There seems to be some new push on social media where Trump and supporters are spinning the bullshit about the US paying for NATO and carrying Europe.
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
I guess he does draw a distinction between land and buildings. Clearly rent for flats and homes is a combination of rent for land and rent for buildings. II can see the rent for the land component may not rise but surely if the cost of land goes up the economics mean appetite for letting the building component falls and supply of rental property falls and rents rise. Claude does recognise in his third paragraph that building supply can shrink over time and get reflected in higher rents.
"If he's remembered at all it will be for him deciding that instead of dealing with bad things in the country, he would instead arrest the people who didn't like the bad things that were happening in the country"
Well let's hope Douglas Murray isn't remembered for dross like that.
He has half a point. Certainly among the things that turned people off the Prime Minister was the feeling that justice was rigged against ordinary people – two tier Keir.
I doubt that is what he means though. Although tbf it's such an odd statement that it's hard to know. Being who he is I suspect he's talking about unfair persecution of the far right.
That is a matter of perception. Hurty words or rioting? Protecting communities or attacking incomers? The point is that people came to see the system as rigged against them, hence two tier Keir. Similarly, another thing that put people off the PM was free gear Keir – and a close and legalistic defence that showed no bribery missed the point. Nigel Farage now has the same problem.
But that's not where Murray is coming from. When he talks about 'arresting people who didn't like the bad things happening to the country', we know what he means - and it's not 'ordinary people'. He means people who agitate in the (far right) cause he believes in, either by deed or by (racist and violent and inciting) word.
Re grift, Farage ought to have a massively bigger problem since it's on a massively bigger scale. But let's see. Here's hoping.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
There seems to be some new push on social media where Trump and supporters are spinning the bullshit about the US paying for NATO and carrying Europe.
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
"Bottom line: the near-consensus among economists (including some who disagree on almost everything else, since even fairly free-market economists like Milton Friedman have praised LVT as among the "least bad" taxes) is that LVT shouldn't increase rents and could reduce them somewhat if it stimulates new housing supply — with the main uncertainty being how cleanly it can be implemented in practice rather than whether the underlying incidence theory is sound."
Are you saying that implementing new taxes on land should decrease rents?
There’s an argument that replacing certain taxes with others can decrease rents in the medium term, but that’s very much not the same.
A Land Value Tax is -effectively- a tax on inactivity. If your property is vacant, or you have a lot and you've not built on it yet, then you're losing money.
So, it incentivizes property owners to rent out their properties rather than leave them vacant. (And if they choose instead to sell them -bearing in mind they'll be paying tax on an empty property while it waits to sell- then they will be eating the tax while waiting to accept a lower price, if other landlords are rushing to the exit at the same time.)
This assumes that there is a surplus of rented accomodation, which in the UK is certainly not the case. The rental housing stock has dropped by 30% in the last 5 years. Alternatively they can increase rents in a sellers market. Across most of the UK there are dozens of people chasing each rented property.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
"Bottom line: the near-consensus among economists (including some who disagree on almost everything else, since even fairly free-market economists like Milton Friedman have praised LVT as among the "least bad" taxes) is that LVT shouldn't increase rents and could reduce them somewhat if it stimulates new housing supply — with the main uncertainty being how cleanly it can be implemented in practice rather than whether the underlying incidence theory is sound."
Are you saying that implementing new taxes on land should decrease rents?
There’s an argument that replacing certain taxes with others can decrease rents in the medium term, but that’s very much not the same.
A Land Value Tax is -effectively- a tax on inactivity. If your property is vacant, or you have a lot and you've not built on it yet, then you're losing money.
So, it incentivizes property owners to rent out their properties rather than leave them vacant. (And if they choose instead to sell them -bearing in mind they'll be paying tax on an empty property while it waits to sell- then they will be eating the tax while waiting to accept a lower price, if other landlords are rushing to the exit at the same time.)
This assumes that there is a surplus of rented accomodation, which in the UK is certainly not the case. The rental housing stock has dropped by 30% in the last 5 years. Alternatively they can increase rents in a sellers market. Across most of the UK there are dozens of people chasing each rented property.
