Do we need a land tax to tame foreign investment?

Hampstead mansion

Bishops Avenue in the affluent north London suburb of Hampstead used to be known as 'Millionaires' Row' but thanks to house price inflation it's now become 'Billionaires' Row'.

The owners are now so wealthy that they no longer bother living in the properties and the expensive street is now tarnished with £350 million worth of rotting, derelict properties.

At a time when housing is in such short supply that the government has levied a bedroom tax on those living in social housing with spare bedrooms, the waste of these buildings - which could house multiple families comfortably if turned into flats - is galling.

The first point is why hasn't the council taken the properties off the owners - many of whom are believed to be Saudi royalty - as part of a compulsory purchase order which they can do if a property is left in poor repair or unoccupied for a long time or is in such a state that it becomes a health and safety issue.

As this hasn't happened yet we can only assume that the council either doesn't care or is too worried about upsetting the regal owners to do anything about it.

Some have called for the council to charge a punitive council tax charge on the properties but I have to saw I don't think even a couple of thousand pounds - which may seem a lot to you and me - will dent the pockets of billionaires, in fact it's pocket change.

What may work is a Westminster-led introduction of a land tax for unused properties levied at a percentage of the value of the land - not the property - each year. The definition between land and property is an important one as a clever billionaire would be more than entitled to knock down any property on their land and side-step the tax.

The value should also be reassessed on an annual basis, not original purchase price, to penalise those who land grab and then sit on it to benefit from the appreciation over time.

For example, one property on Bishops Avenue was bought in 1988 for £1.1 million but today it is worth in excess of £70 million, even in a state of disrepair.

We all know the property market is getting out of control but this verges on the ridiculous.

The government has to stand up to those who are using Britain as a safe house for their money. Buying up property may be 'investing' in the country but leaving that property to rot because the investment stops at the purchase price is a sorry state of affairs for us all.
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