You claim in two places that empty land is being held for speculative purposes. This doesn’t make any sense to me (why would I refuse to rent my properties to push up the value of someone else’s properties?), so I followed your links to investigate. The first link seems to just be a general purpose NIMBY article arguing against redevelopement, and I didn’t see anything about keeping houses vacant. The second link is to a Scottish political campaign that doesn’t claim to know why the houses are empty (at least on this page) and doesn’t contain the 700,000 number in the link text (the linked political campaign claims 46,000 in Scotland and doesn’t seem to say anything about the UK).
The second link is to a Scottish political campaign that doesn’t claim to know way the houses are empty (at least on this page) and doesn’t contain the 700,000 number in the link text (the linked political campaign claims 46,000 in Scotland and doesn’t seem to say anything about the UK).
The phrase ’700,000emptyhomesthroughout’ the UK has different links for each word: one for England, Northern Ireland, Scotland, and Wales. If you follow the link on 700,000, you will be taken to this page which gives a figure of 676,304 empty homes in England. Add this to the Scotland, Northern Ireland and Wales figures and you get a total over 700,000. As explained in the link for English data (which makes up most of the total), the figure comes from Council tax data (council taxes are paid by the owners of a property and charges different rates depending on whether the home is occupied or unoccupied).
I still think it’s a problem that this argument rests on the idea that investors are irrationally not renting land they own, but you don’t provide any evidence for that.
As I try to look into this more, I’m also finding that the vacancy rate seems really low in England. 676,304 vacant homes / 24.9 million total homes gives a vacancy rate of 2.7%, which is lower than every city in the United States except for Gilbert, AZ according to this article, although it’s possible vacancy is being defined differently?
As I try to look into this more, I’m also finding that the vacancy rate seems really low in England. 676,304 vacant homes / 24.9 million total homes gives a vacancy rate of 2.7%
Why is the ratio (vacant homes/total homes) the right thing to look at, if a single metric is to be considered for argument?
The vacancy rate takes into account the size of the total market. If you told me 1 million people are unemployed in a country, the situation is likely to be very different if the total population of the country is 10 million vs. 100 million. Similarly, 700k vacant homes is a big deal if that’s 10% of the market, maybe not as big of a deal if it’s the amount of structural vacancy you’d expect to see in a healthy market, i.e. the amount of homes that are temporarily vacant because they are in the process of being sold.
There are likely other metrics worth looking at, though, as one metric can never tell the whole story as it will always hide relevant details and mash together very different situations that nevertheless produce the same measured value on a particular metric.
Ok, I agree that you have to normalize the number of vacant homes. The total number of homes is the largest denominator that makes sense. My doubt was if the denominator could be something smaller than the number of total homes.
In different words, my knowledge of the housing market is not sufficient to say if 2.7% counts as small or large. Why does it “seem really low”?
Analogous example that comes to my mind: if I am a male searching for a female mate, I prefer cities with higher female/male ratio. Say town A has 49-51, and town B has 51-49. Is a 2% difference large or small? I argue it could be large, for what matters for finding a mate: if most couples in a town are already locked, i.e., people in long term relationships, then the “free market” of dating is much more gender-skewed than a 2% difference.
To be concrete: say 90 people are paired, and 10 are single. Then removing the paired 45:45, the gender ratio within singles remains 4:6 in town A, and 6:4 in town B, i.e., in town A there are 2 single females for each 3 single males.
Thus the set that makes the ratio more intuitively “large” or “small” is the set of singles rather than the set of all people.
Getting back to housing: maybe there is a smaller set contaning all vacant homes, or even a more restrictive set to consider that contains only some vacant homes, that is more appropriate. I don’t know though.
I still think it’s a problem that this argument rests on the idea that investors are irrationally not renting land they own, but you don’t provide any evidence for that.
I disagree. Firstly, even if, they were renting out their land, this would still be bad, for reasons described in the article (landlords extract land rent without doing anything productive etc.)
The section of the post which argues about empty homes rests on the fact that there are empty homes and a land tax would reduce them. I then provide evidence that there are, indeed, a significant number of empty homes in the UK. I do not speculate about the rationality/irrationality of the people holding them because it is irrelevant to the argument. Do you disagree on the 700,000 figure?
Is your view something like ‘I find it hard to believe that people would leave houses empty because they are leaving money on the table. Therefore I disbelieve the 700,000 empty homes figure.’? If so, I guess I’m not super interested in disputing the government figures.
Or is your view something like ‘The argument in the post hinges on the fact that people are irrationally leaving homes empty and the author of the post needs to explain why they aren’t behaving rationally in order to make the argument work.’? If so, hopefully I explained why the argument rests on the fact that empty homes exist, not the rationality/irrationality of the people holding them.
For what its worth, I find it pretty easy to believe that people are leaving homes empty. People often behave ‘irrationally’ when it comes to money: a lot of people gamble and most people have their savings in a low-interest account. I know at least two middle class families who own a flat in a city where they don’t live. They visit it maybe once a year and occasionally let friends visit. They aren’t super interested in squeezing it for every penny its worth and don’t want to sell it for sentimental reasons and they know the price will go up so they keep it as is. They think that renting it out would cause them too much stress and they don’t feel that they need any more money and they enjoy visiting it so they don’t rent it out . Is this irrational? Maybe from the point of view of optimizing their income, but they are just optimizing other aspects of their life.
