Flowhold title : How will it affect individuals?

It’s really easy to see the benefits of Flowhold title from the perspective of the community.  The drive to best use of land; the direct feedback it provides public policy; the damping of swings in value.  Most of all, bringing private and public interests into alignment.

But most people don’t care nearly as much about how something affects others as they do about how it affects them; this is not a problem it is normal and expected.  But the situation as it stands is to the general benefit of landholders.  A change to flowhold title is, while rational from a community perspective, hard to justify from a personal perspective.  So lets lay out some considerations that affect the personal decision making process.

Uncertainty

There are two elements of uncertainty that Flowhold title brings.  The first is the uncertainty of cost; the second the uncertainty of the novel.   What a piece of land is going to cost you over time becomes an unknown under Flowhold.  Without reservation, this is a major downside for many; probably the biggest.  The beauty of Freehold title is the degree of certainty that it provides regarding the costs you will encounter into the future.  There is some variation: the interest rate on home loans changes over time; the amount that local and state governments assess you for is also subject to change.  We are however, as a culture, used to these changes and know how to allow for them. 

Flowhold on the other hand is intended to vary over time.  Sure, it will vary in proportion to the value derivable from the land.  But will the changes driving that value be ones that benefit you personally?  Given that you purchased the land, the likelihood is actually quite good that they will; it is not something that should be taken for granted.  One of the outcomes of Flowhold title is likely to be a greater degree of mobility; the average time a person lives in a house will drop notably.  It’s just one change of many that we still don’t know to expect, an example of the risk associated with the new.  It should be noted that this risk is going to be perceived as greater by older members of the population; they have more to compare it with.

Outlook

The outlook of the individuals involved is going to play a major part in the attractiveness of moving to Flowhold title.  If someone believes that we are in for difficult economic times ahead as a community, Flowhold title will be far more attractive.  Consider the outcomes: under Freehold title bad times lead to both poor prices and fixed costs; under Flowhold bad times simply lead to lower costs.  On the other hand, someone looking forward and expecting boom times would look for the windfall available to them through Freehold title.  This highlights a couple of issues.  Firstly, more people will want to transition land to Flowhold title during a recession.  This can either be to attempt protect what capital value they have, or to take advantage of the lower costs that they expect to arise.  Secondly, if mechanisms exist to transfer land both to and from Flowhold, there is an rapacious opportunity for a savvy landholder to transition to Flowhold during a downturn, allow the state to suffer the drop in value, then transitioning back to Freehold to collect the windfall on the other side.  To prevent this, either not allowing transition back to Freehold or imposing significant financial restraint is necessary. 

Community mindedness

There are a limited number of people who will see the advantages this brings the community to be a significant personal outcome.  As a ‘more equitable way’, those people will have an interest in transitioning their land, not for personal gain but because they see it as the ‘noble’ thing to do.  This is a notion that may well grow as the effects of the change become noticable within communities.  A concern that should be noted is that over time this notion may develop into a politically volatile resentment towards those who continue to hold on to Freehold property.

The money

While the above notions will affect the community differentially, in the end, the attractiveness of Flowhold title will primarily depend on the price on offer.  Quite evidently the transition is a monopoly matter; the state would be the only purchasor in the market.  Thus, given a reasonable ability to assess land value the rate of transition is dependant largely on the desire the state has to reclaim its proper asset base.   

An example

Take a piece of land that would be valued at $100,000 in today’s market.  Assuming you purchased that land today at current rates, your interest only costs for the land would be in the order of $6,300 per year, or $525 per month.  On top of that would be rates and potentially land tax.  Say that together those make up another $125 per month for a total cost of $650 per month.  This ongoing cost would initially be the same under Flowhold; you would just be paying this money to the state government rather than to the bank and the local council.  Over time this will adjust continuously to the rate required to keep the price someone would pay for the land component at zero; the above provides a good first approximation.

To interest anyone in exchanging title as noted above, a consideration (i.e money) will be required.  Depending on the factors noted above, as well as numerous others, the value they place on the exchange will vary;  just as they do in any exchange.  As the government is the single buyer, they basically have the opportunity to take the best offers made up to the rate of expenditure they are willing to sustain.  The higher the rate of expenditure, the higher the price they will pay.  Overtime, as a secondary market in Flowhold title develops, competition will emerge and the dynamics will be somewhat different.  But initially a bit of market research would be required to ascertain how much was required to achieve a desired rate of transition.

In conclusion, most people will see Flowhold title as less advantageous for them personally than Freehold title, most of the time.  An important exception to this is in difficult economic times; during these times, people will see Flowhold as a way to save costs and to secure their assets against losses.  Thus any transition will be achieved most readily in a recession, and the benefits of doing so will become readily apparent. 

 

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About Neocolonial

Ideas. Dreams. Collector of alternative perspectives. Engineering. Education. Politics. Photography. Whatever else catches my attention.
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