Dear God Lean, this is obvious!

The Chancellor’s claim that planning costs are among the highest in the world is groundless; when asked for its evidence, the Treasury had to admit it had “no recorded information”.

Damn, this isn\’t even economics, it\’s straight arithmetic!

What is the price of a house in England? £200k or there abouts for a dwelling (ie, house, flat, average of them all).

What is the rebuild cost of a house (flat, house, average of them all etc)? Given that a nice house costs £120k to build, say, £100k? Fair enough?

What is the price of land? £10k a hectare or thereabouts. How many houses/dwellings can you put on a hectare? The government says 14 minimum. So, we can see that the cost of land is under £1k per dwelling.

I\’m not going too fast for anyone am I? Good, now, out with the calculator.

£200k minus £100k mionus £1 k gives: £99k.

Excellent, we now have the cost of the planning system to each household in the country: £99k.

Excellent, off you go now and see if you can find a place with a higher cost, eh?

5 comments on “Dear God Lean, this is obvious!

  1. Are you assuming the builder’s profits are in the cost of building the house?

    Most “developers” I’ve known aren’t happy unless they’ve got the latest Ferrari or Porsche.

  2. Offering a critique of Geoffrey Lean’s output tends to have the flavour of hunting a dead fox about it. How an advertising copywriter strays into having a column in a nation newspaper will always remain a mystery but, whilst he can carry on rehashing press handouts, one supposes the cheques keep landing on the doormat.
    To save having to actually read the man, this week’s mortgage payer includes a BBC taster for yet another AGW propaganda vehicle thinly disguised as a nature series, a snippet on some bloke who writes on walls & straight copy from a Campaign to Protect Rural England lobbying brief.
    I’ve long harboured a theory that the Torygraph nurtures Lean, Riddell, Grey & now this new bloke who was a Labour spin doctor in the interest of anger therapy for its readers. Comments are usually more interesting than the articles.

  3. While the principle of your calculation is correct, the figure for the base value of the land is out by a fair bit.

    Firstly bare agricultural land isn’t £10K/hectare. Its more like £15K nowadays. And for small plots often much more than that, maybe £25K/hectare.

    Then you have to factor in that the current price for land is artificially depressed because you can’t build a house on it, just use it for farming. So if all planning restrictions were lifted, agricultural land prices would rocket, especially in suitable locations. My guess is that acre plots (that’s more than enough for a big detached house plus garden) would sell for anywhere between £10K and £100K, purely on location. Middle of nowhere, £10K. In a swanky part of Surrey, £100K easy.

  4. Lean is being stupid or disingenuous. It’s hard to know which. If the Treasury hasn’t done a specific information gathering excercise on some statistic, it has to say it has “no information”. That doesn’t mean the asssertion is groundless. If Osborne asserted that men are generally taller than women, that would be true, but if the government hadn’t specifically surveyed gender height differences, they would have to say they have no information on them.

  5. As a sometime property developer, I’ve always evaluated whether land is correctly priced for the area thus:- Take the estimated sales value of a completed property on the site in question, allow a half for construction, a quarter for profit and a quarter for the land. If the asking price of the land is below this figure, it is good value, if not, not.

    At least that is the formula for Spain where I live and where planning restrictions are substantially less onerous than in the UK.

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