Will you pay more for London city centre property?

Depending on who you listen to, if you own a property on the Crossrail line which will fully open in December this year, your property could double in price thanks to easy access to the capital.

Will you pay more for London city centre property?

For those in the South East within its proximity, this has been an almost lottery-like win since the announcement of the project. Commuters looking for access to the capital without the eye watering prices have slowly started to drive prices on the peripheral of the city towards the top end of the scale.

There are, of course, a number of taxes that property owners already pay when the purchase houses anyway. Stamp duty being one, but there are many other fees and if you’re selling to buy then you’ll have already paid tax on the profits from selling your previous home.

It will come as unwelcome news to many, then, that there could be more taxes introduced to anybody who lives within a kilometre of the proposed Crossrail 2 line. According to CityAM: “The proposed £31bn project will start from Cheshunt in Hertfordshire and run through London and then out to stations in Surrey such as Epsom, Hampton Court, Chessington South and Shepperton.”

CityAM and the Telegraph have this week been reporting that, in response to government calls to make the scheme more affordable, a land value tax has been proposed in which a brand new tax would be levied against home owners within a kilometre of Crossrail stations on a scale depending on the value added to property prices.

A spokesperson for TfL said: “In response to the government’s call to make Crossrail 2 more affordable we have been continuing our work to reduce the cost of the scheme through savings in the design and delivery in order to ensure best value for money. We have been working closely with the DfT on the proposals and are assisting with the independent affordability review currently underway.

“As part of our overall infrastructure investment work, TfL published a land value capture report last February setting out the uplift in value benefits along the route and how people might help contribute towards the cost of a scheme. There is currently no process, powers or legislation in place to apply land value capture. Any new land value capture proposal would need to be carefully considered and new powers granted.”

The scheme has seen a mixed response with some praising the idea as a progressive way to recapture some of the wealth that the scheme creates whilst critics, mostly residents and tax groups, have said that they will be forced to pay for a scheme they neither want or need.

Aside from the pros and cons of the argument it sets a potentially worrying precedent whereby the government or local authorities can charge homeowners who see the value of their properties rise thanks to infrastructure programmes. Could we potentially see, for example, a time when a motorway extension means that homeowners within its catchment area are charged a surcharge to subsidise its creation?

Furthermore, who would decide what the potential added value is? Would there be reviews of this to note who has increasing value? How can we be sure that added value isn’t just down to inflation rather than better road access? And, finally, shouldn’t the government or central authority simply build better infrastructure because that’s what society requires?

The answer to those questions will depend largely on your political views, but it’s certainly likely to stoke debate regarding progressive taxes and how we view contributions to the increase in property value.

If you are looking for investments in the South East, why not have a look at X1 Chatham Waters, a waterfront development which is currently in construction?

Liverpool Guide vertical - April 2019

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