Optimal tax theory and the taxation of housing in the US and the UK

First, we survey recent research in the application of optimal tax theory to housing. This work suggests that the under-taxation of housing for owner occupation distorts investment so that owner occupiers are encouraged to over-invest in housing. Simulations of the US economy suggest that this is true there. But, the theoretical work excludes consideration of land and the simulations exclude consideration of taxes other than income taxes. These exclusions are important for the US and UK economies. In the US, the property tax is relatively high. We argue that excluding the property tax is wrong, so that, when the property tax is taken into account, owner occupied housing is not undertaxed in the US. In the UK, property taxes are relatively low but the cost of land has been increasing in real terms for forty years as a result of a policy of constraining land for development. The price of land for housing is now higher than elsewhere. Effectively, an implicit tax is paid by first time buyers which has reduced housing investment. When land is taken into account over-investment in housing is not encouraged in the UK either.

Integrating Sustainability into Brownfield Regeneration: Rhetoric or Reality? – An Analysis of the UK Development Industry

In the UK and elsewhere the use of the term ‘sustainable brownfield regeneration’ has resulted from the interweaving of two key policy themes, comprising ‘sustainable development’ and ‘brownfield regeneration’. This paper provides a critical overview of brownfield policy within the context of the emerging sustainable development agenda in the UK, and examines the development industry's role and attitudes towards key aspects of sustainable development and brownfield regeneration. The paper analyses results from a survey of commercial and residential developers carried out in mid‐2004, underpinned by structured interviews with eleven developers in 2004–2005, which form part of a two‐and‐half‐year EPSRC‐funded project. The results suggest that despite the increasing focus on sustainability in government policy, the development industry seems ill at ease with precisely how sustainable development can be implemented in brownfield schemes. These and other findings, relating to sustainability issues (including the impact of climate change on future brownfield development), have important ramifications for brownfield regeneration policy in the UK. In particular, the research highlights the need for better metrics and benchmarks to be developed to measure ‘sustainable brownfield regeneration’. There also needs to be greater awareness and understanding of alternative clean‐up technologies to ‘dig and dump’.

An analysis of the UK development industry's role in brownfield regeneration

Purpose – This study aims to provide a review of brownfield policy and the emerging sustainable development agenda in the UK, and to examine the development industry’s (both commercial and residential) role and attitudes towards brownfield regeneration and contaminated land. Design/methodology/approach – The paper analyses results from a two-stage survey of commercial and residential developers carried out in mid-2004, underpinned by structured interviews with 11 developers. Findings – The results suggest that housebuilding on brownfield is no longer the preserve of specialists, and is now widespread throughout the industry in the UK. The redevelopment of contaminated sites for residential use could be threatened by the impact of the EU Landfill Directive. The findings also suggest that developers are not averse to developing on contaminated sites, although post-remediation stigma remains an issue. The market for warranties and insurance continues to evolve. Research limitations/implications – The survey is based on a sample which represents nearly 30 per cent of UK volume housebuilding. Although the response in the smaller developer groups was relatively under-represented, non-response bias was not found to be a significant issue. More research is needed to assess the way in which developers approach brownfield regeneration at a local level. Practical implications – The research suggests that clearer Government guidance in the UK is needed on how to integrate concepts of sustainability in brownfield development and that EU policy, which has been introduced for laudable aims, is creating tensions within the development industry. There may be an emphasis towards greenfield development in the future, as the implications of the Barker review are felt. Originality/value – This is a national survey of developers’ attitudes towards brownfield development in the UK, following the Barker Review, and highlights key issues in UK and EU policy layers. Keywords Brownfield sites, Contamination Paper type Research paper

The impact of information and communications technology on commercial real estate in the new economy

Purpose – This paper seeks to critically review the conceptual frameworks that have been developed for assessing the impact of information and communications technology (ICT) on real estate. Design/methodology/approach – The research is based on a critical review of existing literature and draws from examples of previous empirical research in the field. Findings – The paper suggests that a “socio-technical framework” is more appropriate to examine ICT impact in real estate than other “deterministic” frameworks. Therefore, ICT is an important part of the new economy, but must be seen in the context of a number of other social and economic factors. Research limitations/implications – The research is based on a qualitative assessment of existing frameworks, and by using examples from commercial real estate, assesses the extent to which a “socio-technical” framework can aid understanding of ICT impact. Practical implications – The paper is important in highlighting a number of the main issues in conceptualising ICT impact in real estate and also critically examines the emergence of a new economy in the information society within the general context of real estate. The paper also highlights research gaps in the field. Originality/value – The paper deconstructs the myths of the “death of real estate” and “productivity increase means jobs loss”, in relation to office real estate. Finally, it examines some of the ways in which ICT is impacting on real estate and suggests the most important components for a future research agenda in the field of ICT and real estate impact, and will be of value to property investors, facilities managers, developers, financiers, and others.

Can valuation factors be prescribed? The case of collective enfranchisement and leasehold extension of flats in England and Wales

Recent concerns over the valuation process in collective leasehold enfranchisement and lease extension cases have culminated in new legislation. To underpin this, the Government (Department of Environment Transport and the Regions (DETR)) commissioned new research, which examined whether the valuation of the freehold in such cases could be simplified through the prescription of either yield or marriage value/relativity. This paper, which is based on that research, examines whether it is possible or desirable to prescribe such factors in the valuation process. Market, settlement and Local Valuation Tribunal (LVT) decisions are analysed, and the basis of 'relativity charts' used in practice is critically examined. Ultimately the imperfect nature of the market in freehold investment sales and leasehold vacant possession sales means that recommendations must rest on an analysis of LVT data. New relativity curves are developed from this data and used in conjunction with an alternative approach to valuation yields (based on other investment assets). However, the paper concludes that although the prescription of yields and relativity is possible, it is not fully defensible because of problems in determining risk premia; that the evidential basis for relativity consists of LVT decisions; and that a formula approach would tend to 'lead' the market as a whole.

