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Lorne Street tenants protesting at City Chambers, Edinburgh November 2015

The American land and tax reformer, Henry George, observed in his book, Progress and Poverty, that “thirty thousand people have legal power to expel the whole population from five-sixths of the British Islands. The vast majority of the British people have no right whatsoever to their native land, except to walk the streets.”

The history of much of the world is a history of property, of the appropriation of territory and the framing of laws designed to protect the novel concept of private property. Those frozen out of this process – the poor and the landless – had to make do with belated concessions to protecting their rights – concessions that came too late for many as James Hunters’s new book on the Sutherland clearance, Set Adrift Upon the World, makes painfully clear. In the year of the Strathnaver Clearances in 1814, Sir John Sinclair, Caithness landowner and author of the first Statistical Account of Scotland ,observed that, “in no country in Europe are the rights or proprietors so well defined and so carefully protected.”

To be a landowner was to be endowed with economic, legal, social and economic power. On the basis that the primary responsibility of government was to defend the country, those who owned the country presumed to be best placed to monopolise the electoral franchise and undertake that task.

During the 18th and 19th century, fortunes were made through the ownership of urban land in particular. As cities expanded, demand for land enriched those fortunate enough to hold the title deeds to the fields and meadows that were acquired to build the houses, factories and infrastructure necessary to support a modern urban economy.

In Edinburgh, the street names reveal this history in Buccleuch Street, Hopetoun Crescent Roxburgh Terrace, and Moray Crescent. One of the beneficiaries of this legal dispensation was George Heriot, the Edinburgh jeweller, whose death in 1624 established the Heriot Trust which was run by the Provost, Baillies and Councillors of the City together with the Ministers of the town. It rapidly established a virtual monopoly on land around Edinburgh

An exclusion zone was imposed upon Edinburgh by the activities of the Heriot Trust’s acquisitions” wrote urban historian, Professor Richard Roger. “Scarcely an acre in the neighbourhood came into the market which they did not instantly acquire for the benefit in perpetuity of Heriot’s Hospital”. By the end of the 19th century, the Trust owned over 1700 acres of land around the City. Much of this comprised land between Edinburgh and Leith.

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Samuel Hunter’s timber yard in Leith, 1852. Lorne Street was built along the south.

One of those who held a feu from the Heriot Trust was Samuel Hunter, a stonemason and builder who owned a yard on Leith Walk at Smith Place. He ran a successful business as a property developer and builder and in 1879, was granted a further feu by the Heriot Trust to erect blocks of tenements at the western end of what is now Lorne Street.

When he died in 1893, his daughter Agnes Hunter inherited a substantial property portfolio including her own elegant house on Dalrymple Crescent in the Grange. Upon her death in 1954, her executors established the Agnes Hunter Trust which continues to own over 90 tenement flats in Lorne Street occupied by over 200 residents. The Trust is a charity and provides grants to health and social welfare projects.

The Trust established a reputation as a landlord that provided long-term secure tenancies. “We were promised a tenancy for life”, said one tenant. “Stay as long as you like”’, another was told. The Agnes Hunter tenants comprised a close-knit community of all ages. The oldest resident has lived there for 74 years, having moved in aged 2 years old. The younger children all attend Lorne Primary School adjacent to most of the tenement blocks.

But whilst tenants felt secure, their homes suffered from poor maintenance. Damp persisted for years in flats, waste water rose through bath and kitchen pipes, window frames rotted and repairs were ignored. Many tenants undertook work themselves, installing bathroom sinks and even a heating system. Some tenants began leaving and others were evicted. In July 2015 all 200 of the Trust’s tenants were informed by letter that “retention of The Agnes Hunter Trust’s property portfolio was no longer in the interests of the Trust” and all households were to be evicted by the end of the year.

A determined campaign by residents was launched and the Lorne Community Association secured a stay of execution until the end of January 2016. Following a petition to Edinburgh Council, this was extended to July 2016 in order to allow time to try and establish a housing co-operative or similar solution.

To the wider world, evictions on this scale came as something of a shock. Few knew anything about the Agnes Hunter Trust. I had some vague recollections of my own from 7 years spent living in a flat on Lorne Street but I forgot all about it until the story appeared in the newspapers.

