Summary:
The economic realities of housing wrestles with concepts such as rent control, land value, renting and assisted housing. All of these policy ideas are different methods of provisioning housing to different people according to different criteria. The concept of landless housing has one primary goal: provide the most housing at the cheapest possible price with no loss in quality.
In short, the concept forgoes assigning land value, it always belongs directly to the government, but the property built on top can be owned privately (if privately purchased) with price dependent only on the labour/materials that had gone into the construction of the structure. If a house was built for $600 000 CAD or USD, then it was due to the labour/material cost totalling $600 000. Market price still affects labour and material costs.
A person only pays for what is built, for a price at which it was built and nothing else.
Long Description:
Housing management is typically a package of policies that deal with land management, fees with land use, taxes on owning land, tax breaks on renting/leasing, taxes on commercial land owners, taxes/fees associated with different uses on land, rent controls, government transfers based on economic goals or assisted housing etc. The list is long and complicated.
Landless housing is a concept that envelopes the policies that revolve around purchase price. Essentially, the shift in the current model of housing management is to eliminate the idea of "owning" land. Generally speaking, housing development typically involves paying a fee to the local municipal government for development rights, as well as purchasing the land from previous owners. Speaking in contemporary terms, this has resulted in farmland being sold off for suburban development due to the low income of farmland.
Environmentally speaking and also with respect to economy of scales, municipal governments typically lose money on large sprawling communities in the long term. Due to the short term nature of city politics, most politicians/city councillors do not take this into consideration. Instead they rely on the short-term income earned from development fees and land transfer tax income (and other fees/taxes collected) despite the long-term loss due to services provided to the urban sprawl (snow removal in cold areas in northern United States and Canada, sewage and trash removal and so on, also look toward the string of city bankruptcies due to poor development choices by Californian cities). What would be more optimal is to maintain farmland (better even if let fallow) for future food production to guarantee food security in the future and to have high density housing to gain the benefits from mass transit and provide more economic opportunity for small/medium size businesses to thrive (such as small daily bakeries).
The decreased cost of purchasing housing, due to the absence of land value, means that more of the money spent on housing goes directly into quality. This frees up private wealth to be put towards better, higher quality housing, either larger housing or simply higher quality materials.
If the concept of landless housing is combined with assisted housing and rent control then the ultimate result would be a policy package that would do the following:
In order to move from the current model of land value to valueless land, the government (likely provincial governments in Canada and state governments in the United States) can slowly purchase land and then leave construction bids open. The simplest method would be have construction bids open, people to express interest and the winning bid goes ahead on the land (as chosen by potential buyers who risk a deposit with the winning bid). The government is only enforcing that land does not factor into the price (there are likely other ways to perform this).
Economic theory, in various schools, usually predict a "lack of housing supply" if there is rent control, or that repairs are not conducted properly etc. In reality, rent control allows landowners to charge prices far above the value of the housing (if it was initially built for $500 000, they charge a rent of $8000 a month, far beyond what a mortgage would cost) and the increase in income would unlikely be used for anything but profit. It is more likely that rent control merely correlates rent prices with the price of the housing, with respect to the cost of the mortgage. In fact, it is more likely that due to the lowered price of housing, a higher number of individuals would become home owners and for renters, their prices can be predicted to help housing stability.
With landless housing implemented, people would purchase homes from contractors or the government at a price that reflects only the price of labour and materials. Renters pay a rent that would correlate only to the mortgage payments and inflation, rather than market fluctuations. The most important difference is that older homes depreciate in value because land holds no value. This would significantly shift economic behaviour since housing is no longer an investment (after all, a house requires greater repairs or renovations as time goes on, why would it make sense to go up in value against inflation?). This last point has significant implications.
