Vocabulary
Terms and definitions on affordable and sustainable housing *
Green Land Value Tax
Area: Design, planning and building
As a response to the regressiveness of housing taxation and the subsidisation model of housing renovation, (Muellbauer, 2018) has introduced the idea of a Green Land Value Tax (GLVT). The GLVT is composed of two elements, one based on built-up surface and another one on unoccupied land. Energy-efficient buildings would pay the same tax as unoccupied land while energy-inefficient ones would pay a proportional increase by energy use. Such tax would create incentives to retrofit and improve the financial viability of increasing densities as the tax burden on built-up surface could be shared by different households in multiple occupation buildings but concentrated in one in the case of single-family dwellings.
In this regard, the study of policies such as mortgage interest deduction has pointed out how
the lack of adequate taxation leads to the overconsumption of owner-occupied housing and increases in house prices (Fatica & Prammer, 2018) (Poterba, 1984). On the one hand, targeting grants to households could incentivise retrofit among low-income homeowners for whom the impact of increased costs could pose affordability problems. On the other hand, increased taxation of energy-inefficient homes could help redistribute housing wealth toward younger homeowners in the most energy-efficient proportions of the stock and incentivise retrofit through increasing housing costs for house- wealthy households. However, the political feasibility of these drastic policy changes remains questionable.
Although there is no land value taxation in the Netherlands, the Dutch case remains particularly apposite to test green taxation proposals through imputed rent as done in Fernandez et. al (2024). The Netherlands lacks tax neutrality across tenures and imposes regressive taxes on energy consumption. These renovation incentivising policies result from a consumption interpretation of housing renovation as a one-off expense, not as an investment resulting in the appreciation of a financial asset (Copiello & Donati, 2021). Albeit under-taxing it according to the literature presented before, Dutch fiscal policy treats owner-occupied housing as an asset (Haffner, 2003). Aligning incentives for renovation with the asset interpretation of housing present in fiscal policy opens up paths for a set of green tax tools (Fernandez et. al, 2024).
This concept is an excerpt from the article Fernández, A., Haffner, M. & Elsinga, M. Subsidies or green taxes? Evaluating the distributional effects of housing renovation policies among Dutch households. J Hous and the Built Environ (2024). https://doi.org/10.1007/s10901-024-10118-5
Created on 14-10-2024
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* This vocabulary consists of definitions of key terms related to the combined research conducted by the 15 early-stage researchers. Each term has multiple definitions, each connected to one of the three main research areas: Design, Construction and Planning; Community Involvement; and Policy and Funding.
The joint construction of this vocabulary allows the researchers' projects to be interwoven. As such, the vocabulary is a tool for conducting transdisciplinary research on affordable and sustainable housing.
Entries are reviewed by RE-DWELL researchers and supervisors. The vocabulary is updated regularly.