Please contact us if you have an objection that is not dealt with here.
Liens or Charges
Many of the objections raised about LVT are resolved by liens.
A "lein" is a charge or debt entered against the property by the Land Registry.
Before any future transaction on the property, a sale or change of freeholder, the lein will be noted and its conditions must be met before the transaction can be completed. In the case of a mortgage the lender will require repayment, with interest, from the proceeds of the sale.
LVT never forces anyone to downsize or leave their home. No one who can't pay is forced to pay.
Most of us are already paying Council Tax which will be replaced by LVT. Council Tax will be phased out as LVT is phased in and the vast majority of us will pay less LVT than Council Tax. The same will apply to businesses currently paying Business Rates.
Where someone can't pay the full LVT, for whatever reason, a lein will be entered by the Land Registry against the freehold of the property. The outstanding LVT debt is repaid from the proceeds of the sale.
So, no one is ever forced to leave their home to pay LVT.
For an example of a lein or charge click here to visit the Comnpanies House web page for Tesco PLC - it will show you the charges outstanding against the company.
If you have a mortgage you can do the same for your own property (or any other property) by looking it up on the Land Registry. Note: information from Companies House is available online free of charge, information from the Land Registry will cost you £3.00.
- This is a Garden Tax - what about people with large gardens?
- Greedy landowners and corrupt valuers will fiddle the system.
- It will reduce the price of land so we won't get enough tax.
- What about a widow living on a fixed income in a big house?
- What about joint ownership and family breakups?
- What if the freeholder is on benefits?
- How do you make turkeys vote for Christmas?
- You can't tax non-doms.
- LAs will fiddle the system.
- It encourages inefficiency and high spending.
- The government will rig the system.
- Making land values public is an invasion of privacy.
- It will be impossible, we don't know who owns much of England!
- It's too complicated, it's impossible to value all the land in the country.
- It will be far more than Council Tax!
- Taxing agricultural land will put up food prices.
- It will lead to over development.
- There will be endless appeals against land values.
This is a Garden Tax - what about people with large gardens?
"Garden tax" is a scare tactic pushed by the tax avoiding, landowning, non-domicile owners of The Daily Mail (Lord Rothermere), The Daily Telegraph (The Barclay Brothers), The Times (Rupert Murdoch) and The Sun (Rupert Murdoch).
LVT has nothing to do with gardens - LVT is a tax on land value, not a tax on homes, buildings or gardens!
You are not going to be charged extra because you have a big garden - LVT is not a new tax on top of Council Tax - it replaces it. However, if you do have a big garden, and you apply for and get planning permisison for a four bedroom house on it, then of course the value of that land will go up! It doesn't take a genius to figure that out!
You can build what you like on your land (subject to planning permission) and what you build will not change the value of the land. Of course, planning permission for a mansion will make the land worth more than planning permission for a cottage - simply because someone ("the market") would be willing to pay more for the land with such permission.
Greedy landowners and corrupt valuers will fiddle the system.
You mean just as they fiddle the existing tax system?
There will always be people who want to avoid their social responsibilities, who want to use the facilities provided by society without paying for them - no doubt The Sun would call them "scum".
You can't hide land in a tax haven, or bury it in a tax fiddle "to promote the British film industry" - and the freeholder pays the LVT - not a tenant or agent.
The Valuation Office Agency (VOA) has been valuing property, including land, since 1862 - it isn't a case of nudge, nudge, wink, wink, say no more!
A Geographic Information System (GIS) on the Internet will make it very easy for anyone to see when a piece of land is grossly under-valued.
Society will lock up fiddlers and confiscate their assets - so you have to be pretty stupid (or "Tim, nice but dim") to risk losing your land just to fiddle your tax bill!
It will reduce the price of land so we won't get enough tax.
This is the classic objection put forward by "neoliberal" (right wing) groups like The Adam Smith Institute.
The price of land falls, land becomes cheaper, more people can take up farming, homes cost less. Is this a bad thing?
Yes, the price of land may fall, but land has an economic value, it will always settle at a value that provides a return - from agriculture, development, leisure or whatever.
LVT will always bring in the tax we need for the social good - for the simple reason that the LVT rate will change in order to bring in the required amount. Land value falls, the rate goes up. It is not a spiral downwards until land becomes worthless - it is a return to a level that provides sound economic use for all our land - even if that "economic use" involves paying farmers to maintain the countryside for the good of us all.
It will certainly become less easy to make money from the labour of others via rent - landowners may find themselves working for a living. Is this a bad thing?
What about a widow living on a fixed income in a big house?
