Location Value Covenant (LVC) Briefing

Overview

A Location Value Covenant (LVC) is a voluntary contract between a property owner and the government, designed to collect the rental value of a property in exchange for reducing or eliminating existing or potential mortgage debt and reducing your taxes. LVCs aim to make a politically acceptable tax transition and provide a cheaper, less risky alternative to traditional mortgages while generating public revenue for national benefit. LVC's are innovative and unique in that they deliver slightly better results than the next best alternative by voluntary agreement rather than by unreliable force.

Key Features

• Voluntary Agreement: Property owners opt into LVCs freely, unlike mandatory taxes such as the competing yet never adopted proposal for Land Value Taxation (LVT), or taxation of earned incomes which is the norm.
• Purpose: Replaces or reduces mortgage debt with payments based on the property’s rental value, offering lower monthly costs and systemic financial stability.
• Public Revenue: LVC payments fund public purposes, reducing reliance on economically disruptive commercial bank profits or homeowner income.
• Tax Reduction: As LVC adoption scales, tax liabilities can be reduced, creating a virtuous economic cycle.

Comparison to Mortgages

• LVC: Payments based on property rental value, made to the government, with no loan principal or interest. Aims to lower costs and stabilize finances.
• Mortgage: Loan from a bank, repaid with principal and interest, secured by the property. Carries risks of default and economic instability.
• Consent: LVCs require owner consent; mortgages are private agreements with lenders.
• Economic Impact: LVCs redirect revenue to public goods, while mortgages benefit banks.

Comparison to Land Value Taxation (LVT)

• LVC: Voluntary, contract-based, and tied to mortgage debt relief. No legal confiscation of property.
• LVT: Mandatory tax on land value, often resisted due to perceptions of property confiscation and political challenges.
• Adoption: LVCs bypass legislative battles, offering a choice-driven alternative that’s easier to implement.

Example Applications

• Location Value Mortgage: Replaces traditional mortgage with LVC payments for home purchase.
• Mortgage Rescue Covenant: Converts existing mortgage debt into an LVC to reduce financial strain.
• Equity Release Covenant: Allows homeowners to access property equity via LVC payments.
• Inheritance Tax Covenant: Offsets inheritance tax through LVC agreements.
• Property Tax Covenant: Substitutes property taxes with LVC payments for cost savings.

Benefits

• Homeowners: Lower monthly payments, reduced financial risk, and mortgage debt relief.
• Businesses: Flexible financing options for property acquisition or management.
• Government: Generates public revenue, reduces tax burdens, and stabilizes national finances.
• Society: Promotes equitable wealth distribution and funds public infrastructure.

Adoption Considerations

• Choice-Driven: Homeowners choose LVCs if cheaper than mortgages, ensuring market-driven adoption.
• Systemic Stability: Mitigates risks associated with central bank policies and mortgage market volatility.
• Political Appeal: Offers politicians a policy to boost housing access and economic benefits without contentious tax reforms.

Location Value Covenants as a Pilot Scheme for LVT

Summary

This is a work in progress for the adoption of voluntary submission of a properties land value, though a location value covenant(LVC) in exchange for a higher tax code(taxation mitigation)

Outline

• Creating tax havens on individual properties
• Tax exemption to the extent the property owner volunteers to pay the imputed annual rental value of the location, through adjusted tax codes
• A voluntary scheme, objectors simply avoid, beneficiaries opt in
• LVC opt in captures land value gains as opposed to forced confiscation of earned incomes 
• Exempts owner from taxation of their choice
• Can be integrated with mortgages by the state issuing Treasuries to redeem the mortgage
• Example class: VAT exemptions for commercials

What are LVC's and how can they be deployed

LVC's are a simple contract similar to a mortgage. An LVC is an agreement made between the government and the property owner, to collect the rental value of a property in exchange for the existing or potential mortgage debt on the property. Eventually, when the policy is successfully adopted at scale, tax liability can be reduced to the extent of the remaining LVC revenue, to complete a virtuous economic circle for the nation.

LVC's are designed to give homeowners an alternative to a mortgage, with cheaper monthly payments. Unlike the alternatives, the LVC presents an adoption opportunity which retains systemic stability of the nations financial infrastructure and eases the difficult to control effects of central bank fiscal and monetary policy. A neat side effect is that the potentially enormous revenue from LVC's can be used for public purposes rather than as an economically destructive income for a commercial bank or homeowner. 

LVC's appear to be similar to alternative policy proposals such as Land Value Taxation, which though perfect in theory have proven historically impossible to adopt, even under the most favourable circumstances, because the democratic majority of people refuse it for numerous and often, yet not always, reasonable political and economic reasons. Namely that taxation is without doubt confiscation of private property by the state, most importantly when fairer alternatives are readily available for public revenue.

The fundamental difference compared to taxation is that LVC's operate only with the property owners consent, not legal confiscation of homeowners private property. This means there are no statutes which need to be fought over and adapted. Entering into an LVC is a free choice for every single homeowner. This free choice will largely depend on if doing so will be cheaper for them. If not they can take their chances with the traditional way of financing a home through a mortgage, which we must recognise by now is fraught with risk for the household and national finances.

Please browse the following briefing examples to see how it might play out for you as a homeowner or business person. Or even a politician looking to get more out of the system for their constituents and onto the housing ladder with the more positive supplemental effects for the the nation and the party.

• Location Value Mortgage
• Mortgage Rescue Covenant
• Equity Release Covenant
• Inheritance Tax Covenant
• Property Tax Covenant