And we have a very low number of vacant properties.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Sadly, due to time zones, some of us have to go to bed shortly, but one suspects there’s about to be a million videos of the greatest birthday party of all time.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
There are two forms of return. The first is income and the second is capital gain. To date both have been excellent for the amateur but as the market professionalising, a lot have taken their cash from the market and are looking elsewhere. The main issue for them is the flood of properties on the market depressing capital gains in the short term. Last man standing should do well (as they usually do)
There seems to be some new push on social media where Trump and supporters are spinning the bullshit about the US paying for NATO and carrying Europe.
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
My lifelong affection for America is on pause.
Yes, and I am not sure it is coming back. They have elected an imbecile like Trump twice. What does he represent? Corruption, arrogance, patronising tosh. The USA now abuses its erstwhile allies. It abuses countries like Ukraine who should be natural friends. They impose cavalier and irrational penalties like tariffs. With a deeply corrupt and utterly dishonest Supreme Court they have abandoned any interest in the rule of law. To blame all of this on one kleptomaniac is to give the US a pass it frankly does not deserve. We need better friends and more reliable defence. It is time to wave a sad goodbye.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
Sadly, due to time zones, some of us have to go to bed shortly, but one suspects there’s about to be a million videos of the greatest birthday party of all time.
1812 War, that;'s the one where we burnt the White House?
There seems to be some new push on social media where Trump and supporters are spinning the bullshit about the US paying for NATO and carrying Europe.
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
My lifelong affection for America is on pause.
Yes, and I am not sure it is coming back. They have elected an imbecile like Trump twice. What does he represent? Corruption, arrogance, patronising tosh. The USA now abuses its erstwhile allies. It abuses countries like Ukraine who should be natural friends. They impose cavalier and irrational penalties like tariffs. With a deeply corrupt and utterly dishonest Supreme Court they have abandoned any interest in the rule of law. To blame all of this on one kleptomaniac is to give the US a pass it frankly does not deserve. We need better friends and more reliable defence. It is time to wave a sad goodbye.
I agree in spades but I'm not quite there yet. If the GOP stays rotten after Donald Trump I will be. By rotten I mean all this braindead nasty stuff that he has exploited and encouraged, I don't mean economically right wing and socially conservative politics. That's just on the whole contrary to what I happen to prefer, it's not a mortal threat to decency and civilisation.
Sadly, due to time zones, some of us have to go to bed shortly, but one suspects there’s about to be a million videos of the greatest birthday party of all time.
1812 War, that;'s the one where we burnt the White House?
How thoughtful of the current President to show us what a ruined White House looks like.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
Yes, high build costs from one end, affordability from the other. A big squeeze.
I would like to see a mix of 1 and 3. And 3 mitigates 1 of course.
There seems to be some new push on social media where Trump and supporters are spinning the bullshit about the US paying for NATO and carrying Europe.
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
My lifelong affection for America is on pause.
The thing is, is that it has been US policy to make us all dependent on US defence. They've been pushing the defence drugs for 80 years. And if you buy your defence from the US, then clearly they're good, so why not buy your computers too.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
But if the government builds houses, it will doubtless create a surplus of ugly, crap ones and a shortage of good ones, as it usually does when it tries to produce anything.
Oligopolistic developers aren't much better either.
Self-build is the clear, screaming, obvious answer, as in most of continental Europe, e.g. Austria where 80% of new houses are self-built, compared to 10% in the UK, half of which are in Northern Ireland.
That way the person who builds the thing has at least some interest in its quality and visual appeal
Sadly, due to time zones, some of us have to go to bed shortly, but one suspects there’s about to be a million videos of the greatest birthday party of all time.
Owing to time zones, I doubt that video is of this year's performance.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
House prices will adjust (i.e. fall) to ensure that you get the same ultimate yield.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
You're not wrong about the cost of construction - in London we have the Community Infrastructure Levy, Carbon Offset Levy and Section 106 and I suspect others.
The argument is if you add more dwellings into existing communities that puts pressure on both kinds of infrastructure - the "hard", such as pipes, sewage, cables, wires etc and the "soft" -medical and transport capacities, schools and perhaps crime. Existing residents want some kind of if not guarantee then reassurance they won't be the losers if thousands of new dwellings are added to their area.
You can turn a deaf ear as many on here do and call it "NIMBY" but the truth is settled communities are concerned by the possible addition of considerable numbers of new properties without their consent.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
House prices will adjust (i.e. fall) to ensure that you get the same ultimate yield.
