Response to comment on Green Party Discord Group
Comment
I have to challenge the idea that an LVT “optimises land use”. It is helpful, if set at a sufficient level, to discourage things like land banking. However, the incentive it creates is for landowners to look for the best way to minimise their tax by investing their wealth in tax-free (or low-tax) things, such as, with our policy, buildings. The bigger the better for them and the higher the carbon emissions that result. Where it has been implemented, e.g Pittsburgh in the past, it led to a construction boom. This is why the right-wing think tank, the IEA, likes it. The wealthy will build whatever benefits them financially most, not what we need as a country – things like council housing, renewable energy etc. When you look at the incentives/disincentives of taxing land but not buildings, the wealthy are incentivised to build to shelter their wealth in an untaxed asset. So in my view it does lead to unwanted construction as it has done previously. That said, I would include an LVT as a wealth tax.
Response
Land Value Tax (LVT) is an annual tax on the rental value of land paid by owners. The value of land is a function of its natural attributes, local facilities and statutory permitted use, none of which are created by owners, unlike buildings which require maintenance and renewal to retain their value.
LVT is intended to replace all current property taxes: Council Tax, Business Rates, Stamp Duty, Section 106 Agreements (S106), Community Infrastructure Levy (CIL), Annual Tax on Enveloped Dwellings (ATED) – paid by companies which own residential property. Apart from ATED, they all have major faults.
Valuations for Business Rates include buildings, which are part of a business’s working capital. Upgrade a factory/office/shop/restaurant, increase energy efficiency, enhance employees’ working environment, and the business gets a tax increase. This disincentivises real investment. LVT bills increase as a result of investments made by others in the location: a new station, bus route, school, restaurant, theatre, park.
Frequent revaluation is essential for an ad valorem property tax to retain its credibility. Revaluation for Business Rates takes place every 3 years, but there has been no revaluation for Council Tax, except in Wales in 2003. The original assessments were carried out by local valuers to variable standards, not the Valuation Office Agency (VOA) staff who are the experts. Experience in the US, where land and buildings are valued separately, is that land is easier and hence cheaper to value than buildings and generates fewer appeals. Australia has an LVT where revaluation is carried out every 2 years. The VOA valued all English land in 2019, so there would be no problem here. It is a waste of resources for the state to value buildings in addition to land.
Unlike commercial buildings, most of house price is land value. Land can represent more than 90% of house price in some parts of London.
According to the Office of National Statistics 60% of UK wealth is vested in land, a proportion of which would be captured by LVT. The fabric of rich people’s homes would be covered by the Green Party wealth tax. If this were self-assessment, like ATED and Income Tax, valuations would be at the expense of owners. Such a wealth tax would be less avoidable if returns were placed in the public domain, with random checks and high fines for non-compliance.
Section 106 Agreements and the Community Infrastructure Levy (CIL) are intended to fund some of the cost of infrastructure for new developments, which may include some ‘affordable’ homes. They do this by seeking to capture part of the uplift in value when a higher permitted use is granted. They rarely achieve what they set out to do because they pit cash-strapped local authorities against developers’ expensive lawyers and accountants. Abolishing S106 and CIL would hand power to elected authorities, allowing them to plan proactively and enforce high standards. This is the way to curb ‘unwanted construction’.
New infrastructure should be provided in a timely manner by local authorities which, under a Green Party administration, would be adequately funded by central government within the constraints of the real resources available to purchase in sterling.
The following is how LVT would help to create council houses, based on the implementation strategy of this paper: https://www.labourland.org/wp-content/uploads/2015/09/JonesWilcoxLVTpaperFinal-V2.pdf). It would also advance the Green Party 2025 motion to conference to Abolish Landlords.
Set two LVT rates: a high-rate, say 50%, for all land which does or could generate an income: land under commercial properties, private rented accommodation, second homes, even farms (real farmers need an intelligent system of government support); a lower/affordable rate for the land under principal homes, as it cannot generate an income. (Schedule A Income Tax paid by homeowners on ‘inputed rent’ was abolished in 1963 for good reason.) Principal homes could be registered as such at the Land Registry, which should be free to access to ensure compliance.
Land prices would fall as the market takes account of the continual cost of ownership (LVT). Since most house price is currently land value, this would particularly affect the private residential rented sector whose business model depends on extracting unearned land rent. It would lead to a sell-off of many rental properties, as well as those held, under- or un-occupied, as an investment. Increased supply means lower prices. This would enable either tenants to buy or councils with sitting tenants, i.e. council houses.
There would need to be legislation to prevent landlords from increasing rents above what tenants had paid on Council Tax, otherwise families could be forced onto the streets before the market adjusted to the new system.
70% of UK land by acreage is owned by 1% (Who Owns Britain, Cahill) some of which is part of the big estates owned for centuries by the aristocracy. Such land has low acreage value but, because of the acreage, LVT bills would be high. A lot of such land would be sold off, depressing prices. This would be an opportunity for local authorities to buy up some large tracts of undeveloped land to create garden towns and cities and plenty of council houses.
Carol Wilcox, December 2025