A critical review of methodologies for measuring rental depreciation applied to UK commercial real estate

Real estate depreciation continues to be a critical issue for investors and the appraisal profession in the UK in the 1990s. Depreciation-sensitive cash flow models have been developed, but there is a real need to develop further empirical methodologies to determine rental depreciation rates for input into these models. Although building quality has been found to be an important explanatory variable in depreciation it is very difficult to incorporate it into such models or to analyse it retrospectively. It is essential to examine previous depreciation research from real estate and economics in the USA and UK to understand the issues in constructing a valid and pragmatic way of calculating rental depreciation. Distinguishing between 'depreciation' and 'obsolescence' is important, and the pattern of depreciation in any study can be influenced by such factors as the type (longitudinal or crosssectional) and timing of the study, and the market state. Longitudinal studies can analyse change more directly than cross-sectional studies. Any methodology for calculating rental depreciation rate should be formulated in the context of such issues as 'censored sample bias', 'lemons' and 'filtering', which have been highlighted in key US literature from the field of economic depreciation. Property depreciation studies in the UK have tended to overlook this literature, however. Although data limitations and constraints reduce the ability of empirical property depreciation work in the UK to consider these issues fully, 'averaging' techniques and ordinary least squares (OLS) regression can both provide a consistent way of calculating rental depreciation rates within a 'cohort' framework.

The influence of a decision support tool on real estate valuations

An appraisal task involves the rendering of market value, an unobservable and hypothetical construct. Direct feedback against this objective is typically not possible, so alternative feedback such as confirmation of previous appraised values may be employed. This may alter the appraiser’s perception of the valuation objective leading to divergence from the appraisal normative model. The real estate literature suggests appraisers have been susceptible to the influence of previous appraised values, often resulting in biased valuations. This research focuses on the efficacy of a decision support tool in eliminating or subduing this bias in the appraisal process.

Testing for bubbles in indirect property price cycles

Speculative bubbles are generated when investors include the expectation of the future price in their information set. Under these conditions, the actual market price of the security, that is set according to demand and supply, will be a function of the future price and vice versa. In the presence of speculative bubbles, positive expected bubble returns will lead to increased demand and will thus force prices to diverge from their fundamental value. This paper investigates whether the prices of UK equity-traded property stocks over the past 15 years contain evidence of a speculative bubble. The analysis draws upon the methodologies adopted in various studies examining price bubbles in the general stock market. Fundamental values are generated using two models: the dividend discount and the Gordon growth. Variance bounds tests are then applied to test for bubbles in the UK property asset prices. Finally, cointegration analysis is conducted to provide further evidence on the presence of bubbles. Evidence of the existence of bubbles is found, although these appear to be transitory and concentrated in the mid-to-late 1990s.

The cyclical relations between traded property stock prices and aggregate time-series

This paper examines the cyclical regularities of macroeconomic, financial and property market aggregates in relation to the property stock price cycle in the UK. The Hodrick Prescott filter is employed to fit a long-term trend to the raw data, and to derive the short-term cycles of each series. It is found that the cycles of consumer expenditure, total consumption per capita, the dividend yield and the long-term bond yield are moderately correlated, and mainly coincident, with the property price cycle. There is also evidence that the nominal and real Treasury Bill rates and the interest rate spread lead this cycle by one or two quarters, and therefore that these series can be considered leading indicators of property stock prices. This study recommends that macroeconomic and financial variables can provide useful information to explain and potentially to forecast movements of property-backed stock returns in the UK.

Individual assets, market structure and the drivers of return

Much UK research and market practice on portfolio strategy and performance benchmarking relies on a sector‐geography subdivision of properties. Prior tests of the appropriateness of such divisions have generally relied on aggregated or hypothetical return data. However, the results found in aggregate may not hold when individual buildings are considered. This paper makes use of a dataset of individual UK property returns. A series of multivariate exploratory statistical techniques are utilised to test whether the return behaviour of individual properties conforms to their a priori grouping. The results suggest strongly that neither standard sector nor regional classifications provide a clear demarcation of individual building performance. This has important implications for both portfolio strategy and performance measurement and benchmarking. However, there do appear to be size and yield effects that help explain return behaviour at the property level.

Working with legal pluralism: widowhood, property inheritance and poverty alleviation in urban Senegal

This article explores the role of women's inheritance and ownership of property in urban Senegal. It shows how being able to inherit and own property promotes the economic and emotional security of widows and their children in urban areas, and discusses the challenges posed by legal pluralism in working on poverty alleviation and social protection in the city.

The 'ratione temporis' elements of self-defence

This article focuses on one particular factor that is of crucial importance to all self-defence actions. It is a factor that is almost always present in the application and appraisal of the right, but one that is not always explicitly engaged with: time. There are various ratione temporis elements underpinning the lawful exercise of the right of self-defence, and questions related to the timing of both an attack being responded to in self-defence and the response itself are notably controversial. The self-defence timeline is therefore charted, and the key legal debates encountered along its trajectory are identified. In particular, there is a focus on three temporal ‘stages’ of the right of self-defence: (i) the much-debated question of preventative forms of self-defence (the ‘before’); (ii) the timeliness of a state's defensive action, or what is sometimes called the need for the response to be ‘immediate’ (the ‘during’); and (iii) the duration of self-defence actions, including the crucial issue of when they must end (the ‘after’). The aim of this article is not to break new substantive ground with regard to these ‘stages’ as such, but is, rather, to draw together the temporal strands of self-defence in a more focused manner than is often the case in the literature.