For the record, I’m not arguing against a land value tax in general. I actually think an LVT is reasonable idea if you can actually figure out how to determine land value. I just think this particular argument for an LVT has in incorrect premise, and the links used to support it don’t actually support it.
I think the two cruxes of our disagreement are, first that I think you are saying that you know why homes are vacant. These two quotes claim that houses are being left vacant for speculation:
At the same time, vast brownfield sites which could be developed are left unused and many of the properties that are built are simply left empty, and held as a speculative investment.
And here:
Landlords may be unproductive, but at least they allow people to live and work on the land they own. Some land owners do not even rent out their land: they simply sit on it and wait for the price to increase. This behaviour is known as speculation and as a result, there are almost 700,000 empty homes throughout the UK, and over 150 million square feet of unused retail space.
Second, I think the reason matters. If the houses are being held vacant for a reason other than speculation, in undermines the argument for why an LVT would change that. An LVT would affect the vacancy rate if (1) it incentivizes people to rent out more houses and (2) it’s possible to rent out more houses.
I think (1) is not a meaningful difference given that investors are already strongly incentivized to rent out properties they own (they get rent!), and I think (2) is mostly wrong and most of the empty houses are empty because remodeling, sales, and finding renters takes time (around 2/3rds of these houses are empty for less than 6 months) or because no one wants them (the houses are in the wrong place or not liveable).
This article summarizes the important data points here. Among other things, note that long-term vacancy rate in London is 0.4%, compared to 2.7% for England as a whole, and that the number of vacant properties has been doing down over time.
Regarding your comments, I don’t think vacation property owners are relevant here since I’m disputing your claim around land held for speculation, and vacation properties are held for their owners’ use. This effects the incentives since vacation property owners are already forgoing rent which is worth more than any plausible LVT (although an LVT might push some of them over the edge to rent/sell).
In short, I don’t dispute the existence of empty homes; I dispute that they’re empty for the reasons you claim, and as a result, I don’t think an LVT will meaningfully convert those into useable houses.
I expect that your next response will be something like “yes, but a not-literally-zero amount of houses will convert from vacant to not-vacant with an LVT”, and I agree that the number will probably not be literally-zero, but I think that number will not be meaningful, and that this isn’t a free win with no downsides.
Among other reasons, it’s important to realize that the real business a lot of house builders are in is land speculation (even better than waiting for someone else to develop your empty land is just doing it yourself), so it’s unclear if destroying that business would help or hurt housing supply. There’s also the political angle, that “housing shortages are caused by landlords” is used by NIMBYs to redirect away from real solutions (building more housing), so repeating their untrue claims in service of a minor win is counterproductive.
You claim in two places that empty land is being held for speculative purposes. This doesn’t make any sense to me (why would I refuse to rent my properties to push up the value of someone else’s properties?), so I followed your links to investigate. The first link seems to just be a general purpose NIMBY article arguing against redevelopement, and I didn’t see anything about keeping houses vacant. The second link is to a Scottish political campaign that doesn’t claim to know why the houses are empty (at least on this page)
and doesn’t contain the 700,000 number in the link text (the linked political campaign claims 46,000 in Scotland and doesn’t seem to say anything about the UK).The phrase ’700,000 empty homes throughout’ the UK has different links for each word: one for England, Northern Ireland, Scotland, and Wales. If you follow the link on 700,000, you will be taken to this page which gives a figure of 676,304 empty homes in England. Add this to the Scotland, Northern Ireland and Wales figures and you get a total over 700,000. As explained in the link for English data (which makes up most of the total), the figure comes from Council tax data (council taxes are paid by the owners of a property and charges different rates depending on whether the home is occupied or unoccupied).
Hope this helps!
Ah I missed that. Thanks!
I still think it’s a problem that this argument rests on the idea that investors are irrationally not renting land they own, but you don’t provide any evidence for that.
As I try to look into this more, I’m also finding that the vacancy rate seems really low in England. 676,304 vacant homes / 24.9 million total homes gives a vacancy rate of 2.7%, which is lower than every city in the United States except for Gilbert, AZ according to this article, although it’s possible vacancy is being defined differently?
Why is the ratio (vacant homes/total homes) the right thing to look at, if a single metric is to be considered for argument?
The vacancy rate takes into account the size of the total market. If you told me 1 million people are unemployed in a country, the situation is likely to be very different if the total population of the country is 10 million vs. 100 million. Similarly, 700k vacant homes is a big deal if that’s 10% of the market, maybe not as big of a deal if it’s the amount of structural vacancy you’d expect to see in a healthy market, i.e. the amount of homes that are temporarily vacant because they are in the process of being sold.
There are likely other metrics worth looking at, though, as one metric can never tell the whole story as it will always hide relevant details and mash together very different situations that nevertheless produce the same measured value on a particular metric.