At a time when the Scottish Parliament is, at long last, considering a Bill – the Private Sector (Tenancies) (Scotland) Bill – to modernise tenants rights and provide greater security of tenure, it is worth reflecting on what a shocking state of affairs these evictions represent. Most tenants are on Short assured tenancies. Despite the assurances of lifetime security, most tenants in law were never more than 2 months from eviction.

The short-assured tenancy was introduced in the 1988 Housing Act. The idea was that these tenancies would provide a landlord-friendly tenure for the private sector, allowing it to grow at the same time as Housing Associations were given the freedom to access private finance. The result has been the growth of one of the most unregulated, liberal and (from a tenant’s perspective) insecure rental markets in Europe. Britain’s obsession with homeownership has led to eye-watering levels of private debt, house prices outstripping earnings, a speculative volume housebuilding industry that profits from land value appreciation and consumers spending growing proportions of their income on housing costs.

Sometimes it takes a case like Lorne Street to focus minds on long-standing policy failures. The private rented sector has grown in a haphazard manner driven by buy-to-let landlords and little in the way of a strategic plan. A system where 200 tenants can be evicted on a whim reveals serious flaws in Scotland’s housing tenure. One of the most glaring question (which has, as yet, not been addressed) is quite simple.

Why should 100 families have to be evicted merely because the landlord wishes to sell their homes?

The short answer is, of course, because the law allows it. But this situation would never arise in, for example Germany. The fact that a pension fund might wish to sell its portfolio of flats in Hamburg to another investor does not mean that all the tenants have to be evicted. To the Germans such an idea would be ridiculous. Owning rental property is perfectly legitimate but if you sell it, tenants stay put in their homes. Tenants enjoy security of tenure and the landlord a regular return on their investment.

The complacency in addressing such fundamental questions was evident when the Chair of the Agnes Hunter Trust, Walter Thomson, spoke at the City of Edinburgh Council Petitions Committee on 5 November. In a statement that had tenants draw breath for its audacity and cold logic, he claimed that,

The Trust is not in existence to provide housing.The properties are an asset which enables the Trust to make funding available for charitable causes. Miss Hunter’s trust has never been a social landlord.”

In other words, we have no responsibility to families we have housed for over 60 years. They are merely an asset to generate a revenue stream – this from the Chair of a Scottish charity which, among other things, funds homelessness projects.

Such attitudes are an indictment of 15 years of devolution. The Scottish Government’s Private Housing (Tenancies) (Scotland) Bill will have its final reading next Thursday 17 March. It introduces welcome changes to the private rented sector including a new tenancy that affords greater security for tenants. But, crucially, the wish to sell a tenanted property remains a lawful reason to evict a tenant. Whilst such a provision has a role in a transitional period, it will do nothing to contribute to the kind of long term security enjoyed by tenants in Germany.

Whilst crofting tenants, agricultural tenants and commercial tenants are lawfully entitled to remain in occupation of their crofts, farms and offices when the property is sold, people whose tenancy is their home are rendered homeless on the arbitrary whim of the owner. It is an antiquated state of affairs that has no place in a modern democracy.

As Tony Cain, the Policy Manager for the Association of Local Authority Chief Housing Officers observed recently,

The unstated, and unquestioned, view that underlies these provisions is that eviction and homelessness are appropriate management tools to address business failure or change.

These provisions ensure that private landlords or lenders can remove tenants when thing go wrong with the business or they want to disinvest. And most importantly, the value of the asset is protected by ensuring that it is linked directly the property values in owner occupation.  It also means they can borrow more to invest and make bigger returns on capital values.

Equally importantly what they also do is transfer the cost (aside from the personal trauma and disruption to the tenant) on to the public sector.

By protecting the value of private rented houses in this way and transferring the risk and costs of business failure on to the tenant and local authorities, landlord and investors can be confident that they can sell out relatively quickly and at very little cost to them. 

The Lorne Street tenants have been given until July 2016 to see whether they can devise a solution whereby they form a co-operative to take over ownership of perhaps persuade a housing association to step in. They deserve all the support we can provide.

Meanwhile MSPs should question whether it is right that folk who have lived in their homes for decades deserve to be treated as little more than collateral damage in pursuit of the owner’s short term interests. In particular, they should examine critically Schedule 3, Part 1 1(1) of the Private Housing (Tenancies) (Scotland) Bill – namely, “It is an eviction ground that the landlord intends to sell the let property”. If tenants are to feel secure in their homes, this provision should be removed.

Patrick Harvie MSP has tabled an amendment to remove this ground for eviction.

