LVT Fwd: Letter in Today's Guardian

[Mark Barrett]

High house prices not caused by shortage

There is no evidence that high house
prices<http://www.guardian.co.uk/money/houseprices>are caused by a
shortage of homes (
Editorial<http://www.guardian.co.uk/commentisfree/2010/aug/06/planning-policy-editorial>,
6 August). With over a million properties suitable for
housing<http://www.guardian.co.uk/society/housing>lying empty in
England alone, it makes no sense to talk of a shortage. There
are two factors causing inflated house prices: the failure to
tax<http://www.guardian.co.uk/money/tax>land values; and the ability
of banks to create unlimited credit, leading to
leveraged speculation in land. In 1970, the average house price (more
accurately, it is the land on which it stands which increases in value) was
£4,400. Now it's about £180,000 – an average rise of 9% a year. Speculation
depends upon a constant supply of ever more indebted buyers – a pyramid
scheme, whose final collapse is inevitable.

A land tax would tax unearned gains from rising values and so discourage
speculation and encourage idle resources to be used, cutting the blight of
boarded-up properties. It would provide the government with the bulk of its
revenue, enabling taxes on income and property taxes, such as council tax,
to be phased out. A land value tax is advocated by the Green
party<http://www.greenparty.org.uk/>,
the Co-operative party <http://www.party.coop/> and even some members of the
cabinet.

Ken MacIntyre

Leatherhead, Surrey
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