Reader's Letter Of The Day

From today's Evening Standard:

Regarding your article on business rates, there is hope for London's retail and office tenants. There is plenty of evidence to show that increases in rates are offset by equal and opposite reductions in rents, therefore the only losers from this in the long run will be landowners.

They have enjoyed substantial capital gains and increases in rents over the past seven years [i.e. since the last revaluation], so few will shed a tear for them.

Joe Momberg

A pity that either Joe or ES didn't add the 'Young People's Party' sign off.

Or to put it another way, Business Rates is just a super-tax on rents; total London rents have risen by £10 billion or something over the past seven years, and the government has finally got round to increasing this tax to what everybody with a little foresight expected it would be anyway.

Oddly Edited Reader's Letter Of The Day.

From The Evening Standard:

Zac Goldsmith grabbed headlines with his claim that a fare freeze by Transport for London would mean a 59 per cent increase in council tax [February 9].

However, anyone who reads the article will see that the true increase would be 17 per cent. Even his claim that the fare freeze would add £175 to an average council tax bill is deeply flawed.

[Missing third para, explaining that the required annual council tax increase would be more like £33.]

This seems like a sensible option to me, especially if the increase were targeted at the super-expensive homes in Zones 1 and 2 who pay the least toward TfL while getting the best value from it.

Mark Wadsworth, Young People's Party.

Reader's Letter Of The Day

From today's Evening Standard:

Oliver Healey writes (Letters, 27 October) that "A London income tax could be used to eliminate the in-work poverty that millions of Londoners face because of high living costs".

The dividing line is not between high and low earners. It's between those lucky enough to have bought their own home more than 10 or 15 years ago and private tenants. A long-standing owner-occupier can live quite comfortably on a modest income, but private tenants lose half their income in rent and really struggle, even on above-average salaries.

What would bridge this gap is a London-wide property value tax to be distributed to all Londoners as a universal dividend. An average household in an average value home would break even; owners of "prime London"* would finally start paying for the privilege; and renters/recent purchasers would be able to use their universal dividend to cover half their rent or mortgage, thus reducing their living costs to a tolerable level.

Mark Wadsworth, Young People's Party

* With the benefit of hindsight, I should have included "BTL landlords". Ah well.

Reader's Letter Of The Day

From the Evening Standard (8 July 2014, page 44):

Tony Travers is absolutely right (July 7) - London's land wealth could easily generate the revenue to fund all local services.

Rents are hugely in excess of building costs so councils could grant planning permission for built-to-let in exchange for [an] equity stake in each project, a common arrangement in parts of the EU.

Raising council tax to make London self-sufficient would also end the injustice of making the working poor in the rest of the UK subsidise Tube travel and (via housing benefit) rental receipts of the country's wealthiest landowners.

Joe Momberg, Young People's Party.

Outbreak of common sense…

… in London:

Half of Londoners want house prices to fall, an exclusive poll for the Standard reveals today. The startling find marks a historic about-turn in views on the soaring property market, say experts.

With the cost of buying a home rocketing out of the reach of ever more Londoners, almost a third of adults in the capital want property prices to go down “a lot”. A further 18 per cent favour them decreasing “a little”, the YouGov poll found, while just one in six people hopes prices carry on rising. The findings came as the Bank of England unveiled new measures to prevent an explosion of potentially dangerous mortgage debt that could stoke prices even higher.

Tanya Abraham of pollsters YouGov said: “While much has been made of the benefits of a house price boom, many Londoners don’t believe it’s a positive thing. Recently it seems thoughts have turned to the downside — namely, rising values locking many people out of buying a property.”

Home owners are now in a minority in London, with thousands of young “generation rent” workers feeling excluded from the property ladder by ever-rising prices. Those who have bought homes for the first time often find it impossible to move up to the next rung and would like to see prices falling. Younger adults aged 25 to 39, many of whom may be first-time buyers, appear most concerned about startling hikes of around 20 per cent a year in London, with 56 per cent of this group now wanting property prices to fall…

Paula Higgins, chief executive of the HomeOwners Alliance lobby group said: “There has been a fundamental, historic shift in attitudes that I don’t think the Government is aware of yet. People who own properties may have made money out of them but they now realise their children and grandchildren won’t have the same opportunities unless the Government stops this boom and bust property cycle.”

Until the 1980s the UK government had a raft of policies which prevented the worst excesses of the finance-land price boom bust cycle; it was made up of rent controls, mortgage multiple restrictions, social housing, high taxation of rental income, and bringing up the rear, Schedule A tax on owner-occupiers and Domestic Rates, all of which is moving vaguely towards a Land Value Tax system.