Scotland needs investment in a sustainable, high-quality, affordable rented sector. It needs to learn from successful countries such as Sweden and Germany. Above all, it needs to ensure that never again is a community treated with the contempt and arrogance faced by the families of Lorne Street.

This blog is reproduced with permission from the University of Glasgow’s Policy Scotland blog.

In May 2014, the Land Reform Review Group submitted its final report to the ScottishGovernment. The First Minister announced in November 2014 that the Government would consequently bring forward a Land Reform Bill, which was published in June 2015 and is currently under consideration by the Scottish Parliament.

The Land Reform Bill concentrates mainly, but not exclusively, on rural aspects of land reform. Alongside this, the Scottish Government is currently undertaking a consultation programme on the recommendations made by the LRRG for urban land reform. These have potential fundamentally to change the operation of urban land markets in Scotland. If adopted, they could have significant impact on planning, housebuilding and real estate development across Scotland.

To help people better understand the LRRG’s proposals for urban land reform, Policy Scotland is publishing six briefing papers summarising their key elements. These papers have been prepared by Professor David Adams who acted as an independent adviser to the LRRG. For more information, please contact Professor Adams at david.adams@glasgow.ac.uk

Briefing Paper No. 1: Compulsory Sale Orders

Briefing Paper No. 2: Housing Land Corporation

Briefing Paper No. 3: Majority Land Assembly

Briefing Paper No. 4: Public Interest Led Development

Briefing Paper No. 5: Statutory Rights of Pre-Emption

Briefing Paper No. 6: Urban Partnership Zones

Image: Chart from OBR Economic & Fiscal Outlook December 2014. Click for larger image.

Following the changes to stamp duty announced by George Osborne in the Autumn Statement, the Scottish Conservative Party has published proposals to change the proposed Scottish replacement – Land and Buildings Transaction Tax – due to be introduced in April 2015. The topic was raised at First Ministers Questions today (col. 14)

The Tory proposals include halving the rate between purchases of between £250,000 and £500,000 from 10% to 5%. The party claims that its proposals “would mean 97 per cent of transactions, including all those below £500,000, will leave house-buyers better off.”

This claim (and similar claims by the Scottish Government) that cuts in stamp duty rates represent a saving to housebuyers is misleading and wrong. It is a symptom of widespread illiteracy around the fiscal dimensions of land and property.

In broad terms, people have a fixed budget when they buy a house. They can, perhaps afford £150,000 made up of a loan and capital of their own. This sum has to cover the costs of acquisition (fees and stamp duty) and the sum paid to the seller for the house. If stamp duty rates are reduced it follows that more money is available for the other costs (fees and the price paid). Assuming that fees remain fixed (such as land registration fees) and others (survey fees and conveyancing costs) remain unchanged (either as a fixed sum or as a percentage of purchase price), the money saved in stamp duty will be available to bid up prices.(1)

This is a straightforward economic principle that was the subject of this useful analysis by Shelter and is noted by the Office of Budget responsibility in its Economic and Fiscal Outlook December 2014 on page 126 as follows.

The OBR analysis makes clear that the cuts proposed by George Osborne and the Scottish Conservatives will be more than offset by higher house prices. Those higher prices will, in many cases be financed by loans, the interest on which will be higher over many decades. A small saving in a one-off transaction tax will not simply be more than offset by higher house prices but by ongoing, compounded and volatile interest payments to financial corporations.

The best solution (and the one I advocated two years ago and is recommended by one of the Scottish Government’s own economic advisers – Sir James Mirrlees) is to abolish this transaction tax in its entirety and replace the volatile yield with a better-designed system of recurrent taxation of land and property. The Mirrlees Review (Chapter 16 pg 404) noted that,

If the Scottish Conservative (and indeed other parties) want to be truly radical, they would be well-advised to stop tinkering with rates (that will not have the claimed effects), abolish stamp duty and its associated bureaucracy, and agree to far more fundamental reform in fiscal policy relating to land and property.

(1) Of course, buyers are often sellers and will receive higher bids for the property that they are selling. But given that most buyers who are sellers are trading up, this merely exacerbates the inflation in prices.

The comedian and TV presenter Griff Rhys Jones is reported today to be ready to quit the UK in protest at plans by the Labour Party to introduce a mansion tax if it wins the 2015 General Election. As the Telegraph reports,

He himself lives in a “gigantic” house in a part of central London that was, when he bought it 15 years ago, a “slum”. He has a track record of buying large, run-down properties and turning them into homes for himself and his wife, Jo. His Fitzrovia house has appreciated so significantly that he is contemplating moving overseas if Labour win the election and introduce a mansion tax.

