The Grosvenor Estate

The death of the Duke of Westminster has drawn attention to the fact that the estate is not liable for inheritance tax as it is vested in a trust. This has led to indignant comments and charges of tax avoidance.

The Grosvenor Estate is one of several owned by aristocratic families, which together encompass a large area of Central London. The pattern of land ownership in Central London has hardly changed since 1700.

Their managers of these estates have done a good job in preserving the attractive character of at least part of the capital, protecting it from rapacious developers and local authorities who between them have ruined the London skyline.

However, it is important to remember that this land would be almost worthless if it were not for the infrastructure paid for and maintained day and night at the expense of the taxpayer, without which London could not function. In principle, it does not matter who owns land as long as those owners pay their contribution towards the cost of the services which sustain their rental income stream – ie a land value tax close to the full market rental value. From this perspective, breaking up these estates would in itself solve nothing. The land value tax is in principle just a service charge.

In practice, land ownership brings political influence. Wise owners would use that influence to secure legislation which was for the greater good. If they do not, sooner or later there will be a price to be paid.