February – a quite month well it could have been save for a series of meetings including BRAF (Business Rates Advisory Forum) PBLG (Professional Bodies Liaison Group) both of which the IRRV is represented on and it is a welcome opportunity to hear of the work of key stakeholders working with the Valuation Office Agency. There are clearly concerns about the process of Check Challenge Appeal and the fairness of the business rates system and the usual budget round of chit chat and briefing coupled with of course the most recent BRIL (Business Rates Information Letter) setting out the Governments approach to what are clearly challenging times and then ….. it was all change at the Treasury!
So, as Rishi Sunaak, the new Chancellor has taken over to prepare his new budget. I was interested to see a recent article referring to the Micawber principles in David Copperfield who is noted for his inability to work his way out of poverty. Two of his enunciations are “something will turn up” and “annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.” Something of a rabbit out of hat is needed.
But I ask myself why – we had a detailed report prepared by the Treasury Select Committee published at the tail end of the last Parliament which provided some clear thoughts on what the issues are coupled with the Institute having provided its own thoughts on how to address the issues. Yet the response appears to be some way off we are told.
For many professionals and we have heard this time and time again, a revaluation for Council Tax is well overdue and David Magor our CEO has also set out alternatives including possible solutions with a move to values being based on a percentage of capital values.
The area of most concern however remains the suggestion that LVT or a Land Value Tax is some kind of silver bullet which will provide a meaningful change – sadly this to my mind is not the case:
Moving from a rental based approach for which there is a substantial body of evidence to an LVT approach needs to be considered extremely carefully and as such change for changes sake is not the way to address the issues here. Firstly, as already mentioned the evidence base is limited, practicing valuers are currently able to research and find evidence on rental values, indeed most homeowners will be able to have a good attempt at being able to estimate the value of their homes for capital value or rental purposes. Secondly are the implications that come from LVT as the pool of taxpayers a swathe of central and local government. Third, whilst land registry records have improved there are likely to be significant issues in the identification of the ultimate landowner. Fourth, the problems of separating the value of land from the buildings and of course any transactions that take place don’t do so in such a way as to be able to separate out the value of land versus building. Finally who is to stay that such a change of approach wont in fact be passed on to occupiers. So any change needs to carefully thought through and report from the TSC provided a useful guide to the issues at hand.
A land-based tax is theoretically appealing as it charges landowners rather than tenants—although it cannot be known on whom the final incidence of the tax would fall—and incentivises the best possible use of land. However, the practicalities of implementation are very difficult. It is likely that there would be more appeals. There would be an enhanced level of technical judgement required, particularly in built up areas where there are very few sales to generate a reliable value and it is very difficult to separate the value of land from the value of the buildings that are situated on that land. Land value tax would incentivise high-density usage, and there could be instances where this would not be the desired outcome, such as green spaces.
At the end of February, we finally had confirmed the latest BRIL 02/2020 confirming the multipliers for 2020/21.
From an Institute perspective engagement now gather a pace and I am extremely pleased to be visiting the Island of Jersey to meet Edward Trevor MBE FRICS IRRV (Hons) on issues on property taxation, some may recall an article by him in 2016 on the issues. A series of Association events follow quickly afterwards including the West Midlands Association Dinner, the always popular gastronomic excellence of London & Home Counties Dinner at the Innholders Company with Micheline star chef Herbert Berger, of course there’s a clash with the Cheltenham Festival week so a little shuttling back and forth required prior to a dash up to the Lancashire Association Dinner.
I’ll need to recover for a short while after that so I’ve lined up for the following week (mid March) a trip to Washington DC for the 21st World Bank - Land and Property Conference 2020: Institutions for Equity and Resilience and chairing a session on strategies for sustainable urban development.
Plenty therefore for my letter to you in March by when we will know whether it was a rabbit out of a hat or a different magicians trick that landed on budget day!
