A London land tax could provide the incentive to build more than 200,000 new homes in the capital, a London Assembly report has found.
A new land value tax would be unlike any existing property taxes currently in use in the UK because it would tax land, not buildings, according to the report by London Assembly member Tom Copley.
Current tax and business rates are only imposed on occupied and developed land, which Copley said has discouraged development by causing some sites to be under-utilised as car parks or plots when they could be used to meet housing needs.
The report, Tax Trial: Land Value Tax for London?, recommends that the next mayor look at the issue to identify what further devolved powers might be needed to create a land value tax and then explore its potential through a feasibility study and pilot scheme.
The report was commissioned by members of the GLA oversight committee in September, following a recommendation from the planning committee to investigate the cases for and against a land value tax for London.
Copley said: “The current tax system can encourage inefficient land use, deter development and incentivise landbanking. The evidence suggests that a land value tax could incentivise development and more efficient use of land. The time has come to test it out, and we offer the next mayor a clear course of action to pursue.”
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