Time for LVT in London at least?

Twin Towers on Chelsea Barracks lying empty

Twin Towers on Chelsea Barracks lying empty still!

Last year, the Mayor responded to an interesting question about the number of potential homes in London with planning permission but which are currently in ”stalled” developments.  The figure was quite startling – 170,000 stalled developments!  This number, if built, would help alleviate the chronic shortage of homes in the capital, helping to accommodate homeless families; families needing to move into larger properties and the plethora of Londoners waiting to take their first step into owner occupation.

Yet while the national focus is on how to incentivise developers to get on and build, we should not underestimate the part which Land Valuation Tax (LVT) could play in stopping developers sitting on land banks.  The Economist made point of this in its editorial on the 9th March where it said:

“………………. It would be much better to tax the land value: that would make hoarding expensive and force owners to sell to someone who can use the site. Once in use, the site value and the tax would rise—creating a virtuous circle, as the revenues pay for better infrastructure, making land more valuable.”

The New Statesman also articulated the problem in a recent article about “Why all progressives should support land value tax”.  It said:

“Landowners, including homeowners, are freeloaders on a gigantic scale. The total value of the housing stock in the UK was £1.3trn in 1990. With only inflation it would now be worth £2trn, but instead its current value is over £4trn. This £2trn increase above inflation has come through a rise in the value of land itself, not through new buildings; comparatively few houses have been built in the last two decades. Landowners have gained £100bn yearly on average from a rise in land values. As Churchill might have said, never in the field of human endeavour has so great a reward been given for so little effort.”……………

A case in point is Chelsea Barracks (a potential £3 billion proposal) in the City of Westminster, on the border of the Royal Borough of Kensington & Chelsea. This major site in Central London has now been lying empty for probably the best part of a decade, if not more, with no sign of movement.  The original proposal included about 50% affordable housing (before the intervention of Prince Charles).   The local council attempted to find out what the owners were doing with the site and wanted to help move it on recently when it warned the owners “start building or sell-up” , but without much success.   Stories like this probably account for a number of stalled sites across Greater London.  And soon, we are to get another barracks on the market, Hyde Park in Knightsbridge.  Will this also lie empty for years before it gets developed? LVT is a measure which could catalyse developers into utilising land which the capital desperately needs to house its growing population.

4 thoughts on “Time for LVT in London at least?

  1. John

    ” warned the owners “start building or sell-up”” I doubt the Council has power to make them sell and get out. Do they have these powers? If they added a clause that if work is not started by a certain time they have to sell, then they may be able to “evict” the hording landlord.

    There is another barracks that has been lying empty for over a year at the St.John’s Wood barracks. The 5.5 acre barrack site has planning permission for 74 upmarket houses and flats, and 59 affordable homes. The site has a total saleable space of 359,000sq ft. It was sold by the landowners (which was not the MOD). The scheme is on “hold”, after purchase for the site for £250m to an Asian Tycoon. Another land hoarding ploy!!

    1. Murad

      You are right the council doesn’t have the powers but the intriguing thing for me was how frustrated the council became about the issue.

      Thanks John for the update on the St Johns Wood barracks. That’s makes for two empty barrack sites already in the City of Westminster and a third could be added if the Knightsbridge one is soon sold-off as announced by the MoD.

  2. John

    Those blocks look quite smart and I am sure fully habitable when the army left. Evidence in the USA states that all this land hoarding would be mostly eliminated by LVT introduction.

    Liverpool attempted to get LVT about 5,6,7 years ago. Whitehall beat them down.

    If LVT was introduced in London and the benefits clear to see that buffoon of a mayor, Johnson, would be in power for long time. But if he introduced LVT then maybe he deserves to stay in longer.


Leave a Reply

Your email address will not be published. Required fields are marked *