Should we charge Land for vagrancy?

by on April 17, 2013

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The Melbourne City Council has been urged to apply differential rates “to sites defined as vacant or derelict” by its Future of Melbourne committee.

They name to shame the Savoy Tavern on Spencer Street, the Argus building on Latrobe Street and bare land at 567 Collins Street as examples of developer-owned blight.

Councillors loathe these freeloaders, and you should too.  Vacant or derelict sites diminish civic activity and amenity.  Rather than put them to their best and highest use, the landowners prefer to leave them unused in the hope of rezoning or better times ahead.

This landowner abuse isn’t academic – it kills people. Three young people died on 28 March 2013 when a poorly supported wall on Grocon’s long vacant land at Victoria and Swanston Streets collapsed onto the footpath.

The Age thundered: “The loss of three lives has raised questions about how a prized city site could have been left to wither over almost thirty years – and about the dangers that come with such neglect.”

Local government is pressured to give in to developer demands by the obvious neglect and neighboring properties are tainted by adjoining carelessness.

The MCC already charges differential rates: 3.9 per cent of the Net Annual Valuation of residential property and 4.6 per cent on non-residential. The key element is the NAV. This is five per cent of the capital value of residential properties and the annual rent of commercial properties.

The unused Savoy, the asbestos-riddled Argus and vacant 567 Collins Street would be deemed to generate minimal rent and pay very little in rates, hence the councillor anger.

There is a better way – Site Value Rating, which is based on the market value of the land.  The Savoy and the Argus would pay as much in rates as the 30 story building next door. Their civic blight would simply vanish as the owner scrambled to put them to good use. Too late for the three dead students. The removal of similar hazards elsewhere cannot happen soon enough.

This is not rocket science.  Just do it, MCC.

 

 

5 Comments

  1. Driftforge17-04-2013

    I would even suggest that applying a higher bracket to land that is either unused or especially land that is decayed is something that should be considered.

    As mentioned, lack of use actually depresses value in the surrounding area, and rating should recover the loss caused by poor use.

  2. Karl Fitzgerald
    Karl Fitzgerald24-04-2013

    Hi Driftforge,
    if we had Site Value Rating rather than CIV/NAV then both bombsite & neighbouring building would pay the same in rates. At present the land banker gets anywhere from 5 – 30% subsidy in council rates because they have no improvements.

    The danger with rating differentials is that it encourages an us versus them, wealth envy line of thinking rather than one of a legalised privilege. This provides an easy out for the imposters. More on our ratings portal.

  3. Driftforge24-04-2013

    Karl – I’m not talking about variation based upon value, but rather upon (lack) of usage.

    There is a very real depression of land values associated with the lack of usage of properties, and where the cause of this can be identified, it should be recovered.

  4. Karl Fitzgerald
    Karl Fitzgerald29-04-2013

    Driftforge – our experience over the last 100 years shows that whenever this issue pops up, it is shot down for precisely the reasons outlined above in us v them. By removing the subsidy for vacant land usage inherent in NAV, similar outcomes are possible without the media sideshow. The cause of under usage is the poor taxation of economic rents in the least distortive manner. David Collyer’s most recent post on the topic gives more detail on why these incentives have grown at a state level.

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