Grant Shapps’s comments on house prices might have held some value had the Tories in opposition not been so vociferously against Gordon Brown’s attempts to bring at least some sanity to the area in the year before the general election (“Minister pledges an end to the housing price rollercoaster”, News).
Where was he when the Tories called a modest rise in estate duty a “death tax”? Or when a similarly modest rise in stamp duty was rejected by the Tories? These two measures alone could have helped moderate house-price rises in the longer term, but I see no mention of either in your report about his “pledge” to do something. These are things the government could do now, but all Shapps offers is a vain hope that building more houses might do the trick.
What is needed is a massive increase in house building, or maybe make capital gains tax apply also to homes or, better still, how about a land tax related to the value of property?
David R Reed
I think it is useful to separate the elements that make up the price of a property. They are the bricks and mortar which make up the house and the piece of land upon which the house sits. It is misleading to say, as Mr Shapps does, that house prices have almost tripled between 1997 and 2007. In fact, the price of the bricks and mortar has probably increased at about the same rate as the prices index, whereas, to judge by the area of the Cotswolds where I live, the price of land has increased tenfold. In London, I suspect the rate of increase has been even higher.
What needs to be addressed is the absurd rate at which land prices have risen. A land tax, which has been trailed many times in the past, is one way to exercise some control on its price. In the past, governments have shied away from this, but perhaps its time has come.
Mr Shapps may have some ideas which will create the situation he wishes for, and at least it is good to hear a minister proclaiming that the continual rise in house prices is no longer good for everybody, but unless land availability and its price is addressed, nothing will change.