Houses might actually have a negative value at some point with the left in charge. I just sold my house for minus 2 million says the chap in Burnham's Britain!
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
House prices will adjust (i.e. fall) to ensure that you get the same ultimate yield.
Yes I think London house prices have a long way to fall in real terms. They haven't adapted to 5% risk-free yields and reduced net migration.
I suspect they get there the hidden way via 30% cumulative inflation over a decade rather than the sticker prices moving much.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
But if the government builds houses, it will doubtless create a surplus of ugly, crap ones and a shortage of good ones, as it usually does when it tries to produce anything.
Oligopolistic developers aren't much better either.
Self-build is the clear, screaming, obvious answer, as in most of continental Europe, e.g. Austria where 80% of new houses are self-built, compared to 10% in the UK, half of which are in Northern Ireland.
That way the person who builds the thing has at least some interest in its quality and visual appeal
The problem as always is our permission system.
People should not need consent to self build within the law on their own land.
There seems to be some new push on social media where Trump and supporters are spinning the bullshit about the US paying for NATO and carrying Europe.
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
My lifelong affection for America is on pause.
The thing is, is that it has been US policy to make us all dependent on US defence. They've been pushing the defence drugs for 80 years. And if you buy your defence from the US, then clearly they're good, so why not buy your computers too.
I think that Trump has broken that little bubble.
Yes I suppose so. It's as if we allowed a single company to dominate key sectors of the economy, because they were bigger and better than the competition, and now they have suddenly been taken over by the Kray Twins.
"If he's remembered at all it will be for him deciding that instead of dealing with bad things in the country, he would instead arrest the people who didn't like the bad things that were happening in the country"
Not sure if Douglas Murray is coming out in support of Palestine Action, of people who incite arson endangering life, of those who actually committed such crimes or what. A bit of a mystery.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
You're not wrong about the cost of construction - in London we have the Community Infrastructure Levy, Carbon Offset Levy and Section 106 and I suspect others.
The argument is if you add more dwellings into existing communities that puts pressure on both kinds of infrastructure - the "hard", such as pipes, sewage, cables, wires etc and the "soft" -medical and transport capacities, schools and perhaps crime. Existing residents want some kind of if not guarantee then reassurance they won't be the losers if thousands of new dwellings are added to their area.
You can turn a deaf ear as many on here do and call it "NIMBY" but the truth is settled communities are concerned by the possible addition of considerable numbers of new properties without their consent.
So what?
Its not their land and not their place.
People in the country deserve somewhere to live. Whether others like it or not.
Good evening all (does Dixon of Dock Green Scissor-Squat).
A fine afternoon visiting the 90 year old Godmother in Sheffield, including a strange, baroque diversion as the A617 is closed, a big fish n chips n peas for £10.50 - not the most inexpensive but very, very good, a visit to the street where my mum lived in the 1940s-1960s, and a feeling that Sheffield has let its transport arrangements degrade over time. I think decreased prioritisation of buses is a serious question, and that there is a problem with the tram network.
And my Godmother reports a friend of the family who had the wrong leg amputated a couple of weeks ago. She is very compos mentis, and still plays Scrabble every week, but I am really not sure about that one without a horse's mouth account.
And watching the cricket whilst talking of horses, I really did think at first glance that there was a Test cricketer called Horseshit, which is so necessary that he should change his name accordingly.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
House prices will adjust (i.e. fall) to ensure that you get the same ultimate yield.
Yes I think London house prices have a long way to fall in real terms. They haven't adapted to 5% risk-free yields and reduced net migration.
I suspect they get there the hidden way via 30% cumulative inflation over a decade rather than the sticker prices moving much.
They're down 20% or so (real terms) in the last 4 years.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
But if the government builds houses, it will doubtless create a surplus of ugly, crap ones and a shortage of good ones, as it usually does when it tries to produce anything.
Oligopolistic developers aren't much better either.
Self-build is the clear, screaming, obvious answer, as in most of continental Europe, e.g. Austria where 80% of new houses are self-built, compared to 10% in the UK, half of which are in Northern Ireland.
That way the person who builds the thing has at least some interest in its quality and visual appeal
The problem as always is our permission system.
