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Zoopla: What is the best value home?

Article by Zoopla, spotted by Henry Law:

Key takeaways

The same amount of space in some parts of the UK can cost a whopping 12 times more than in others.

The floorspace needed for a double bed alone in London’s Kensington and Chelsea stands at £43,951.

Three-bedroom homes offer the best value for buyers seeking more space for their money. But watch out! Prices for this type of property are on the rise.

This all boils down to two things:

1. Flats are the most expensive on a per-square-foot-basis.

a) It is the own entrance and utility meters, bathroom and kitchen with all the units and plumbing that cost the most money/have the most value. A further bedroom with a couple of sockets and a radiator not so much. If the home is larger, the extra cost of the own entrance etc is spread over a larger area.

b) Flats tend to be in city centres where land values are the highest – the average price paid for flats across the UK is very similar to the average price paid for a three-bed semi. It’s the usual trade-off between space and convenience. Which leads on to item 2…

2. There are huge regional differences.

Prices per-square-foot range from £562 in London, via £302 in the South West (close to the average of £282), down to £157 in the North East, with the lowest in Burnley of £123. That can easily be split up into two things – the actually building value, which is a bare minimum of £123 and the location value, which is everthing in excess of that, so prices in London are 78% location value; in the South West 59% location value… down to 0% location value in Burnley.

Zoopla’s workings are based on prices recorded by HM Land Registry, who have detailed computerised records on all sales with selling price, address and broad category of home (F, T, S or D. We can interpolate for finer caegories, like small flats/big flats) going back twenty years. It wouldn’t take HM Land Registry more than a few days to work out land/location values for each category of home in each smaller valuation area for Land Value Tax purposes.

Valuations do not need to be 100% accurate – there is no intellectually perfect way of doing them – but LVT on such estimates/assessments will always be a much better way of recouping goverment spending which enhances land values than the current mish-mash of Council Tax and Stamp Duty Land Tax; all the more minor taxes like Capital Gains Tax, Inheritance Tax, ATED and the non-dom levy; not to mention all the fees and taxes (less subsidies) paid by home builders.

Whatever these add up to (something around £60 billion a year, I think), that’s the required tax take A. HM Land Registry can work out the total land value B. A divided by B is the required tax rate (something around 1% based on selling prices or 25% based on rental values).

Job done, no internal inspections or indiviudal valuations needed. There will of course be a few outliers which have to be looked at on an individual basis, like stately homes in the countryside, but they can be tidied up later on.