The developments in Paddington Basin are almost all complete after the removal of the waste facilities along this arm of the canals in Paddington, except for no 1 Merchant Square,W2 – One may ask how come and what is there to do about it?
This was another office tower part of Merchant Square development proposals along Paddington Basin. It was originally 16 storey tower providing 173,000 square feet of Grade A office space and 3,500 square feet of retail space otherwise known as “Cucumber”. The site has been lying empty for many years and more recently was given permission ( April 2023) for residential use composing of 426 units in two Towers, one 42 floor Tower “cucumber” and an adjacent 21 floor block of flats as well – a planning application that was hanging around since 2019. Yet still no action on the ground even though a Section 21 Agreement is in place with the Council.
Such development are also part of the national discussion of how to get built the housing that already has planning consent but has yet to be “built out” and and occupied with new residents. The Planning and infrastructure reforms discourse, we have the government issuing a Planning Reform Working Paper entitled “Speeding up Build Out” where the proposal is that a new “housebuilding timeframes must be set before planning permission is granted and there will be “Delayed Homes Penalty’ for” those who consistently fail to build out consented sites and those who secure planning permissions simply to trade speculatively
Another suggestion comes from some Economists is a fiscal proposal, Land Value Taxation (LVT). Traditional property taxes assess the value of the land and any buildings or improvements on the property. On the other hand, a land value tax only assesses the value of the land itself, disregarding the value of structures. This distinction makes land value taxes more fair, especially in areas where land tends to appreciate slower than buildings.
By separating the land value from the building value, a land value tax also reduces the impact of market swings. This separation helps prevent sharp fluctuations in property taxes that can occur when the value of buildings changes quickly, which is clearly what is happening right now with 1 Merchant Square.
A land value tax is an alternative to traditional property taxes that could provide a more stable and fair way to assess property taxes. By taxing only the land value, rather than the land and buildings together, LVT encourages better land use and reduces the economic inefficiencies caused by fluctuating property values. While not yet widely adopted, land value taxes hold promise for communities seeking a more equitable and predictable tax system.
Such an annual taxation would thus be a disincentive for leaving land and properties empty, helping to push developers to get on site with their proposals once planning consent has been given granted. At present in the UK, no property tax is applicable when sites and properties lie empty and thus grossly inefficient, as we see with 1 Merchant Square clearly!
So as we have this discussion on what measures are undertaken to get built the housing that already has planning consent lets not forget LVT. Another reason to have it really!