“It would mean I’d be paying the most colossal tax, which is obviously aimed at foreigners who have apparently come in and bought up all the property in London,” he says. “That sounds about as fatuous an idea as that immigrants are stealing all the jobs. I’d probably go and live abroad because I could get some massive palace which I could restore there.”

There has been a lot of nonsense talked about the mansion tax. This, from the Chief Executive of Legal & General, is typical.

“People who choose to prioritise buying a home have typically made sacrifices to do so: fewer foreign holidays, meals out or other luxuries. Through no fault of their own, their prudence would be punished by a Mansion Tax.” (Telegraph 27 October 2014).

The idea that folk who own houses worth in the millions have made sacrifices, saved hard or been prudent may well be true (at least for some). But that sacrifice, saving and prudence is not what has been responsible for their homes being worth so much money. The inflated price of houses in many parts of the UK is a consequence of scarcity and a lax fiscal regime. The financial gains made by homeowners are only in very small part due to their own efforts (for example, insulating or other improvements). The vast majority of the gains are as a consequence of rising land values.

Labour has yet to spell out the details of its plans but they involve a levy on properties worth over £2 million. Ed Balls announced the policy in an article in the Evening Standard on 20 October 2014. The Financial Times calculated that on average, the owners of properties worth over £3 million would pay an average of £19,000 per year.

Griff Rhys Jones and his partner Joanna own 2 Fitzroy Square (shaded red above) in the London borough of Camden. They bought the property for £1,450,000 in 1998 after Camden Council granted planning consent for a change of use from offices to a residential home (see Land register title). The couple then undertook the renovations and the property is now a domestic dwelling with 7 bedrooms, 3 bathrooms and 4 reception rooms.

Image: Extract from Title Plan for 2 Fitzroy Square.

According to Zoopla, the property is currently worth £7,012.156 and has risen in value by £3,015,251 over the past 5 years. The rental value is estimated at £16,167 per month (£194,004 per year). Rhys Jones currently pays £2640.96 in Council Tax to Camden Council.

Assuming that £1 million was spent undertaking renovations, the Rhys Joneses have seen their property rise in value by around £4.5 million. That sum is unearned increment (economic rent in economic theory) and, since principal residential properties are exempt from capital gains tax, the gain is entirely tax-free. This tax relief is worth an estimated £10.4 billion per year to homeowners according to the National Audit Office.(1)

Successive governments have put in place a fiscal regime for domestic property that allows Rhys Jones to make a £4.5 million tax-free capital gain without any effort on his part.

A sensible system of recurrent taxation would be designed to curtail such asset inflation by socialising this rent rather than allowing it to be appropriated tax-free by private interests. The mansion tax is a badly designed tax. As the Institute of Fiscal Studies commented in February 2013,

Rather than adding a mansion tax on top of an unreformed and deficient council tax, it would be better to reform council tax itself to make it proportional to current property values.”

If property taxation was properly proportional and the Rhys Joneses paid the percentage rate (1.85%) that a mid-point English Band D property is liable for, then they would be paying £129,724 per year. The Mansion tax is liable to be about a tenth of that.

That kind of liability would deter most buyers who, as a consequence would offer less for the property so as to pay less in annual holding costs – which is precisely what a well-designed system of recurrent property taxation would do. Lower property prices means less indebtedness and more resources invested in the productive economy. But that is not the kind of economy that either Labour or the Tories appear to be interested in.

In the meantime perhaps Rhys Jones should be grateful.

NOTES

(1) See Figure 6 in Tax Reliefs.

 

The Title Conditions (Scotland) Act 2003 was passed during the first Scottish Parliament. It codifies the kinds of restrictions or burdens that can be included in titles to land and property. Among them is something called a conservation burden that can be used to protect aspects of the natural and cultural heritage. One of the bodies allowed to impose such burdens is the National Trust for Scotland (NTS).

Helen Finan owns a croft in the village of Inveralligin in Wester Ross. She inherited the croft from her mother, Donaldina Maclean Finan who passed away in 2011. The croft has been in her family since before the 1886 crofting act. Her great-grandfather’s family was a victim of the Highland Clearances. Helen moved to the croft in 2009 to nurse her mother in the last two years of her life.