This is a popular argument used by The Daily Telegraph and Daily Mail - usually with emotive language: "war widow" or "widow of a fallen hero". It's not the widow's fault she's alone in a large house in Chelsea or the countryside.
The widow is currently paying Council Tax so at least part, if not all, of the LVT can be afforded.
Those in homes on land with a high market value may choose to downsize - but LVT doesn't force them to.
Where the full amount of LVT cannot be found, the remainder can be delayed and recovered from the value of the land when it is sold or passed on. It becomes a "lien" (like a debt with interest) recorded in the Land Registry. Local authorities can borrow to make up for the relatively small number of such liens.
What about joint ownership and family breakups?
Many people hold freehold property jointly so what happens if they split up?
They are already mutually liable for Council Tax and the same will apply to LVT - the feeholder(s) named at the Land Registry must pay the LVT, it cannot be paid by anyone else.
Obviously it is up to the people concerned to resolve their financial and legal affairs after a split.
If the LVT is not paid in full, perhaps because one party refuses to pay or can't pay, a lein will be entered at the Land Registry for the outstanding amount. When the two parties resolve their affairs they can pay the outstanding amount or it will be repaid the next time the freehold is sold.
What if the freeholder is on benefits?
This is the same situation as for Council Tax.
Since LVT permits no exceptions, the freeholder remains personally liable for the LVT which must be paid by the freeholder and cannot be paid by anyone else.
This has to be resolved within the benefits system which may provide funds for the freeholder to pay the LVT.
LVT is not concerned with, or part of, the benefits system. A Universal Basic Income, or Citizen's Income, would go a long way to resolving this and many other problems within the current benefits system.
If the LVT is not paid in full, a lein will be entered at the Land Registry for the outstanding amount. The outstanding amount will be repaid when the freeholder is able do so or repaid the next time the freehold is sold.
How do you make turkeys vote for Christmas?
We assume this means "how do you get the agreement of those who will lose out?"
It's all down to the Utiltarian argument
Politics starts with philosophical questions: what is society for, how to we bring about change?
Utilitarianism is arguably the most reason-based approach to determining right and wrong:
When a decision is made that brings the greatest good to the greatest number it is then down to mitigating the effects on those who lose out. As far as LVT goes, liens handle this well since no one is forced to move.
It is hard to oppose a Utilitarian argument (it is certainly not "perfect", but nothing ever is - and what would be a replacement?) but one has to recognise that there will always be a minority who are negatively affected.
Should such a minority stand in the way of what is best for the majority? Apart from sounding like the title of a sixth form Philosophy essay, it is certainly worthy of discussion - and one still has to come up with an alternative.
A specific is not a general argument
While we are on the topic of philosophy it is worth remembering there are rules to philosophical discourse - rules that are broken every day by the media.
We are not going to get into arguments about a single elderly lady living in a big house with 400 acres of parkland, a Constable on the wall in the library, the farmland held in a St Kitts and Nevis Trust, and tens of thousands coming in each year by way or unearned rent - we don't need to, liens solve the problem for the amount she can't afford above what she is currently paying in Council Tax.
Most people will pay less with LVT but a few will pay more.
LVT is fair, simple and unavoidable - but what do we mean by "fair"?
There are many unfair things in our society but the unfair distribution of wealth is probably the worst - we are the most unequal country in Europe and only slightly less unequal than the USA.
At some time someone has to grasp the political nettle - one which has been ignored, to the benefit of those with wealth (because they made the laws!), for almost 1,000 years.
The distribution of wealth is skewed in favour of a small number of very wealthy people and skewed by geographical region - if England was a ship it would sink in the South East corner first - where wealth is concentrated.
London and the South East
Why is housing so expensive to buy or rent in and close to London? Simple: because people are willing to pay silly money for it. The market decides.
But people need to live and work in London!
Maybe. Many government departments have already moved out of London and more moves are planned. Media City in Salford is expanding rapidly and much (most!) of England is a more attractive (and certainly less stressful) place to live than London. Moving parliament to Sheffield might help.
Covid has demonstrated the vulnerability of an economy dependent on services - the UK has suffered a greater economic downturn than any other country in Europe and, after a decade of austerity caused by bankers in 2007/2008, we are about to enter another decade of frozen wages caused by dependence on services as well as by corrupt, incompetent and financially irresponsible government. The rich will continue to get richer and the rest can fend for themselves.
Conservative and Labour governments continue to be in awe of "the financial sector" (there is something about money that makes politicians go weak at the knees and grovel in front of City gamblers) and until rcently they have had a very relaxed attitude towards it - thus making our economy even more dependent on services.
