Land Value Taxation Campaign

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Home Discussion Theory LVT and bank lending

LVT and bank lending

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"Land value, if we assume land values fall from this tax what will happen to the debt lent against the property?"

The borrower will still have the revenue stream to pay off the debt, provided that the switch from present taxes to mostly-LVT is phased over a few years.

" ie when the landowner come to refinance he may find as the debt has previously been lent using the property as collateral that the banks may see land now as a liability therefore will either lend less or not at all, how will the ensuing international banking crisis be dealt with?"

The banks will no longer give credit for land purchase as this will be unnecessary. Any credit they give will be subject to their assessment of the ability of the borrower to repay. It can still be secured on the value of the buildings, machinery, plant and stock for which the credit was given.

"Will banks ever lend on property in the uk again?"

They will lend on building value only. They will never lend on land purchase again, as this will no longer be necessary. Those wanting to use land, ie everyone, will pay what is in effect a perpetual rent to the government, in return for which they now longer have to pay taxes on their labour, or on goods and services. Thereby putting a stop to credit-fuelled land price booms and busts.

Bring it on.

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