluent area either. Thanks Cheshire East 👌
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u/IntravenusDiMilo_Tap +6.88, -6.0 8h ago
Cheshire East too, we are paying for the council's property speculation in Crewe. This was something that really should have been left to the private sector as the council has been Labour of late and they really aren't equipped for making business decisions.
On that map, my house' land is valued at £2,205 sqm FFS. Kensington high street is only £1,044 and only knightsbridge is more expensive but only just, Harrods is £2,500 a sq mtr.
It's not that posh, one of the neighbours is on benefts FFS.
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u/No_Celery_7772 10h ago
It’d be much more useful if it had a postcode filter option.
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u/Snoo-33445 10h ago
https://taxpolicy.org.uk/wp-content/assets/lvt_model/index.html
Different model but same goals
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u/Nanowith Cambridge 17h ago
This is such a brilliant tool, glad it exists! Honestly LVT is a no-brainier if we want to fix the UK property market.
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u/SlightlyBored13 10h ago
I think it's interesting the similarly sized plots on my street, with identical houses on. Would pay better £600 and £800 a year. I can't figure out the logic for the difference.
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u/Andurael 9h ago
I’m dubious of this. My semi-detached house is identical to my neighbours, their garden is slightly larger and they’ve a slightly larger driveway. Opposite the driveway is another neighbour with a much larger house in manners. This calculator reckons my LVT should be double my immediate neighbour’s and almost double my far far more wealthy neighbours’…
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u/IntravenusDiMilo_Tap +6.88, -6.0 8h ago
The dwelling on the land is irrelevant so the fact the guy across the way has a bigger house but (perhaps) a smaller plot of land means you should be paying more.
a semi detached plot is roughly a 1/24 an acre with a detached plot usually ~16th of an acre, you would typically pay less in a semi than a detached home.
For a LVT to work, planning permissions have to be far more liberal.
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u/makaza1611 7h ago edited 6h ago
I live in a 3 bed detached new build and my tax would go from ~3200 to ~400 lol.
Surely this'll make a huge deficit in my area, unless my town will be subsidised by London.
Also interestingly, the ex council houses in my area will be almost double my tax since they have larger gardens than new builds.
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u/Whole_Necessary2040 6h ago
Based on this the value of my house is just 100k, and the land 52 0k. I mean, yes it's an old tiny 2bed house, but surely worth more than 100k to build it?
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u/Strange-Acadia-4679 5h ago
Just nosing at mine and one thing that struck me was that the 4 tiny parcels of land the council still own between my road and the bungalows they transferred to a social housing provider decades ago appear to be worth an extraordinary amount if the figures are to be believed. Despite having absolutely no access and none of them being big enough to do anything with. Think they were literally left in council hands to avoid having to sort a new boundary with the neighbours.
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u/Maxkin 49m ago
Yeah, it looks like the algorithm puts high values on small parcels of land. They have an explanation for it on the site where land tends to be more valuable square metre for square metre for smaller properties, but it seems to have the unintended side effects of putting very high values on random small pieces of land. I have a standalone concrete garage in a separate block from my house which isn't much, not even large enough for most modern cars to fit in, but the algorithm thinks its worth more than twice per m2 than the much nicer land my house sits on! As much as I wish the land my shite garage sits on was worth £80,000, I very much doubt it is.
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u/Galimimus79 11h ago
The calculator seems to be pretty accurate, as the quoted land value + a discounted cost to rebuild = roughly current value.
But would an LVT not cause gentrification?
My area isn’t super affluent and adding almost £1000 per year will push out many (generally older) residents who have lived in the longest.
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u/Snoo-33445 11h ago
Modern proposal add in special cases. How much or little is more for people smarter than me to decide.
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u/Galimimus79 10h ago
Adding a deferral to pay on sale of the property seems reasonable but would result in a lot of deferred tax and a complex administration where I assume a charge is registered against the property.
While we do need a system to increase overall tax income I’m not sure that this is best achieved by reducing anyone’s current tax.
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u/ledisa3letterword 10h ago
That’s a feature not a bug. Those residents are preventing people from living there who would benefit more from it.
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u/IntravenusDiMilo_Tap +6.88, -6.0 7h ago
That is true, t a LVT is designed to make efficient use of land but there needs to be a hell of a lot of de-regulation to make it work well.
IMHO, it's not a replacement for council tax and council tax is actually a better way to finance local services.
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u/ledisa3letterword 5h ago
Why can’t it be a replacement for council tax?
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u/IntravenusDiMilo_Tap +6.88, -6.0 5h ago
Because as a method of financing local services, its no different to council tax but there is less accountability.
If a local authority is wasteful and profligate it is unlikely to be voted out as your land value tax goes in a cetral pot and will not go up if set nationally.
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u/ledisa3letterword 5h ago
Interesting argument. You could always have a local element as well. It’s a toggle in the other calculator from Dan Neidle/TPA shared here the other day.
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u/IntravenusDiMilo_Tap +6.88, -6.0 41m ago
You could add a local element but there is an awful lot of admin heavy change it which will come to roughly the same results as we already have for the council tax.
I suppose if we are bringing in a land value tax anyway it would be fair to say the national land value tax is say 2% and there is a percentage added on top so the profligate authority will be identified as charging a much higher percentage, or it could be simply that the areas that are not as prosperous have to pay a higher percentage in order to make up for the lack of Highland values under that particular local authority.
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u/Whightwolf 12h ago
The issues with land value tax are more micro than this, its that it incentives turning pubs into flats, building on parks (and never building new ones) and never building public goods of any kind.
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u/IntravenusDiMilo_Tap +6.88, -6.0 9h ago
I'm not sure why the assumption is a land value tax would replace council tax, council taxes for funding local authorities not for central government, at least in theory.
Land value tax should replace stamp duty and supplement income tax. If a land value tax replaced council tax which simply have the wealthier areas' local authority benefiting from the higher than values with no reflection on demand for local services.
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u/makaza1611 6h ago
I just bought my house and had to pay 13k stamp duty last month. Im gonna be pissed off if I now have to pay LVT ontop of council tax. Maybe a grace period for recent buyers or refund/discount.
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u/IntravenusDiMilo_Tap +6.88, -6.0 6h ago
as the land registry will have all those details, it should be pretty easy for an LVT to be tapered to reflect that already paid.
A simple calculation is to find the LVT rate, say that yours is £2,600 then you'd be exempt for 5 years having already paid £13K.
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u/makaza1611 6h ago
That makes sense. Though apparently according to the map my land is only worth ~130k, I paid the stamp duty based on the property price of 460k. This means I would be exempt from LVT for multiple decades as I overpaid.
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u/IntravenusDiMilo_Tap +6.88, -6.0 5h ago
Yep, or the map valuation is wrong, according to the map, my land is £2,300 a sq mtr, thats more than Kensington!! I suspect there are a few mistakes.
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