Services don't generate wealth - they feed off it
Bankers, traders, graphic designers, web designers, advertising companies, lawyers, tax advisors, journalists and everything else that supports "finance", feeds off the wealth generated by others - and that wealth utimately comes from making and selling things.
Instead of wealth resting with those who create it, it percolates upwards (the opposite of "trickle down") and those working in services have the sort of salaries and bonuses that enable them to purchase or rent property in London - and that forces out those who can no longer afford it.
Since Covid struck we have become used to the phrase "keyworkers" - people society depends on most but who are often paid the least. A rich oligarch, or the bling daughter of an F1 boss, isn't much use when you need to be fed by supermarket workers, looked after by care workers or cured by doctors and nurses!
Keyworkers and the traditional "working class" are already being forced out of central London by gentrification caused by those working in services. Areas in the East End and the old docks now carry very high housing costs - it is not LVT that forces people to move - it has been happening for the last 40 years.
Huge amounts of London are leasehold with the freehold held by extraordinarily rich families such as the Duke of Westminster and the Earl of Cadogan - as freeholders they will be liable to pay LVT on the market value of their land.
When asked for advice on how to get rich, the Duke of Westminster's father, Gerald Grosvenor, replied: "have an ancestor who came over with William the Conqueror". In 1066 all land in England was stolen by William, kept under his personal ownership (all land is still "owned" by the Crown) and the right to hold it ("freehold") was handed out to his family and friends in return for them fighting for him in the future. (That arrangement didn't last long, they preferred to fight amongst themselves for the right to live off rent - hence Magna Carta.)
Three key points:
- LVT will rebalance land values, probably very quickly, the market will decide.
- LVT will be phased in over several years with Council Tax and Business rates falling as LVT increases - no one will be faced with a massive increase in bills on day one! This will allow plenty of time for people to make key life decisions based on experience.
- Shifting stuff out of London and the South East would have a dramatic effect on London prices. Moving parliament to Leeds and the National Gallery to Sheffield would be a good start.
Ultimately the choice is personal. If you want to live in a high land value area, with all the benefits that brings, you must expect to pay a price for it. If you and others refuse to pay that price then the price of land will fall and the price of housing will fall. The market will decide.
You can't tax non-doms.
Yes we can!
The freeholder may be outside UK tax jurisdiction but the land isn't. You can park your tacky and tasteless fibreglass superyacht in Monaco but you can't move land! As my mother used to say: "some people are so common!"
Unpaid LVT becomes a lien (a debt with punitive interest) on the property until it is next sold or transferred.
Should the value of the lien exceed the value of the property it will be sold to recover the LVT due.
Please see the article LVT: the most simple and elegant of taxes for more details.
LAs will fiddle the system.
Efficient and low spending Local Authorities (LAs) will resent "subsidising" inefficient and high spending LAs so they will maximise their budgets to "get our fair share".
Most LA spending is on services determined by national legislation but demand for those services will vary between LAs. For example:
- LAs in rural areas have higher spending on roads - because they have more of them!
- LAs in rural areas have higher spending on bin collection - because communites are widespread.
- LAs in areas of deprivation have higher spending on social and other services relating to poverty and low incomes.
- LAs with more old people have higher spending on residential and nursing homes.
Which services are required by law, and how much funding is provided to meet local demand, is for negotiation between LAs and national government.
Non-statutory spending would be subject to the agreement of local taxpayers (through elections) and would be funded by a local supplement to the national LVT rate. The supplement would be collected nationally along with the standard LVT and returned directly to the LA.
It encourages inefficiency and high spending.
There is no incentive for Local Authorities (LAs) to be efficient if their costs are paid from a national tax with a common rate. LAs cease to be accountable to local tax payers and they have no incentive to be efficient.
The case is quite the opposite.
The services provided by LAs are determined by national legislation and funding for them is determined by negotiation between LAs and government.
There is every incentive for efficiency - savings go towards reducing any local LVT supplement (see above).
The government will rig the system.
A government, influenced and funded by people paying more under LVT, may attempt to shift funding from national LVT to local supplements.
For example: local road maintenance could cease to be a legal requirement so funding would have to come from local supplements. This would be great news for compact, and wealthy, urban LAs such as Westminster and bring us back to the unfair system we have now.
See above for details of the statutory and supplementary parts of Local Authority spending.
This would probably be resolved in the same way that persuaded Margaret Thatcher to drop the Poll Tax.
Making land values public is an invasion of privacy.
No it isn't.
The value of all land and property transactions is recorded by a public body, the Land Registry.
This information is available online to anyone.
A terraced house in London:
A terraced house in Derby:
It will be impossible, we don't know who owns much of England!
Correct - we don't know who owns land which has not changed hands since 1862 because landowners ensured there is no compulsory registration of land.
