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.