UK grows wealthier on the back of soaring land values
Land now accounts for 51% of UK’s net worth. An upsurge in land values pushed British wealth to a new record of £10tn last year, indicative of the vast profits made by developers in property hotspots throughout the country.
Land values have become the single largest element of wealth, vastly exceeding household wealth derived from property and financial savings.
Official figures showed that the UK’s net worth rose by £492bn between 2016 and 2017 to £10.2tn, with the lion’s share of the increase accounted for by a £450bn jump in the value of land.
According to official figures, the UK’s net worth rose by £492bn between 2016 and 2017 to £10.2tn, largely on the back of a £450bn increase in the value of land.
The rise follows a trend since 2012 that has increased assets held by each Briton to £155,000, up £6,000 from 2016.
The Office for National Statistics said consistent increases in the value of land meant it accounted for 51% of the UK’s net worth in 2016, higher than any other G7 country that produces similar statistics.
In France, whose land mass is twice that of the UK, land values account for 41% of wealth while in Germany they account for only 26%.
This week several landowners have outlined plans for developments, including the Duke of Westminster’s Grosvenor Group, which has developed an interest in residential properties outside the metropolis.
It said it would develop greenfield sites in Oxfordshire and Cambridgeshire, which are expected to benefit from Treasury plans establish a cross-country rail link between the two university towns.
Analysts said the growth in land values was significantly owed to demographic growth, which has put pressure on the government to support house builders seeking to develop farmland in south-east England and elsewhere throughout the country.
The value of farmland can increase by 100 times when ministers agree to redesignate it for housing. Areas of London that were previously derelict, especially in east London, have seen huge increases in values owing to regeneration efforts and improved transport links.
Commercial property has also seen growth in value since Britain recovered from the 2008 banking crash, more than offsetting recent declines in much of the retail sector.
The ONS figures go beyond those provided last year by Lloyds bank which showed that Britain’s net worth had exceeded £10tn but did not single out the value of land.
The steady increase in land values is expected to trigger further calls for a land value tax or new rules allowing local authorities to reap the rise in values by allowing them buy land earmarked for development.
The steady increase in land values is likely to lead to further demands for a land value tax or new rules allowing local authorities to reap the rise in values by letting them buy land set aside for development.
A growing number of thinktanks and politicians support imposing a tax that would take a slice of rising land values.
Research institutes and politicians increasingly support taxation that would take a slice of growing land values.
The Institute for Fiscal Studies has encouraged the Treasury, while Green Party Co-leader Caroline Lucas has put forward a private member’s bill proposing a land value tax. The Labour Party’s 2017 election manifesto said it would consider a similar tax.
Mark Wadsworth, the head of the Campaign for Land Value Taxation, said: “The minority with a vested interest in high land values will no doubt celebrate higher values, saying that is shows the importance of land to the UK economy.
“In truth, land values are not a net addition to national wealth, they merely represent the benefits that accrue to landowners because of government spending on public services funded out of general taxation; land values are actually just a measure of ongoing transfers of wealth from taxpayers to landowners and a zero-sum game.”