Landowners will have six months to register their land before the scheme comes into force. This gives them plenty of time to dig out the deeds and register them. Land remaining unregistered after six months will be transferred to local authority ownership to replace some of the community farms we have lost over recent decades.
It's too complicated, it's impossible to value all the land in the country.
Complicated it isn't.
It does what it says on the tin - it's a simple percentage tax on the market value of land. Those who advise on tricks to avoid tax will have to find more socially useful jobs to do.
Land is valued as soon as it is sold - the value is recorded on the Land Registry. Over time this builds up a pattern of land values across the country and modern Geographic Information Systems (GIS) can make this information available to us all on the Internet.
Other land can be valued by people who have been doing the job since 1868 - members of the Royal Institute of Chartered Surveyors (RICS).
Land values change year-on-year - during the agricultural slump of the 1930s land values dropped but these days they tend to rise - partly because so many people see land as a reliable investment. LVT may alter that since land will become less attractive to hedge funds, fat cats and speculators once they have to pay tax on it. This may reduce land prices which will in turn reduce the cost of new houses, which may or may not be a good thing. The market decides.
It ain't rocket science!
Click the image below then scroll down to see an example of land values in Ebensburg PA, USA.
It will be far more than Council Tax!
No it won't.
The level set for LVT will depend entirely on which taxes it replaces and what the income will be used for.
Obviously it will be less if it is used exclusively to replace Council Tax - simply because the tax base has been increased to include land that has never been taxed before.
Those who have avoided paying tax for hundreds of years will now have to contribute towards their social responsibilities - so expect loud squawks from major landowners - and they carry a lot of clout, especially in the Tory party.
The current system means that those in South Derbyhire pay over twice as much Council Tax as those in Kensington and Chelsea - for homes in the same tax band. LVT will level that out so everyone pays the same percentage based on the value of freehold land. Yes, more valuable land will pay more than the same amount of less valuable land - but that seems perfectly fair - those who can afford most, pay most - who could possibly object to that? Those who don't like it should follow the advice of Norman Tebbit in relation to bicycles!
If it is coupled with measures to remove tax loopholes and fiddles used for tax avoidance (trusts, tax havens etc.) it could be even less.
However, it might be better to consider which other taxes it could replace since many taxes (VAT for example) impose a much larger burden on those with low incomes than on those with higher incomes.
Taxing agricultural land will put up food prices.
Farming is a business as well as a lifestyle.
Businesses are in competition with one another - the strong survive and the weak go to the wall.
Landowners pay LVT, not tenants, and if landowners try to pass on the cost of LVT to their tenants they may shoot themselves in the foot. Agricultural rents, like all rents, depend on what people are willing to pay and a tenant who cannot make an income ceases to be a tenant and the landowner makes nothing.
Of course, if landowners wish to work for a living, instead of living off the labour of others, they may indeed make money - as long as they use their land profitably.
LVT has nothing to do with whatever else society wishes to do with rural land - after all, the English countryside is one of our greatest assets enjoyed by millions. What society agrees to pay to maintain the countryside is a separate discussion.
It will lead to over development.
No it won't.
The argument goes that since LVT is paid on all land it encourages the best use of that land. "Best use" is interpreted as "most profitable" so every acre of land will be used for highly profitable housing.
This is nonsense.
Society grants permission for use through the planning process. You can't turn your large garden, or your vast estate, into housing unless you have planning permission - which you are unlikely to get!
Peregrine Andrew Morny Cavendish (known to his old Etonian chums as "Stoker") can't suddenly decide to park a bijou "luxury executive" housing estate slap-bang in front of Chatsworth House for two reasons:
- He would never get planning permission.
- He has placed the ownership into the hands of a trust to avoid tax so it is a decision for the trustees - of which he is the Chair.
It also comes as a surprise to many people (especially those who go out of their way to avoid paying tax) that profit isn't everything! Some people are motivated by things other than money.
"Best use" means the best that can be done given what the land has permission to be used for. Farmers have been making these decision for centuries, they are far brighter than most people give them credit for and, while a good income is obviously important, many of them love their job, love their animals, love the land they work and want to create a pleasant environment in which to live.
Of course, those large landowners who live off the the labour of their tenants and who take no active interest in what is going on, may well try to maximise their profits - so LVT taxes them for sitting on their backsides and the planning system determines what they can do with the land.
There will be endless appeals against land values.
Of course there will be an appeals procedure - that's only fair.
However, the experience of other countries is that the number of appeals is extremely low and falls dramatically as the system beds in and people become used to it.
The yardstick is simple: "what would it sell for if it came on the market now - given what it can be used for?"