Tax deed sales and land banking to reuse vacant and abandoned properties

Abstract

Purpose Tax sales intersect with the market, housing policy and socioeconomic matters, but the topic in this context is understudied. The purpose of this paper is to investigate whether and how land banking is more effective in fostering positive property outcomes than tax lien sales and what market-based measures can be combined with land banking to reuse tax delinquent, vacant and abandoned properties. Design/methodology/approach This paper analyzes the consequences of tax lien sales and land banking in Indianapolis, Indiana, the USA. Various local data sources are used. Findings This paper finds that land banking, when compared to tax lien sales, results in less tax delinquency, less vacancy and abandonment, more increase in assessed value and fewer ownership changes after sales. Also, this paper shows the contributions of non-profit and for-profit developers as business partners to land banks. Practical implications This paper demonstrates the utility of the land banks that have become prevalent in some states in the USA over the past 20 years. The results of this paper recommend the realistic approach of combining government intervention and market forces. Social implications This paper sheds light on the US practice of tax lien sales. It goes largely unnoticed, but malpractice risks harming the vulnerable members of community. Originality/value Housing policy needs to find common ground with the market. It is a dilemma, more or less, for every country. The results of this paper suggest a harmonized public policy approach that includes land banking and the market can be effective in combatting with troubled properties.