Ok, I agree that you have to normalize the number of vacant homes. The total number of homes is the largest denominator that makes sense. My doubt was if the denominator could be something smaller than the number of total homes.
In different words, my knowledge of the housing market is not sufficient to say if 2.7% counts as small or large. Why does it “seem really low”?
Analogous example that comes to my mind: if I am a male searching for a female mate, I prefer cities with higher female/male ratio. Say town A has 49-51, and town B has 51-49. Is a 2% difference large or small? I argue it could be large, for what matters for finding a mate: if most couples in a town are already locked, i.e., people in long term relationships, then the “free market” of dating is much more gender-skewed than a 2% difference.
To be concrete: say 90 people are paired, and 10 are single. Then removing the paired 45:45, the gender ratio within singles remains 4:6 in town A, and 6:4 in town B, i.e., in town A there are 2 single females for each 3 single males.
Thus the set that makes the ratio more intuitively “large” or “small” is the set of singles rather than the set of all people.
Getting back to housing: maybe there is a smaller set contaning all vacant homes, or even a more restrictive set to consider that contains only some vacant homes, that is more appropriate. I don’t know though.
I disagree. Firstly, even if, they were renting out their land, this would still be bad, for reasons described in the article (landlords extract land rent without doing anything productive etc.)
The section of the post which argues about empty homes rests on the fact that there are empty homes and a land tax would reduce them. I then provide evidence that there are, indeed, a significant number of empty homes in the UK. I do not speculate about the rationality/irrationality of the people holding them because it is irrelevant to the argument. Do you disagree on the 700,000 figure?
Is your view something like ‘I find it hard to believe that people would leave houses empty because they are leaving money on the table. Therefore I disbelieve the 700,000 empty homes figure.’? If so, I guess I’m not super interested in disputing the government figures.
Or is your view something like ‘The argument in the post hinges on the fact that people are irrationally leaving homes empty and the author of the post needs to explain why they aren’t behaving rationally in order to make the argument work.’? If so, hopefully I explained why the argument rests on the fact that empty homes exist, not the rationality/irrationality of the people holding them.
For what its worth, I find it pretty easy to believe that people are leaving homes empty. People often behave ‘irrationally’ when it comes to money: a lot of people gamble and most people have their savings in a low-interest account. I know at least two middle class families who own a flat in a city where they don’t live. They visit it maybe once a year and occasionally let friends visit. They aren’t super interested in squeezing it for every penny its worth and don’t want to sell it for sentimental reasons and they know the price will go up so they keep it as is. They think that renting it out would cause them too much stress and they don’t feel that they need any more money and they enjoy visiting it so they don’t rent it out . Is this irrational? Maybe from the point of view of optimizing their income, but they are just optimizing other aspects of their life.
For the record, I’m not arguing against a land value tax in general. I actually think an LVT is reasonable idea if you can actually figure out how to determine land value. I just think this particular argument for an LVT has in incorrect premise, and the links used to support it don’t actually support it.
I think the two cruxes of our disagreement are, first that I think you are saying that you know why homes are vacant. These two quotes claim that houses are being left vacant for speculation:
And here:
Second, I think the reason matters. If the houses are being held vacant for a reason other than speculation, in undermines the argument for why an LVT would change that. An LVT would affect the vacancy rate if (1) it incentivizes people to rent out more houses and (2) it’s possible to rent out more houses.
I think (1) is not a meaningful difference given that investors are already strongly incentivized to rent out properties they own (they get rent!), and I think (2) is mostly wrong and most of the empty houses are empty because remodeling, sales, and finding renters takes time (around 2/3rds of these houses are empty for less than 6 months) or because no one wants them (the houses are in the wrong place or not liveable).
This article summarizes the important data points here. Among other things, note that long-term vacancy rate in London is 0.4%, compared to 2.7% for England as a whole, and that the number of vacant properties has been doing down over time.
Regarding your comments, I don’t think vacation property owners are relevant here since I’m disputing your claim around land held for speculation, and vacation properties are held for their owners’ use. This effects the incentives since vacation property owners are already forgoing rent which is worth more than any plausible LVT (although an LVT might push some of them over the edge to rent/sell).
In short, I don’t dispute the existence of empty homes; I dispute that they’re empty for the reasons you claim, and as a result, I don’t think an LVT will meaningfully convert those into useable houses.
I expect that your next response will be something like “yes, but a not-literally-zero amount of houses will convert from vacant to not-vacant with an LVT”, and I agree that the number will probably not be literally-zero, but I think that number will not be meaningful, and that this isn’t a free win with no downsides.
Among other reasons, it’s important to realize that the real business a lot of house builders are in is land speculation (even better than waiting for someone else to develop your empty land is just doing it yourself), so it’s unclear if destroying that business would help or hurt housing supply. There’s also the political angle, that “housing shortages are caused by landlords” is used by NIMBYs to redirect away from real solutions (building more housing), so repeating their untrue claims in service of a minor win is counterproductive.
Thanks for this comment-it explains your view very clearly and I understand what you are getting at now.
I think its a fair criticism. I’ve added footnotes within the post, linking people to your comment.