What if I told you that the solution to the housing crisis isn’t building more homes?
And it isn’t rent control.
It’s a specific, 150-year-old economic concept called Land Value Tax (LVT).
In this definitive guide, I’m going to break down exactly what LVT is, how it exposes the “do nothing” strategy of billionaire investors, and how it applies to the current real estate situation in Israel.
We have a lot to cover.
Let’s dive right in.
The Billionaire’s Secret: The “Brompton Road” Strategy
To understand why housing is so expensive, we first need to look at an abandoned tube station in London.
This is Brompton Road.
It’s been empty since the 1930s.
Ten years ago, a Ukrainian oligarch named Dmytro Firtash bought this building.
And here is the crazy part:
Since buying it, he has done absolutely nothing with it.
He hasn’t renovated it. He hasn’t rented it out. He hasn’t opened a business.
Yet, he is going to make millions in profit.
How Is That Possible?
It comes down to one fundamental truth about real estate:
The Building vs. The Land.
As the building sits there rotting, its value goes down. But the value of the land it sits on goes up.
In the UK (and similarly in Israel), land accounts for roughly two-thirds of real estate’s total value.
Mr. Firtash is benefiting from the hard work of his neighbors.
- The dry cleaner across the street?
- The flower shop?
- The insurance company next door?
They are all working, paying taxes, and making the neighborhood desirable. Their hard work increases the value of the land. Firtash simply holds the deed and waits.
This is called Land Banking. And you are likely paying for it right now.
The “Tax Injustice” You Didn’t Notice
If you work for a living, you pay Income Tax. If you buy a coffee, you pay VAT. If you run a business, you pay Corporation Tax.
But if you buy a prime piece of land in Tel Aviv or London and let it sit empty for 10 years? You often pay nothing on the increased value of that land until you sell.
This creates a perverse incentive structure.
The result?
We tax the things we want (work, business, trade) and we subsidize the things we don’t want (hoarding land).
The Israeli Connection: A Market in Flux
Let’s look at the data.
According to the latest Q3 2025 statistics, the Israeli market is behaving strangely.
While the Reddit discussion highlights a long-term 7.5% increase, the current on-the-ground reality in late 2025 is actually cooling in specific areas due to interest rates and market conditions.
Here is the breakdown of the current housing stats:
- National Average Home Price: NIS 2.21 million.
- Tel Aviv (4-Room Apt): ~NIS 4.3 million.
- Northern District Trend: Prices UP 9.5%.
- Tel Aviv District Trend: Prices DOWN 7.6%.
Here’s the catch:
Even with a 7.6% drop in Tel Aviv, prices are still astronomical (NIS 4.3M for a 4-room apartment). Meanwhile, rents are rising. Tenants renewing leases saw a 2.6% increase, while new tenants are facing even steeper hikes.
Why? Because the land remains a scarcity.
Enter The Solution: Henry George and The Land Value Tax
Henry George was an American economist who noticed a paradox:
“Whenever society improves, the value of land always goes up.”
This makes landowners rich without them lifting a finger.
George proposed a radical solution: The Land Value Tax (LVT).
How LVT Works
Currently, property tax (like Arnona in Israel or Council Tax in the UK) is often based on the value of the property including the building.
If you renovate your house and make it nicer, your taxes go up. You are punished for improving your property.
LVT flips this script.
- We calculate the value of the land only.
- We ignore the building, the crops, or the business on top.
- We tax the land value heavily.
- We abolish taxes on productivity (Income tax, VAT, building improvements).
The Impact on “Mr. Firtash”
If an LVT was implemented, our Ukrainian billionaire with the empty tube station would be in trouble.
He would be billed annually for the massive value of the land he is hoarding. He would have two choices:
- Develop the land: Build housing or a business to generate income to pay the tax.
- Sell the land: Sell it to someone who will use it.
Suddenly, hoarding empty luxury apartments in Tel Aviv becomes a financial liability, not an asset.
But Does It Actually Work? (Real World Examples)
This isn’t just theory. It has been proven in the wild.
1. Singapore (The Efficiency Model)
Singapore is a tiny island with zero natural resources. Yet, it is a modern marvel.
Why?
When Singapore builds new infrastructure (like a subway line), the land value nearby goes up. The government captures this value. When a developer builds a skyscraper, they are taxed heavily on the land value increase (up to 70% in some cases).
This forces efficient land use. No empty lots. No sprawling parking lots in the city center.
2. Alaska (The Citizen’s Dividend)
In the 1970s, Governor Jay Hammond realized that the oil in Alaska belonged to the people, not the oil companies.
He set up the Permanent Fund.
Instead of the government spending all the oil revenue, they give a chunk of it directly back to the people.
- No state income tax.
- No state sales tax.
- Annual Dividend: $300 to $2,000 per person.
This is the “Georgist” dream: Tax the natural resource (land/oil) and give the money back to the people.
The “Q&A” Checklist
The original discussion raised some burning questions. Here are the answers, backed by the data.
Q: Won’t landlords just pass the tax on to tenants? A: No. LVT is unique because it cannot be passed on. Rent is already set at the maximum the market can bear (supply and demand). If a landlord raises rent, tenants leave. Since LVT forces more landowners to build/rent out their empty units, the supply of housing increases.
- Higher Supply + Same Demand = Lower Rents.
Q: Is this Communism? A: Far from it. Milton Friedman (the father of modern free-market capitalism) called LVT “The least bad tax.” It encourages capitalism by removing taxes on labor and business. It only taxes the monopoly of nature.
Q: How does this help the average Israeli? A: It lowers the cost of living. Imagine a 1% LVT on all land in Israel.
- Revenue: Billions of Shekels collected from land speculators and owners of empty “Ghost Apartments” in Jerusalem and Tel Aviv.
- Result: The government uses this revenue to slash VAT (currently 17%) or Income Tax.
- Bonus: Housing prices stabilize because housing becomes a place to live, not a speculative asset like Bitcoin.
Conclusion: The “Just Tax Land” Movement
The data is clear.
In Israel, the Northern District is seeing prices rise (9.5%), while the center creates a bubble of unaffordability.
We are currently taxing workers for working, and companies for producing. Meanwhile, we let land values—created by the community—flow into private pockets tax-free.
As the Reddit thread eloquently puts it:
“We who keep society’s wheels turning should not have to pay for the society which we created; it is those who made money from unearned wealth.”
The solution isn’t to eat the rich. It’s to stop letting them eat the land.