People should not need consent to self build within the law on their own land.
No, and in New Zealand, once you have bought the land (section or sub-division), it'syours to do with as you see fit.
You don't have to build - you can leave it until you are ready to build but normally most people are quick to go in and build what will fit on their piece of land which does a lot to limit what you can do.
There seems to be some new push on social media where Trump and supporters are spinning the bullshit about the US paying for NATO and carrying Europe.
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
My lifelong affection for America is on pause.
The thing is, is that it has been US policy to make us all dependent on US defence. They've been pushing the defence drugs for 80 years. And if you buy your defence from the US, then clearly they're good, so why not buy your computers too.
I think that Trump has broken that little bubble.
Yes I suppose so. It's as if we allowed a single company to dominate key sectors of the economy, because they were bigger and better than the competition, and now they have suddenly been taken over by the Kray Twins.
It's quite clear that the US has bigged itself up as big brother within NATO at least in part to make its defence industry the world leader.
I think there's a similar story to be told in other areas, but I really don't know the facts.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
Must admit I am surprised. Still seems counter intuitive to me. Why would all landlords accept lower returns and still stay in the market. After all we have seen them exit the market because of the new regulations.
Probably because the return on investment is greater that they could get elsewhere.
Say you can let a £250,000 flat for £1,000 a month. That's a 10% return, and the property appreciates. What else would you do with that quarter of a million?
But you have agents fees, maintenance, void periods, electric and gas regulations to complied with, service charges, ground rents, licensing costs, bad debts. You would be doing well to get anywhere near a 5% yield. Yield on Uk equities or gilts look attractive with less hassle and risk.
That's fine though. There's something wrong if you can coin it (good yield plus capital gains) simply by buying and renting out property. That those times seem to be over in many places in the UK is not a mourning matter. It should be an activity where a 'solid but no more' return is possible so long as you do it to a professional standard and always remember that your investment is somebody's home.
Don’t disagree
Well that's popped my balloon. I'll stop chuntering on then.
What a super exchange 🙂
The basic problem is that the cost of creating properties has skyrocketed. We have hit an affordability ceiling in a number of areas. Which has shut down further construction.
Government can build, but must then do one of the following
1) take a loss to provide affordable housing 2) build expensive properties 3) reduce the cost of properties
Yes, high build costs from one end, affordability from the other. A big squeeze.
I would like to see a mix of 1 and 3. And 3 mitigates 1 of course.
Reducing 3 would mean moving to effective regulation, not ever increasing piles of paper that aren’t read.
Are you really prepared for the Neon Fascist Capitalistic Anarchic Hell Hole, where replacing one window only costs £3,000 (say) rather than £18,000? Where you don’t need two separate consultants to write reports on the awesomeness of the window? Reports that will never be read. The window, of course, will never be inspected.
I am very impressed by @interested's attempts to mangle the basic economics of supply and demand.
A land value tax would almost certainly lower rents, because it would discourage properties from being left empty.
O level economics if costs go up the supply curve shifts and prices rise.it’s you that is mangling the basic laws of economics
Shall we ask Claude?
"What would the likely impact on rents in the UK be of the introduction of a land value tax?"
To which Claude responded:
"Short answer: standard economic theory predicts that a well-designed land value tax (LVT) shouldn't raise rents at all, and in fact could push them down slightly.
The core theoretical argument Land differs from produced goods (like buildings) because its supply is fixed — you can't create more of it in response to price signals. Standard tax incidence theory says the burden of a tax falls on the side of the market that's least able to adjust quantity. Since landowners can't reduce the supply of land in response to a tax, they can't pass the cost on to tenants through higher rents. The tax gets "capitalized" into a lower land value instead — the landowner absorbs it, roughly one-for-one, through a drop in what the land is worth. This is different from a tax on buildings or improvements (like most property taxes), where supply can shrink over time (less construction, less maintenance), which does tend to get partly passed through to renters. Why it might even push rents down If an LVT replaces less efficient taxes (like taxes on labor, capital, or construction), it removes the disincentive to build. A tax on land value doesn't penalize you for adding a building — unlike a conventional property tax, which taxes the improvement too. So LVT can encourage more intensive use of land (more housing built on it), which increases housing supply and puts downward pressure on rents over time. There's also an argument that LVT discourages land speculation and "warehousing" of vacant or underused sites, since holding unproductive land becomes costlier — again nudging more land into productive (housing) use."
