Mark Wadsworth

This is a spare 'blog in case my main 'blog at isn't working

Killer Arguments Against LVT, Not (137)

A good one is to deliberately misunderstand it, argue against what you claim it to be and then resolutely refuse to give ground. Over at a Faisal Islam’s Channel 4 economics blog:

adrian clarke: Meg and Carol, I am trying to get my head round this LVT without success. If i start from the end and work back , i will pose some questions…

The tax is based on land values. Who determines those land values? Is all land of an equal value irrespective of its location. Clearly the landlord needs investment within that land to produce an income to pay the tax. If so that tax must be passed on, either in rental or production to meet that payment. How does a farmer, within a rural community pay the same value for land as in one of the large urban conurbation?

To which Carol Wilcox responded “Adrian, your question “Is all land of an equal value irrespective of its location” shows that you have not understood anything about LVT and are therefore not worth debating with. Sorry.”

That’s the short answer 🙂 The long answer is that there is a staggering difference between the lowest and highest land/location values in the UK. If you imagine a rental value of one penny per square yard per year to be equivalent to one second in time, then you can picture these differences as follows:

A grouse moor in Scotland – about half a second
Average residential land in England – about three quarters of an hour
Retail premises in Bond Street, London – about a week.

If you can imagine how much longer a week is than half a second (about a million times as long!), then that is roughly how many times as valuable the most expensive location is compared to the cheapest one. That is one of the first things you have to grasp about land values in any developed country.

A 9-acre grouse moor in Scotland was bought/sold for £5,000,000 a year or two ago (page 5 of this), that works out at selling price of 11.48 pence per square yard, so the rental value will be five per cent of that, call it half a penny per square yard per year.

You can rent an average semi-detached for about £10,000 a year, an average residential plot is 400 sq yards, so that’s 2,500 pence per square yard per year. One hour is 3,600 seconds.

The most expensive rents in England are on Bond Street, about £500 per square foot per year for the ground floor retail premises = 450,000 pence per square yard per year, plus maybe a third as much again for the upper floors = 600,000 pence per square yard per year. A week is 604,800 seconds.


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