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The labour party may be hinking about building more houses but behind the front there are various lobby organisations and firms which are seekign to seriously tax landowners.
Let's look at some of the ideas out there and why or whether they can or cannot work : a) The 'Labour Land Campaign' (labourland.org) is pushing for tax on ALL land and states : "All land should be valued and taxed according to its assessed value. As well as making it possible to reduce or abolish unfair, economically inefficient taxes, this will help repair the broken UK land market - characterised by speculation and underuse - that has deprived many citizens of secure, decent accommodation, for the benefit of a small-but-powerful, wealthy minority." Of course we have heard all this before from labour as it may be the politics of envy at work yet again. Most tax experts agree that the introduction of such a tax would probably create another banking crisis and land values might plummet and consequently cause huge mortgage affordability/funding issues. With around 30 million parcels of land in the UK could any system cope with a proper assessment of land value increases decreases be properly and fairly assessed ? It would no doubt result in a lot of Appeals about how much tax had been charged. b) Land Value Capture Tax - this is actually used in a number of countries already (e.g. the USA) and is in effect already in place in the UK through Section 106 ('s106') payments to Councils when planning permission is granted for new housing developments (as well as another tax call Community Infrastructure Levy ('CIL'). However, as with (a) above, if it was implemented in full it would probably cause huge problems within days due to risks to the financial markets. As highlighted by the 2019 report 'Land Value capture through planning and legislation' written and researched by Mark Stephens as part of a UK Housing Review, he noted that the Scottish Parliament found reasons for failure of such a scheme are that there are : "insufficient incentives for landowners to bring forward land for development; the lack of resourcing provided to agencies responsible for implementation (both administrative and, in the case of local authorities, to develop their own land banks); tensions between national agencies and local government, and the associated lack of sensitivity to local circumstances of a national scheme. Other factors were the relationship between a scheme and the economic/ property cycle, where a scheme developed during a property boom might be implemented during a downturn; and a perceived lack of fairness, exhibited for example when thresholds for development scale were set too low, so bringing in relatively trivial developments and sometimes causing hardship." Finally - Housebuilders - yes, it could be argued that housebuilders essentially 'tax' landowners by simply paying too little for their land by using Option Agreements with the dreaded 'We will issue a price notice' (i.e. THEY decide the price...) Tread carefully and perhaps consider getting a deal done soon before the Government tries to gobble a good chunk of your hard won profit and your family's rightful inheritance.
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The potential for a new Labour government to come to power in late 2024 is set to potentially create big changes in the supply and development of land for new housing in the UK.
Various senior Labour politicians have stated they will significantly alter the Greenbelt rules for planning and that as many as 1,500,000 new homes are being targetted to be built within 5 years (considering that currently we build around 250,000 homes a year this would not actually be a significant rise). Great if it was an EXTRA 1.5 Million new homes - now that would make a difference ! However, without doubt the Nimby-driven, politically motivated, highly complicated and dreadfully slow planning system will probably get the overhaul it has needed for some time. This could mean that YOUR LAND may at last have a chance of gaining a planning permission and now is the time to engage with a development partner to start that process ? As interest rates drop and inflation falls, the land market (and economy) is looking much better for 2025-2026 and onwards and for some sites, getting a planning application in during 2024 or 2025 could mean you would be selling that site in a potentially very good market when the permission comes through. Selling at the right time in the land and housing market can make as much as a 50% difference in the price obtained, depending upon where in Britain the land is located. So do have another look at your field, farm or inherited land. Just saying 'Oh it'll happen one day' may no longer be the right decision. |
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