Landlords and Tenants
How does Land Value Rating affect landlords?
Landlords who are in the business of providing quality housing will be better off. They are penalized under AAV for improvements made to their properties.
Landlords who are in the speculative business of capital gains from land/house appreciation may be worse off. Land value rating will encourage them to become better landlords.
Tenants benefit greatly:
Land Value Rating alters the rating burden from homeowners to land speculators. It encourages holders of vacant land to sell. Sites can then be obtained more cheaply, and tenants can become owners more easily.
Land Value Rating encourages owners to make repairs and upgrade their properties, because they are not faced with increased rates for doing so.
- Land Value Rating cannot be passed on to tenants.
The land revenue collected by the local authority as rates is matched exactly by a reduction in the unearned income of landholders
- Land Value Rating stimulates house building, increasing supply and lower rents.
Under AAV, the tenants’ landlord will often increase the rent if an area is improved! Rates levied on buildings and property improvements can be passed on to the tenant and therefore add to the cost of industry and land use generally. Therefore, under AAV, prices are affected.
Freehold owners receive a return on their payments in the form of higher land/house prices; this return is denied to tenants – although they pay most of the cost of ownership!
One of the injustices of the user-pays system is that both tenants and freeholders pay for services. While both tenants and freeholders pay for council services, those services increase land values. Freehold landowners gain a benefit that a tenant cannot. The gap between ‘haves’ and ‘have-nots’ will be wider in a ‘user-pays’ system.
How does Site Value Rating affect home builders?
Land Value Rating is better for the owner of a vacant lot who intends to build.
- Under AAV rating, a lower rate would be payable while the block was vacant, but as soon as a house is built, the AAV rate would rise steeply, and would remain high forever.
- In contrast, the Land Value Rate would not be increased by building the house, and would always remain moderate.
- Land Value Rating stimulates building construction and all of the related trades.
- It will also bring better balanced development, giving local employment opportunities for young Tasmanians, reducing the drift to the mainland.
- Land Value Rating encourages replacement of older factories by modern ones.
- Owners are not penalized for installing workers amenities, or better buildings, etc
Land Value Rating does not add to the cost of industry and therefore prices are not affected