In general, commercial/industrial businesses should benefit from structures whose value is separated from land. For instance, a manufacturer would think when a factory needs to be replaced (say every 25 years), then the factory depreciates in value each year (capital depreciation). Then at 25 years, (if for some reason this occurs) the factory owner does not need to purchase land to build another factory. Another example could be small businesses such shops, which would likely benefit much more. A failing business can have their shop (say it is a restaurant) sold but only at the actual value of the material/labour (basically initial cost, with inflation calculated, subtract the necessary repair costs unless the repairs were already done) and then the business is replaced. This allows greater fluidity in the small/medium business sector.
Looking to the far end of the concept, no land is traded any more. Businesses construct and own structures until they are no longer useful and then decide to either redevelop the area or release it to another business to develop if they cannot do so (such as lacking the financial resources). Housing and small shops will be as high density as possible to leave as much land open for future farmland or left fallow for ecological purposes. Private construction is likely to be left to private entities but the government can assist using new web technologies to provide a simple platform for open construction bidding (probably most useful for housing projects). Government construction projects would strictly be required to be done under the openness of the Internet to prevent as much corruption as possible (although this by itself will not eliminate corruption it gives a handy paper trial for the auditor general).
The economic realities of housing wrestles with concepts such as rent control, land value, renting and assisted housing. All of these policy ideas are different methods of provisioning housing to different people according to different criteria. The concept of landless housing has one primary goal: provide the most housing at the cheapest possible price with no loss in quality.
In short, the concept forgoes assigning land value, it always belongs directly to the government, but the property built on top can be owned privately (if privately purchased) with price dependent only on the labour/materials that had gone into the construction of the structure. If a house was built for $600 000 CAD or USD, then it was due to the labour/material cost totalling $600 000. Market price still affects labour and material costs.
A person only pays for what is built, for a price at which it was built and nothing else.
Long Description:
Housing management is typically a package of policies that deal with land management, fees with land use, taxes on owning land, tax breaks on renting/leasing, taxes on commercial land owners, taxes/fees associated with different uses on land, rent controls, government transfers based on economic goals or assisted housing etc. The list is long and complicated.
Landless housing is a concept that envelopes the policies that revolve around purchase price. Essentially, the shift in the current model of housing management is to eliminate the idea of "owning" land. Generally speaking, housing development typically involves paying a fee to the local municipal government for development rights, as well as purchasing the land from previous owners. Speaking in contemporary terms, this has resulted in farmland being sold off for suburban development due to the low income of farmland.
Environmentally speaking and also with respect to economy of scales, municipal governments typically lose money on large sprawling communities in the long term. Due to the short term nature of city politics, most politicians/city councillors do not take this into consideration. Instead they rely on the short-term income earned from development fees and land transfer tax income (and other fees/taxes collected) despite the long-term loss due to services provided to the urban sprawl (snow removal in cold areas in northern United States and Canada, sewage and trash removal and so on, also look toward the string of city bankruptcies due to poor development choices by Californian cities). What would be more optimal is to maintain farmland (better even if let fallow) for future food production to guarantee food security in the future and to have high density housing to gain the benefits from mass transit and provide more economic opportunity for small/medium size businesses to thrive (such as small daily bakeries).
The decreased cost of purchasing housing, due to the absence of land value, means that more of the money spent on housing goes directly into quality. This frees up private wealth to be put towards better, higher quality housing, either larger housing or simply higher quality materials.
If the concept of landless housing is combined with assisted housing and rent control then the ultimate result would be a policy package that would do the following:
- Housing prices reflect the material/labour value of the home constructed
- Rent is based on initial house price, with the ability to increase rent with inflation (such as the CPI + 1 percent maximum increase per year)
- Assisted housing allowance can be targeted for a percentage of the housing in the area in order to prevent poverty from becoming geographically concentrated
In order to move from the current model of land value to valueless land, the government (likely provincial governments in Canada and state governments in the United States) can slowly purchase land and then leave construction bids open. The simplest method would be have construction bids open, people to express interest and the winning bid goes ahead on the land (as chosen by potential buyers who risk a deposit with the winning bid). The government is only enforcing that land does not factor into the price (there are likely other ways to perform this).
