Taxing value not land
Taxing land is daft!
History shows that attempting to tax land (as land) ends with failure.
The reasons are obvious:
It assumes that “land” is all the same.
It requires hundreds of exceptions.
Taxing land (as land) is a silly idea.
Basing things on area
The EU paid farmers a subsidy based on land area - irrespective of location, quality or use.
Until 2024 the UK did the same but this has now changed.
Basing things on value
Land Value Tax (LVT) is a tax based on land value, not a tax on land area.
LVT allows no exceptions, not for anyone, anywhere!
What is the land value of my house?
The value of your property (land and everything on top of it) is pretty easy to find - just look for similar properties on Rightmove!
The value of the land is the value of the property minus the value of everything on top of it.
You probably have house insurance to cover the cost of rebuilding your house if it was totally destroyed. Take that away from the property value and you are left with the land value.
Example
This house, on Goodmaynes Lane in Ilford, was up for sale at £725,000 in April, 2025.
The question to be asked is:
"If this house burnt down, what would someone pay for this plot of land, at 16 Goodmaynes Road, with planning permission to build a four bedroom house?"
Good news!
You don't have to work this out for yourself!
Before Land Value Tax is introduced, the Valuation Office Agency (VOA) will provide every freeholder in the country with the value of their land. The VOA has been valuing land and property for over 100 years and is currently responsible to valuing new builds and all business premises.
The VOA bases its valuation on location, planning permission granted (if any) and the value of other land in a similar location.
These valuations will be publicly available online - just as values are now available via the Land Registry web site. You can compare the value of the land under your house with similar houses in the area and, if you are unhappy, you can appeal against the VOA valuation - as long as you provide evidence to support your appeal.
What is "value"?
The financial value of something is what someone would pay for it on the open market.
In November 2024, Justin Sun, a "cryptocurrency entrepreneur", paid $6.2 million for a banana taped to a wall. A few days later he ate the banana and replaced it with a fresh one. The banana and tape were/are an "artwork" produced by Italian artist Maurizio Cattelan and suitably entitled the "Comedian". It will be interesting to see what the value is in 20 years' time.
Some things have a financial value of zero - they can’t be sold or no one wants to buy them.
Land value
The value of land depends on two things:
Use.
Rich arable land for crops is worth more than poor hill land suitable only for sheep.
Land with planning permission for homes is worth more than pasture land.
Location.
An acre of land with planning permission for homes in Gateshead is valued at about £300,000.
A similar acre in parts of the South East is valued at over £2,000,000.
How to measure "value"
Land that has recently been sold has an obvious value - the sale price.
Similar land, in the same area, will have a similar value. Surveyors and auctioneers know the history of sales in their area so they can give reasonable estimates of value.
Agricultural land can leap in value once it gets planning permission - providing a massive windfall profit for landholders.
Agricultural land can change value in several ways.
The original value - for agricultural use only.
"Hobby" value - small parcels of land can sell for high values for keeping ponies, horses etc.
"Hope" value - land close to cities, towns or villages has a higher value in the hope that one day it may get planning permission for development. Such land is usually sold with an "overage" condition so the seller gets a share of any future increase in value if the land is used for development.
"Zoning" value: this is better than hope value because the Local Authority's Local Plan will define certain areas of land as suitable for future development.
"Option" value - a landholder agrees to sell to the developer once the developer gets planning permission.
"Promotion" value - the landholder contracts with a "promoter" to fund the cost of getting planning permission and then market the land to a developer.
"Outline" permission - the point at which the Local Authority agrees, in principle, to a development.
"Final" permission - the point at which the Local Authority agrees the specific details of a development.
The increase in value at each stage will be recorded by the Land Registry so the LVT will also increase. Development land will be paying much more LVT than agricultural land so developers have every incentive to get the job done rather than "banking" it in the hope that land and house prices will rise even further.
Land for industry and warehousing also increases in value - as this example shows.
Valuing land under buildings
"Property" (homes, offices, shops, factories, etc.) consists of land and everything on it.
Property values may be seen on Rightmove etc.
The value of land under new builds is obvious - it is the amount the developer paid for the land shared amongst the properties built. The example below shows land for sale at £450,000 with planning permission for 7 dwellings - a density of 19 dwellings per hectare. The value of the land under each of the 7 dwellings is £64,286.
For the value of other developed land we need the answer to this question:
"What would someone pay for this piece of land given where it is and what it may be used for?"
Two ways to think of it:
This one acre rural plot of land has a three storey, six bedroom house on it along with conservatory and double garage. How much would the land cost if the buildings weren't there but we had planning permission to build something exactly the same?
This property is worth £1,000,000 and the rebuilding cost is £600,000 (*) so the land value is £400,000.
* note: this is less than the rebuilding cost for insurance purposes which also includes the cost of demolition.
RICS and VOA
Members of the Royal Institute of Chartered Surveyors (RICS) have been valuing land and property since 1868.
The Valuation Office Agency (VOA) has been valuing land and property since 1910. It was responsible for the old domestic rates system, it assigns new homes to the bands used for Council Tax and it provides values for Business Rates.
The VOA has, in the past, carried out exercises to assess land value to enable governments to make future plans
The VOA has well established procedures for handling appeals about values.
Assessing land value prior to implementing LVT is straightforward - the VOA and members of RICS can handle it and any appeals can be dealt with.