Flowhold in the context of decayed property

A decayed property is one in which the improvements on the property have ceased to have value.  There are any number of reasons this can occur.  It can be because of neglect; where a house has fallen into disrepair.  It can be due to changed local circumstances; a property that has not kept up with the changes in use occurring around it. It can also be due to outright damage.  Regardless of cause, decayed properties are an interesting case which illustrate one of the distinct differences between flowhold and freehold.

Under Freehold title, it is not uncommon for a decayed property to be held in that state for an extended period of time.  There may even be some marginal return from rental or utility from possession.  Primarily though, these properties are held to gain from increase in land value.  They will often sell at a discount to land value, as there is an inherent cost associated with removing the existing improvements.  As such they present a low cost opportunity for people to gain from changes in land value – even better than vacant land.  In a market where the value is rising, there is little incentive for a landowner of one of these properties to conduct improvements on the property, as their gain occurs regardless.  Even the depression of prices in the area due to the existence of a property in decay is not a factor, because the opportunity to remove that effect lies with the owner.  Only in the case where a whole area falls into decay does the situation change.

Under Flowhold, the situation is quite different.  As there is not capital appreciation to consider but only an ongoing cost, there is no benefit at all to a property being held in a state of decay.  Someone purchasing a property in decay under flowhold will feel a distinct imperative to convert that property into something which will return value as soon as possible.  Furthermore, government will also seek to prevent properties falling into decay, and where it has occurred to see the situation rectified; a property in decay will pull down levies across the local area.  Quite properly, a property in notable decay should have its levy increased to account for the losses in the surrounding area.

The hard cases are where a long term owner fails to make the necessary changes over time to keep their property from becoming decayed.  This may be from neglect, or from incapacity.  Neither are pleasant cases to deal with, and it must be noted that flowhold will make these situations apparent earlier and more costly.  It becomes a  hard love case; financially forcing a change for the benefit of the owner and the community.

From a community perspective though, the outcomes of these change are all good.  Land will tend towards best use far more quickly.  No one likes having decayed properties in there area, other than the owner’s thereof.  Also, having a greater proportion of land in productive use will decrease scarcity pressures on that land, reducing artificial costs. Flowhold establishes a situation where it is to an owners benefit to do what is best for the community, rather than the other way around.

From an owners perspective, there is a loss of methodology.  Money can still be made through the rental of appropriately developed property, just not through the holding of decayed property for its value.  In one sense, in is a more honest return.  Rather than benefitting from changes that are not of the owners doing, they benefit from the service they provide to the community.  Which… is as it should be.

Advertisements

About Neocolonial

Ideas. Dreams. Collector of alternative perspectives. Engineering. Education. Politics. Photography. Whatever else catches my attention.
This entry was posted in Uncategorized and tagged . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s