Now, it could be that Claude is mangling basic economics.
Or it could be that you're simply wrong.
two points on LVT: Most land in England is agricultural and is untaxed WRT property taxes. LVT might see a rush to exempted use. Secondly, LVT encourages financial maximising of land. But the fun and gaiety of nations relies on there being uses of land which don't maximise commercial potential. Lords or The Oval might do better as skyscrapers, but London would be less fun. Ditto Westminster Abbey. LVT can encourage a Gradgrind approach to things.
Comments
It’s sort of funny they should be doing this on Independence Day when that really came about because they didn’t want to pay taxes to help cover their defence and the costs of the French Indian War. Maybe MaGAs could try and think about that.
(I'm looking at the Colonials across the pond too!)
Re grift, Farage ought to have a massively bigger problem since it's on a massively bigger scale. But let's see. Here's hoping.
Morocco are cheating barstewards and Oliver is buying it.
Well done to all the Brits involved in the USA250 celebrations.
https://x.com/thenewarea51/status/2073423668076478926
https://x.com/theextrememusi1/status/2073187534130106866
Sadly, due to time zones, some of us have to go to bed shortly, but one suspects there’s about to be a million videos of the greatest birthday party of all time.
What a super exchange 🙂
Government can build, but must then do one of the following
1) take a loss to provide affordable housing
2) build expensive properties
3) reduce the cost of properties
Government can build, but must then do one of the following
1) take a loss to provide affordable housing
2) build expensive properties
3) reduce the cost of properties
I would like to see a mix of 1 and 3. And 3 mitigates 1 of course.
I think that Trump has broken that little bubble.
Oligopolistic developers aren't much better either.
Self-build is the clear, screaming, obvious answer, as in most of continental Europe, e.g. Austria where 80% of new houses are self-built, compared to 10% in the UK, half of which are in Northern Ireland.
That way the person who builds the thing has at least some interest in its quality and visual appeal
The argument is if you add more dwellings into existing communities that puts pressure on both kinds of infrastructure - the "hard", such as pipes, sewage, cables, wires etc and the "soft" -medical and transport capacities, schools and perhaps crime. Existing residents want some kind of if not guarantee then reassurance they won't be the losers if thousands of new dwellings are added to their area.
You can turn a deaf ear as many on here do and call it "NIMBY" but the truth is settled communities are concerned by the possible addition of considerable numbers of new properties without their consent.
I suspect they get there the hidden way via 30% cumulative inflation over a decade rather than the sticker prices moving much.
People should not need consent to self build within the law on their own land.
Its not their land and not their place.
People in the country deserve somewhere to live. Whether others like it or not.
A fine afternoon visiting the 90 year old Godmother in Sheffield, including a strange, baroque diversion as the A617 is closed, a big fish n chips n peas for £10.50 - not the most inexpensive but very, very good, a visit to the street where my mum lived in the 1940s-1960s, and a feeling that Sheffield has let its transport arrangements degrade over time. I think decreased prioritisation of buses is a serious question, and that there is a problem with the tram network.
And my Godmother reports a friend of the family who had the wrong leg amputated a couple of weeks ago. She is very compos mentis, and still plays Scrabble every week, but I am really not sure about that one without a horse's mouth account.
And watching the cricket whilst talking of horses, I really did think at first glance that there was a Test cricketer called Horseshit, which is so necessary that he should change his name accordingly.
You don't have to build - you can leave it until you are ready to build but normally most people are quick to go in and build what will fit on their piece of land which does a lot to limit what you can do.
I think there's a similar story to be told in other areas, but I really don't know the facts.
Are you really prepared for the Neon Fascist Capitalistic Anarchic Hell Hole, where replacing one window only costs £3,000 (say) rather than £18,000? Where you don’t need two separate consultants to write reports on the awesomeness of the window? Reports that will never be read. The window, of course, will never be inspected.
Secondly, LVT encourages financial maximising of land. But the fun and gaiety of nations relies on there being uses of land which don't maximise commercial potential. Lords or The Oval might do better as skyscrapers, but London would be less fun. Ditto Westminster Abbey. LVT can encourage a Gradgrind approach to things.