In 2006, Donaldina had decrofted (removed from crofting tenure) the house and garden. Later, in 2009 she exercised her legal right to acquire the whole croft and, in so doing became an owner-occupier crofter.

Under the crofting acts, if the croft land is sold to anyone who is not a member of the crofters’ family within 10 years of being bought, the landlord is entitled to clawback 50% of the difference between the open-market value and the price paid to acquire it. This condition relates only to the croft land and not to the dwelling house. Helen is content with this statutory condition.

This blog is not about the croft-land. It is about the house and garden which Helen now owns outright. The house and garden are shown bounded in blue in the title plan above. The croft-land is the remaining land bounded by the red line.

At the time of the sale of the croft, NTS, who bought the estate in 1967, insisted that a conservation burden was imposed on the croft house, garden and croft-land. (1)

The burden requires the consent of NTS for the following.

– the sub-division of the house or its permanent occupation by more than one family

– the development of the building for anything other than a single dwelling house

– any internal or external alterations.

The burdens require that,

– the owner shall paint the house at least ever five years with a colour approved by NTS

– the garden be kept in a neat and tidy condition.

Helen and her late mother have done a very good job abiding by these conditions.

The most significant of the conservation burden conditions, however, has nothing to do with appearance or amenity but insists that the house and garden,

“shall be used as a private dwelling house only and as the main residence of the Proprietor, and for no other purpose, including a holiday home or let for holiday purposes.”

Helen is not in a position to reside permanently in Inveralligin and thus she wishes to sell the whole croft. But she faces a problem because the potential buyer has been advised that the burden will make it difficult to re-sell the property in future. The croft house is now difficult to sell and leaves Helen in a tricky position. She cannot live and work there as there is no work. She cannot let the house because that contravenes the conservation burden and it looks like she may not be able to sell it. Her future is in the hands of the NTS.

I understand that others are in a similar situation.

Now it may or may not be desirable that the owners of such properties be compelled to live in the house they own. Indeed Section 33(2) of the Crofting Reform (Scotland) Act 2010 insists that crofters should live within 20 miles of their croft (though this do not apply to the croft house if it is sold independently from the croft). The issue here is not the desirability or otherwise of such conditions but whether it is appropriate or even lawful for the NTS or any other private body to impose and police them.

Helen has therefore applied to the NTS to waive the conservation burden. The application was considered by the NTS’s “Conservation Agreement Scrutiny Panel”. It decided that it was willing to grant the waiver in respect of the residency condition but that all other conditions (the colour of the house etc) remain in place. But the panel placed a condition on the granting of the waiver viz.

the Panel recognised that the condition diminishes the market value of the property. In recognition of this the Panel requests that a payment be made to the trust equivalent to 50% of the uplift in the value of the Property arising from the granting of the waiver. The payment shall be applied to the trust’s charitable purposes which include the care and protection of the wider Torridon Estate for the benefit of the public.”

This is a quite breathtaking statement. The only reason the croft house is devalued is because of the conservation burden which NTS imposed and in exchange for waiving the burden, NTS wants to be paid a substantial sum of money!

The problem with the approach of the NTS is that it is not clear that the conservation burden is lawful in the first place. In 2002, the NTS argued for such burdens in written and oral evidence to the Scottish Parliament and made no mention of any wish to become involved in social engineering of any kind.

Section 38 of the Title Conditions (Scotland) Act 2003 reads as follows

38 Conservation burdens

(1) On and after the day on which this section comes into force it shall, subject to subsection (2) below, be competent to create a real burden in favour of a conservation body, or of the Scottish Ministers, for the purpose of preserving, or protecting, for the benefit of the public—

(a) the architectural or historical characteristics of any land; or

(b) any other special characteristics of any land (including, without prejudice to the generality of this paragraph, a special characteristic derived from the flora, fauna or general appearance of the land);

and any such burden shall be known as a “conservation burden

What architectural, historic of other (flora, fauna etc.) characteristic of the land is preserved or protected for the benefit of the public by insisting that the owner of the house shall use it as their main residence and for no other purpose?

Answer – none.

Whether someone lives in a  house or not bears no relation to any characteristics of the land.

In this instance an absentee conservation landlord is seeking to impose its values and will on another property owner who stands to be disadvantaged as a consequence. Is this right?

