Land Banking Taxed with a Land Tax

Abstract

Stalled sites are a problem in the Dutch housing market. A substantial number of land positions with planning permission have been stalled by landowners and developers for strategic purposes. This is partly due to developers’ use of land banking practices, which commonly benefit from local market power and land market speculation. The adoption of strategies such as land banking by developers indicates that there is developer behaviour (corporate strategy) involved in the decision to use land as an investment vehicle to ensure future profit or future construction capacity for in-house construction firms. This study aims to discover what exactly leads developers to adopt this strategy for stalling developments and what the influence of a potential land tax might be on perceived land banking practices for land positions with planning permission. It is thought that increasing the cost for holding a development will lead developers to instead choose to develop the site. This should therefore reduce the number of stalled sites and hard plan capacity nationwide and encourage the efficient use of land to solve part of the current housing crisis.