Living rooms have shrunk?

[hard-work]

Actually it is the overall service industry which is close to 80%, and financial services contribute less than 10% (and has only 3% of the job market).

I did know that, I slipped. Such a few people are generating so much of the wealth a Citizens Dividend is being proposed (a monthly wage packet given by the state if you work or do not work). But the housing cost have to be dropped, and LVT does that.

 

[Notch7]

Actually it is the overall service industry which is close to 80%, and financial services contribute less than 10% (and has only 3% of the job market).

Thus given that manufacturing is such a small percentage of our economy (and we have very few resources), Napoleon was indeed right!

Oops, my bad......I meant to say services.

 

[SirGalahad]

So how does a LVT make a difference to somebody renting a flat?

A landlord owns 1,000 properties so he owns a fair bit of land. He gets taxed on the land. So he passes his tax cost onto the tenant by charging enough rent to cover the tax plus some profit. Market forces prevail, so all landlords in one locality will be on say band 'S', which will thus determine rental for that area.

The LVT doesnt make the land more productive.......it this example distorts the rental market.

Some errors in your logic.

The lVT is not based on bands. You are using taxonomy from council tax.

Rents are initially sticky so the landlord initially absorbs the tax. When rental agreement is up for negotiation then the landlord can raise rents. But bare in mind the tenants disposable income has increased. Remember lVT depending on the rate it's set will replace some or all taxes.

Now the landlord sets rent too high, he has still to pay LVT so his choice what to do. Another person who has done nothing with their land has the choice, do nothing pay LVT or lease it to someone willing to be productive.

Its a very free market approach.

 

[hard-work]

Im struggling to see how that works.

Under a LVT, a valuation of land takes place. If I understand correctly land value is determined by its amenity......which you would argue hasnt been generated by the land owner, but his land value has been increased by production.

So if I rent a flat near a main line train station, that would be valued more than 1 further away. So all of the properties in the locality would be in a similar high value tax band. The properties would be owned by different landlords but they all have 1 common link: the LVT band.

So how would other properties be cheaper? Market forces would keep them the same. No different to how it is now.

If LVT goes up, so do tenant rents.

Recall that a landlord in a full LVT system will be paying little to no income tax. He will pay zero tax on the buildings - he can add a conservatory and charge more rent and the LVT will not rise. If the LVT rises he can try to pass it on, but he will not get far. The tenant will leave. He may put up the LVT because say a new Tube station has been opened down the street raising land values, then the tenant, maybe, be willing to bare the some of the extra rent because of new amenity. If not he will move to a lower rent location. If the landlord ups the rent and the rest around do not, he will find himself with an empty property where he still pays the LVT - he pays whether it is let or not. He would be foolish to force a tenant out by short sighted greed. The market steps in. LVT is auto regulating.

 

[SirGalahad]

That sounds like an opinion, rather than a fact.
Call me cynical, but I reckon whatever the system, the haves will pretty much always still be so.

It's a fact if you read up on economics. Look at lump sum taxes. If you think its an opinion can you site me economic articles to the contrary. I am happy to increase my knowledge.

 

[Notch7]

The lVT is not based on bands. You are using taxonomy from council tax.

No, i used the term 'band' for simplification. Are you saying that LVT would not be valued more, where it is more beneficial to live.

 

[Notch7]

Now the landlord sets rent too high, he has still to pay LVT so his choice what to do. Another person who has done nothing with their land has the choice, do nothing pay LVT or lease it to someone willing to be productive.

Its a very free market approach

So in an area of greater value, the LVT will be higher. Free market approach indicates rents will all be higher. No different to how it is now.

How will the productivity of a rental property be any different to how it is now?

 

[SirGalahad]

It deters speculative landholding so run-down inner-city areas are returned to good use.

This reduces the pressure for building on greenfield sites and restores use of currently unoccupied buildings. The need to pay the tax encourages landowners to develop vacant and underused land properly or to make way for others who will. Empty sites are brought into use as owners seek an income with which to pay the tax.

 

[SirGalahad]

No, i used the term 'band' for simplification. Are you saying that LVT would not be valued more, where it is more beneficial to live.

Either you don't get it or you are trying to be facetious.

lVT is based on land value. Simple. An area with great transport links will have a higher lVT than out in the sticks.

 

[Notch7]

The market steps in. LVT is auto regulating

Im sorry but Im really struggling to see how your example is any different to the existing situation.

If I want to rent somewhere I weigh up what is on the market and choose the best based on price, location, room size, decoration, aspect, convenience, parking etc etc. LVT doesnt alter that. A domestic flat, will never become converted to a hairdressers in the name of being productive.

 

[SirGalahad]

I'm surprised that notch7 is a Marxist when it comes to land taxes. He hated the idea of lvt.

Comrade notch7

 

[Notch7]

Either you don't get it or you are trying to be facetious.

lVT is based on land value. Simple. An area with great transport links will have a higher lVT than out in the sticks.

So no error in my logic.

Greater transport links = higher LVT = higher costs to landlord = higher rental cost.

Same as exists now?

 

[hard-work]

A car hire company deals 100% with capital items, rents them out and makes a profit by using some business acumen. His assets, the cars and vans, drop in value by the month. A landlord's asset, the house, rises in value by the month. Well the land values rise not the bricks. Why should we shield a poor businessman, the landlord? LVT would make him improve his wares to rent - the property. Make it more attractive.

BTW, in a local car hire place I would notice if they were not renting out too many cars that week, so would go up and negotiate the price down saying I will take the car as I noticed you have a few hanging about, saying they are getting something rather than nothing. If they did not move I would given them another chance to reconsider, if they said no, then I go elsewhere. They would drop the price to get something for a car rather than nothing. Market forces.

 

[SirGalahad]

Im sorry but Im really struggling to see how your example is any different to the existing situation.

If I want to rent somewhere I weigh up what is on the market and choose the best based on price, location, room size, decoration, aspect, convenience, parking etc etc. LVT doesnt alter that. A domestic flat, will never become converted to a hairdressers in the name of being productive.

You seem to be stuck in your ideology. Productive use of the land, we don't care what you build on it. Your focusing on economic activity which can be anything be a flat, shop etc as long as the lVT is paid.

Currently you get taxed on the improvement to the property how anti capitalist is that? The land remains the same.

 

[hard-work]

Im sorry but Im really struggling to see how your example is any different to the existing situation.

If I want to rent somewhere I weigh up what is on the market and choose the best based on price, location, room size, decoration, aspect, convenience, parking etc etc. LVT doesnt alter that. A domestic flat, will never become converted to a hairdressers in the name of being productive.

When there is no tenant in the flat it is not productive whatsoever. The landlord cannot play around with tenants too much. He has to make sure the rent is right, and not attempt to rip-off, otherwise he may have the place empty for a few months and paying the full LVT levy, which is dead loss. The landlord is then in the same arena as the car rental guy - he is renting out mainly capital, the building.