There was a nice advertorial in today's City AM:
Hearing that the Prime Minister plans to open up public sector land for small-scale developments was a great way to start the year. Gaining access to land is a major hurdle that keeps too many small property development companies out of the market. All initiatives to correct that should be welcomed.
Yet lack of land isn’t the only barrier facing small developers. Accessing finance to purchase that land and put it to work is an even greater challenge; one that’s pushed as many as three in four small-scale property developers out of business in recent years...
No, we've done this before, small developers do not need a single penny of 'finance' to acquire publicly owned land.
Assuming public bodies were rational, they would sell their land for whatever they can get, and cut out the finance middleman by deferring payment of the purchase price until the units and finished and sold.
In the interim, the public body can charge the developer interest, which to all intents and purposes is the same as Land Value Tax. Either the developer pays the LVT interest on the outstanding amount as he goes along, or defers payment of that as well. From the point of view of the public body, whether they get their money today or in a couple of years' time is neither here nor.
Sorted. And there's no reason why the same principle can't apply to subsequent purchasers. Instead of borrowing money to buy the land and buildings, they just need to borrow money to pay for the value of the buildings and they can take over the existing notional loan on the land element and pay 'interest' to the public body on that.
Debate Magazine
