So I rent somewhere cheap, take out massive loans, pay my brother to build a house (with a large profit), then leave the debt with the land and don't bother next year?
The LVT solution to this is valuing the unimproved land. I.e. if someone were to buldose the buildings and infrastructure actually on the land, how much would it cost to rent it.
This works fine on a lot-by-lot basis, we tend to know the value of land in cities. It starts falling when you buy a large amount of land. The value of land in Manhattan is very high obviously. Remove the empire state building and that plot is still worth a lot of money.
The value of that lot is the surrounding infrastructure - transport, power, proximity of people, etc.
If one company owned the entire island as a single lot though, the unimproved land would be very low. If two companies owned the land, the unimproved value suddenly balloons.
The LVT solution to this is valuing the unimproved land. I.e. if someone were to buldose the buildings and infrastructure actually on the land, how much would it cost to rent it.
This works fine on a lot-by-lot basis, we tend to know the value of land in cities. It starts falling when you buy a large amount of land. The value of land in Manhattan is very high obviously. Remove the empire state building and that plot is still worth a lot of money.
The value of that lot is the surrounding infrastructure - transport, power, proximity of people, etc.
If one company owned the entire island as a single lot though, the unimproved land would be very low. If two companies owned the land, the unimproved value suddenly balloons.