Are Developers and Builders Sitting on Unused Land?

ILW

tyllwyd wrote: »

But as has been said earlier developers don't always own the land when they get planning permission. At the moment, there is a field behind us which is owned by a bungalow. A national builder has planning permission for houses on the land and an option to buy it, but the development is being delayed by a neighbour who is claiming that he owns the road that would give access to the land. Should the bungalow owner be paying the new tax?

If he has sold the option to buy to the builder, then yes.

Pennywise

It's standard business practice to buy and hold assets when prices are low and then sell them when prices rise. It's been happening for centuries.

Builders/developers have always held land as trading stock whilst waiting for the right time to sell or build.

No builder in their right mind would spend hundreds of thousands or millions to develop a site in a recession, and run the risk of not selling the properties at all or having to sell them at a loss. Just why would they risk it?

Also, they usually require bank finance to pay for the materials and labourers to build, and as we all know, banks are a lot more risk averse these days, so the builders may find themselves unable to borrow to build.

I can't see any logic or fairness in taxing someone for holding onto any business stock asset - it would only force poor business decisions that may make things worse.

At the most, perhaps there should be a reduced rate of business rates charged on all property that isn't lived in, but it should be a nominal amount rather than a punishment. There's already far too much stick and not enough carrot. Any future changes to law and regulation should be far more supportive and encouraging - i.e. grants or subsidies or whatever for taking actions that benefit everyone, rather than fining them for not doing it.

tyllwyd

And of course you are assuming that everyone would support the introduction of this new tax - I can imagine it would be very unpopular with a lot of people if pressure was to be put on developers to start building on land that they owned no matter what. I can think of at least one proposed development locally that is being bitterly opposed by local residents, and I'm sure it is the same all over the country. It might be very difficult for MPs to be seen to support the introduction of the tax.

CLAPTON

tyllwyd wrote: »

But as has been said earlier developers don't always own the land when they get planning permission. At the moment, there is a field behind us which is owned by a bungalow. A national builder has planning permission for houses on the land and an option to buy it, but the development is being delayed by a neighbour who is claiming that he owns the road that would give access to the land. Should the bungalow owner be paying the new tax?

as far a land value tax is concerned then :
the answer would be .. what is the value of the land? it has planning permission but no access
so the likely answer until the access issue is resolved is that the land has low value so wouldn't pay much tax.

CLAPTON

Pennywise wrote: »

It's standard business practice to buy and hold assets when prices are low and then sell them when prices rise. It's been happening for centuries.

Builders/developers have always held land as trading stock whilst waiting for the right time to sell or build.

No builder in their right mind would spend hundreds of thousands or millions to develop a site in a recession, and run the risk of not selling the properties at all or having to sell them at a loss. Just why would they risk it?

Also, they usually require bank finance to pay for the materials and labourers to build, and as we all know, banks are a lot more risk averse these days, so the builders may find themselves unable to borrow to build.

I can't see any logic or fairness in taxing someone for holding onto any business stock asset - it would only force poor business decisions that may make things worse.

At the most, perhaps there should be a reduced rate of business rates charged on all property that isn't lived in, but it should be a nominal amount rather than a punishment. There's already far too much stick and not enough carrot. Any future changes to law and regulation should be far more supportive and encouraging - i.e. grants or subsidies or whatever for taking actions that benefit everyone, rather than fining them for not doing it.

the thinking behind a land value tax is that land isn't like (say) widgets
we can always make more widgets and we can move them around at will; new manufacturers can come in with new technology etc etc

however land in say westminster can't be increased; land from say tottenham can't be moved to westmister.
the value of land in westminster its intrinstic but related to the society about the area .. it's value is part of the social situation

the land value tax isn't intended to punish anyway but to put a fair value of the land and to encourage efficient usage of that land;
it doesn't stop some-one hoarding the land but the cost of the tax would be a factor in the business decision on how to use or hold the land


it's not exactly revolutionary; the current council tax band is related to the value of the house.. an identical house build elsewhere would have a different council tax band

it's not a magic bullet but it would encourage better use of scarce land
obviously planning laws etc need changing but thats another story

CLAPTON

tyllwyd wrote: »

And of course you are assuming that everyone would support the introduction of this new tax - I can imagine it would be very unpopular with a lot of people if pressure was to be put on developers to start building on land that they owned no matter what. I can think of at least one proposed development locally that is being bitterly opposed by local residents, and I'm sure it is the same all over the country. It might be very difficult for MPs to be seen to support the introduction of the tax.

yes, you are right, any change to local taxes is diffcult; I remember some difficulties a little time ago about a poll tax that lead to the current rediculous (temporary) banding based on house prices in 1991.

however, given that the same amount of tax would be collected then there will be winners and loser

the likely winners would be people living in 'ordinary houses' with no significant development potential ;

the likely loser would be large land owners/ farmers with planning permission/ brown fill sites, underused factories, railway yards etc etc if they were located in 'desireable' areas
obviously there would be a little old lady somewhere living in a large house will a couple of acres of land that possibly would be adversely affected but that is as ever.

ILW

I do know a town in Kent where a major builder bought a large plot of land slap in the middle of the town for development. It has now been an empty eyesore for around four years. In a recent radio interview, the builder said they could develop the land and make a profit, but their hope is that if they waid a few years they can make a bigger profit so are holding out for prices to rise. He also said that by building now it may keep prices down due to increased supply.

The Plot has full PP

The area has a big housing shortage.

It seems that a tax on the land would maybe nudge the buider into actually building the places sooner, rather than later.

If not then the tax could be used by the local authority to improve or expand some of it's existing housing stock.

tyllwyd

CLAPTON wrote: »

yes, you are right, any change to local taxes is diffcult; I remember some difficulties a little time ago about a poll tax that lead to the current rediculous (temporary) banding based on house prices in 1991.

however, given that the same amount of tax would be collected then there will be winners and loser

the likely winners would be people living in 'ordinary houses' with no significant development potential ;

the likely loser would be large land owners/ farmers with planning permission/ brown fill sites, underused factories, railway yards etc etc if they were located in 'desireable' areas
obviously there would be a little old lady somewhere living in a large house will a couple of acres of land that possibly would be adversely affected but that is as ever.

I wasn't thinking in quite those terms - although a tax that affects large land owners might be unpopular with a group of people with a lot of political influence, including quite a few MPs and Peers! - I was thinking more of middle class home owners who although they wouldn't be hit by any extra tax, won't necessarily welcome a scheme that they were told would encourage development in their local area.

lazer

Of course the builders own land.

However, the construction industry has been badly damamged by the recession remember as no-one is buying houses due to lack of savings/available finance.

Builders tend to work on a house to house basis, they sell one house and use the money from it to finance the building of the next house. therefore, if no-one buys the houses they currently have for sales, they don't have the funds to build the next one.

Do you seriously think builders/developers want to be sitting idle - possibly the major firms with lots of retained profits or other income sources, but not the small local construction firms, they would be love to be building developments and selling house again!

CLAPTON

tyllwyd wrote: »

I wasn't thinking in quite those terms - although a tax that affects large land owners might be unpopular with a group of people with a lot of political influence, including quite a few MPs and Peers! - I was thinking more of middle class home owners who although they wouldn't be hit by any extra tax, won't necessarily welcome a scheme that they were told would encourage development in their local area.

but before we have a population of 70 million we must address the issue that although one wants affordable housing for one's own children one doesn't want affordable housing for one's neighbours

at least this system encourage under utilised land to be used rather than green belt