Economic theory, in various schools, usually predict a "lack of housing supply" if there is rent control, or that repairs are not conducted properly etc. In reality, rent control allows landowners to charge prices far above the value of the housing (if it was initially built for $500 000, they charge a rent of $8000 a month, far beyond what a mortgage would cost) and the increase in income would unlikely be used for anything but profit. It is more likely that rent control merely correlates rent prices with the price of the housing, with respect to the cost of the mortgage. In fact, it is more likely that due to the lowered price of housing, a higher number of individuals would become home owners and for renters, their prices can be predicted to help housing stability.
With landless housing implemented, people would purchase homes from contractors or the government at a price that reflects only the price of labour and materials. Renters pay a rent that would correlate only to the mortgage payments and inflation, rather than market fluctuations. The most important difference is that older homes depreciate in value because land holds no value. This would significantly shift economic behaviour since housing is no longer an investment (after all, a house requires greater repairs or renovations as time goes on, why would it make sense to go up in value against inflation?). This last point has significant implications.
In general, commercial/industrial businesses should benefit from structures whose value is separated from land. For instance, a manufacturer would think when a factory needs to be replaced (say every 25 years), then the factory depreciates in value each year (capital depreciation). Then at 25 years, (if for some reason this occurs) the factory owner does not need to purchase land to build another factory. Another example could be small businesses such shops, which would likely benefit much more. A failing business can have their shop (say it is a restaurant) sold but only at the actual value of the material/labour (basically initial cost, with inflation calculated, subtract the necessary repair costs unless the repairs were already done) and then the business is replaced. This allows greater fluidity in the small/medium business sector.
Looking to the far end of the concept, no land is traded any more. Businesses construct and own structures until they are no longer useful and then decide to either redevelop the area or release it to another business to develop if they cannot do so (such as lacking the financial resources). Housing and small shops will be as high density as possible to leave as much land open for future farmland or left fallow for ecological purposes. Private construction is likely to be left to private entities but the government can assist using new web technologies to provide a simple platform for open construction bidding (probably most useful for housing projects). Government construction projects would strictly be required to be done under the openness of the Internet to prevent as much corruption as possible (although this by itself will not eliminate corruption it gives a handy paper trial for the auditor general).
Rationale:
Property values and house prices do not track with neighbourhood conditions any longer. Instead, it tracks with exactly the quality of housing. Much like buying a cast iron pot in Richmond is not any different from buying the exact same cast iron pot in Scarborough, buying houses of the same quality will not shift in price. Land value would normally increase or decrease with respect to community conditions (such as crime or school quality) but Canada is meant to be a country of equal opportunity. No matter where you are born or raised, you should have the same opportunities. Property taxes will likely be replaced with a slight increase in a combination of sales tax, income tax and corporate tax rates (likely easiest to simply raise the highest income tax bracket, or increase sales tax slightly or hike large corporate tax rates, all of which probably requires a fraction of a percent increase to cover the loss of property tax income). Or property taxes are simply flat, based on the square footing of property owned, used to pay for services (waste collection, sewage/water, snow removal). Ideally, roads/school would be handled solely by the province/state in order to more evenly distribute financial resources.
Tools:
Anywhere it says "Statistics Canada" replace it with Bureau of Statistics for the United States and pretend that the department has already been formed in the United States Government.
Statistics Canada should begin to track housing prices
and the associated portion of the price being the price of the land of
the property rather than the housing itself. This gives a good sense of
how much money is actually going into labour/material costs of building
these structures.
Housing prices are already tracked by various real estate agencies, so whether Statistics Canada tracks housing prices for stability issues may not matter.
There should already be statistics on house ownership but it would be good to keep track of house ownership quality (rooms in a house, square footage, lot size and amenities). This would require a return to the mandatory long form census, which will hopefully return in the event of a more scientifically-minded Canadian government coming to power in the future.
It would be nice for government structures to depend only on material/labour cost to construct once land has been purchased by the government.
No comments:
Post a Comment