It would be interesting to see what the Land Court or Lands Tribunal for Scotland would make of of this question if it were to be presented to them given both the question over the legitimacy of the conservation burden and the more general conflict arising between the rights of crofting tenants under the law and the aims of the NTS.

NOTES

(1) Of course the conditions of sale were accepted by Helen’s late mother. Had she not accepted them, she may have had to go to the Land Court to contest them. She was ill and in the last two years of her life. On a reasonable interpretation of the circumstances she appeared not to have had a great deal of choice in the matter.

Scottish Government’s Council of Economic Advisers with Professor James Mirrlees 2nd from right.

The Scottish Government has been consulting on a replacement for Stamp Duty Land Tax (SDLT) – one of the devolved taxes in the Scotland Act 2012. The consultation closes tomorrow (30 August 2012) and I have submitted a response. Yesterday, I spent a stimulating afternoon as a member of a panel discussing property and land tax organised by the Scottish Policy and Innovation Forum where my personal highlight was hearing from Eugene Creighton, Head of Income and Capital Taxes in the Irish Revenue.

As has become the norm in Government consultations, we are invited to answer a set of questions. In the case of this consultation, I declined to answer these questions for the simple reason that they all assume that it is a good idea to replace SDLT with what is being called a Scottish Land and Buildings Transaction Tax. My view is that such a transaction tax should be abolished in its entirety.

I cite in support of my view no less an authority than Professor James Mirrlees, Scottish economist, Nobel prize winner and member of the Scottish Government’s Council of Economic Advisers. Professor Mirrlees led an exhaustive 5-year review of the UK tax system funded by the Economic and Social Research Council and the Nuffield Foundation.

Their view of Stamp duty land tax?

“Stamp duty is among the most inefficient and damaging of all taxes.

There is no sound case for maintaining stamp duty and we believe it should be abolished”(1)

The Mirrlees Review recommends the abolition of business rates, council tax and stamp duty land tax to be replaced by a Housing Services Tax and a Land Value Tax. (2)

My recommendation to the Scottish Government is to conduct a comprehensive review of property and land tax in Scotland rather than the present ad-hoc approach where stamp duty land tax, council tax and business rates are all subject (or soon to be subject) to separate ad-hoc reform processes. There are a range of issues that need to be addressed in addition to purely fiscal matters. These include the important question of local governance and who should be responsible for setting property tax rates.

I also think that the Scottish Government should pay close attention to the findings of a comprehensive review of tax led by one of their own economic advisers which recommends abolition of transactions taxes on land and property. For a full review of their conclusions read Chapter 16 of the Mirrlees Review Tax by Design especially sections 16.3 and 16.4.

UPDATE 31 AUGUST 2012

The above debate is closely linked to the debate on a wealth tax in the UK kicked off by Nick Clegg’s interview in the Guardian on Tuesday. In the Financial Times on Wednesday, former Deputy Governor of the Bank of England, Howard Davies, dismissed the practicalities of the idea but did advocate a land value tax as workable alternative.

UPDATE 2 NOVEMBER 2012

The responses to the SDLT consultation can be viewed here and an analysis is published here.

UPDATE 3 DECEMBER 2012

The Land and Buildings transaction Tax (Scotland) Bill was published on 29 November 2012.

(1) Press Release 14 September 2011
(2) For further details of Land Value Tax, see my October 2010 paper and other material under “Hot Topics/LVT in the main menu.

UPDATE 22 JANUARY 2013

The Land and Buildings Transaction Tax (Scotland) Bill is now being considered by the Finance Committee of the Scottish Parliament. I have submitted evidence. The Scottish Parliament Information Centre has produced a briefing on the Bill in which they make the important point (page 8 of the briefing) that the power that has been devolved to the Scottish Parliament is a power to levy a tax on transactions. I argue that we should abolish such a tax. Such an option is open to Parliament but it would have to raise the lost tax receipts from other sources which is why I argue for a proper review of all property tax and the introduction of a land value tax. That, however, is not going to happen. The Scottish Government are committed to this clumsy and complex tax that produces revenues that are unpredictable, necessitates a new bureaucracy and has been criticised by the Scottish Government’s own economic adviser, Professor Mirrlees.

UPDATE 28 MARCH 2013

The Finance Committee today published its Stage One Report on the Land and Buildings Transaction Tax (Scotland) Bill. My evidence and the views of Professor Mirrlees are dealt with under “Alternative Approaches” paras. 102 – 108. The Committee recognises that the Scotland Act 2012 requires any replacement tax for SDLT to be a tax on land transactions. The Committee has asked the Scottish Government whether it considered the findings of the Mirrlees Review in bringing forward a replacement tax for Stamp Duty Land Tax.

