I refer to a proposal by the Social Market Foundation for a 40 per cent tax on home sales plus an annual tax on a proportion of a property's value (The Argus, June 24).

That would have the opposite effect to the one intended.

A tax on profits would be a huge barrier against movement and lead to gridlock in the housing market.

Such a tax would deter people from trading down through moving to parts of the country where housing is cheaper, thereby aggravating the shortage in areas of highest demand.

As for a tax on the property's value, that sounds like the old rating system - which penalised improvements, rewarded people who allowed property to stand derelict and ignored developable land altogether.

Such proposals show a failure to understand what lies behind rising house prices.

What we really have is a relentless increase in land prices because the costs of building materials and builders' pay has risen more or less in line with general inflation.

The "housing" problem is really a "land" problem, which is intractable precisely because housing commentators and policymakers nearly always miss the point.

The issue is not recognised for what it is and no solution that could be effective is ever put forward.

One reform needed is replacing both council tax and business-rate tax with one relating to the rental value of all land however used - or not used.

Assessments should be based on the assumption that sites are at their optimum permitted development.

Any existing and future construction would be ignored for tax purposes, thereby rewarding effort and enterprise.

As well as raising useful and sustainable amounts of public revenue, that approach would check the volatility in the market and encourage landowners to bring forward sites for development.

-Henry Law, Brighton