UPDATE 25 JUNE 2013

Scottish Parliament passes the Land and Buildings Transaction Tax (Scotland) Act.

UPDATE 31 JULY 2013

Land and Buildings Transaction Tax (Scotland) Act receives Royal Assent

Interesting announcement today by the English Housing and Planning Minister, John Healey. He proposes that Parish Councils be given powers to build affordable housing by extending the scope of permitted development rights. Individual planning applications would not be needed for amaximum of 10-15 houses where the Parish Council backs the development.

This is quite radical.

Of course it is only possible because England still has a local level of “local” government. Parish Councils in Scotland were abolished in 1930 by the Local Government (Scotland) Act 1929 and Town Councils were abolished in 1975 by the Local Government (Scotland) Act 1973.

It is time to resurrect these vital levels of local democracy so that the parishes, towns and villages of Scotland can play a proper role in local development.

I’m grateful to my colleague, Graham Boyd for drawing my attention to an excellent report produced for the Mayor of London on Community Land Trusts and Mutual Housing Models. Such solutions could be very appropriate for overheated housing markets in Scotland. A copy of the report (606kb pdf file) is available here.

We know about problems with the planning system and we know about the problems of land availability. For those folk who don’t want to rent from a housing association but want to buy a piece of land on which to build their own house these problems are real enough. But just when you think they’ve been solved, along comes another spanner in the works.

The village of Laggan in Inverness-shire has a reputation for getting things done and housing has been high on their agenda. However, things are not always simple and even when you think everything is going right, you get walloped by the unexpected. This is a story of the unexpected.

Campbell and Sheena Slimon own Breakachy Farm. Campbell is well-known in farming circles and Sheena has been a stalwart in local community activities for years. She is now the Highland Councillor for the Badenoch west ward. They bought Breakachy Farm in 1987 from the MacPherson’s of Glentruim Estate. In recent years, a local couple were in search of a plot of land and the Slimons agreed to sell a 3877 square metre plot for 20,000 GBP (considerably less than they could have achieved on the open market). It took 2 years to obtain planning permission and the sale was imminent. Then the unexpected happened.

Breakachy Farm was sold to the Slimons by Feu Disposition. In other words, the owners of Glentruim Estate, although they’d sold the farm, remained the Slimon’s Feudal Superiors. As Superiors, they had, among other rights, a right of pre-emption which is to say that if the Slimons were ever to sell any part or all of Breakachy Farm, the owners of Glentruim would have the right to purchase the land at a price equal to that being offered by the purchaser. In 1997, Glentruim Estate and the rights associated with the estate (including those of Feudal Superior) were sold by the MacPhersons to Roeland Hendrik Jan Groenendyk for 405,000 GBP. The Estate by now consisted of a mere 22 ha including Glentruim House.

Thus when Roland Groenendyk was notified of the sale of the housing plot, he exercised his right of pre-emption and bought the land for 20,000 GBP. Obviously this caused huge upset and the Laggan Community Association wrote to Mr Groenendyk to express their concern. In reply, he wrote,

“We were also looking for a building plot for a couple of years now, for
a young family with 2 children, who wants to settle here in this area.
So we are very pleased to get the opportunity to help another young
family and therefore will proceed with the purchase.”

However, the real motives are now apparent. Mr Groenendyk has put the plot of land up for sale at offers over 125,000 GBP. The land is being advertised for sale.

What appeared to be an alternative gesture of goodwill towards a family in housing need turned out to be no more than an exercise in profiteering.

What can be done? Well, on 28 November 2004, the Feudal system of land tenure in Scotland will finally be abolished. The Abolition of Feudal Tenure etc. (Scotland) Act does allow for the retention of certain types of title conditions including rights of pre-emption. We do not know whether Mr Groenendyk had taken steps to preserve this right or whether, had the Slimons waited a couple of months, the right of pre-emption would have been extinguished. What is clear is that many existing rights of pre-emption will disappear on 28 November BUT EQUALLY many will remain. When land is sold by ordinary dispostion (rather than by a feudal disposition) the abolition of feudalism has no impact.

So, celebrate the end of feudalism on 28 November, but still be prepared for the unexpected.