Damned idiots

Labour is considering forcing landowners to give up sites for a fraction of their current price in an effort to slash the cost of council house building.

The proposal has been drawn up by John Healey, the shadow housing secretary, and would see a Jeremy Corbyn-led government change the law so landowners would have to sell sites to the state at knockdown prices.

Landowners currently sell at a price that factors in the dramatic increase in value when planning consent is granted. It means a hectare of agricultural land worth around £20,000 can sell for closer to £2m if it is zoned for housing.

Labour believes this is slowing down housebuilding by dramatically increasing costs. It is planning a new English Sovereign Land Trust with powers to buy sites at closer to the lower price.

This would be enabled by a change in the 1961 Land Compensation Act so the state could compulsorily purchase land at a price that excluded the potential for future planning consent.

Healey’s analysis suggests that it would cut the cost of building 100,000 council houses a year by almost £10bn to around £16bn.

It’s not who gains the profit that leads to the high prices. It’s that the change in value exists. Reclassify more land and that premium will shrink, reclassify enough and it will disappear.

After all, what was the uplift before the Town and Country Planning Act 1947? Trivial? Quite, therefore it’s the act imposing the premium, isn’t it?

The idea of buying land at market price without planning permission then adding the permission is fine, no problems at all with that. Although a large problem with using compulsory purchase to do it. But it’s not actually solving the problem, is it?

20 comments on “Damned idiots

  1. At least they’re getting close to admitting that planning is the major cost and blockage.

  2. Does ‘right to buy’ apply to these new cheaper houses?
    A bigger windfall to the occupier then. Or, if sold at market price, the council makes a huge profit.

  3. I think Madsen Pirie has written about councils bidding to buy agricultural land when it comes on the market, granting planning permission to the bits with no amenity value, then selling it on.
    If it means more demonstrations from the oldies at CPRE standing in the rain, then I’m for it.

  4. “The idea of buying land at market price without planning permission then adding the permission is fine, no problems at all with that.”

    Quite. Play straight and fair. Find six viable sites for the units you want to build and conduct a reverse auction. Owners can sell at a premium to the unpermissioned value, or hold and wait to see if they can do better later.

  5. It’s still just socialist thieving ponced up with talk and is an appeal to Venezuelan style envy–“Get them rich Bastards”.

    The outcome in Venez should serve as an object lesson for anyone with a brain.

  6. As Mr Ecks says, pure theft.

    I would go as far as to say Tim’s economic arguments on planning and building, made often and well, are almost offensive in the face of this legal and moral obscenity.

  7. They aren’t idiots, exactly. They are statist rent-seekers. They want the value of the planning uplift, and the control over vast swathes of housing, to accrue to the state alone.

    Keeping us all in housing poverty of course.

  8. Personally I don’t understand the issue with land speculation
    If the government released publicly owned land with planning permission for housing on a leasehold basis (peppercorn land rent) builders get to build, owners get to own leasehold and land banking/speculation is pointless.
    Make right to buy on the basis of a shared benefit between occupier and the government and you would torpedo the business of the sharks offering cash to long-term tenants to buy properties and then develop the site or flip for £thousands profit

  9. Ahh, they don’t know what to say about Brexit do they? They know that their particular brand of Labour can only work within the EU, with a collective to (they think) pick up the pieces after they’ve destroyed the country.

    But then so many of the things they want to do are illegal within the EU. Oh, what a dilemma, between what they need and what they just want!

  10. That’s a nice bit of land you’ve got. Shame if something were to happen to it.

    They’re not idiots. They know *exactly* what they’re doing.

  11. ‘It’s still just socialist thieving ponced up with talk’

    I think it even more sinister: the lust for power. Power over other people’s property. Yes, “ponced up with talk.”

    Yes, it parallels communism, but I see it as Healey’s personal evil, independent of any political system.

  12. If you can get a piece of property upzoned it can be better than high tech stock options, but man o man what a battle it can be. Founding the next Facebook might actually be easier. And people are baffled why fewer houses are built.

  13. Mr Ecks

    The issue I have there is that a Corbinite by definition has no brain so therefore are utterly impervious to your argument!

  14. Tommydog

    +1

    And most of that gain is now captured by the council in the form of Section 106 payments, SANG’s, etc., etc..

  15. VP–Memory stirs and I recall their was an original Star Trek episode called “The Corbomite Maneuver “. In which a tiny little man in a giant but underpowered ship tried to intimidate the Enterprise Wizard of Oz style. Despite having no real power behind his threats.

    Let us hope life may yet imitate art.

    Unfortunately our “leader” is not Captain Kirk but instead a “lard-er” ie the Fat-Arsed Fish-Faced Cow.

  16. The idea of buying land at market price without planning permission then adding the permission is fine, no problems at all with that.

    It is if those doing the buying are the ones who, at the stroke of a pen, can add the permission. That’s the kind of thing mayors do in Russia.

  17. Fuck me, where to start.

    First of all the ‘get planning permission, turn land worth 10k/acre into £2m/acre’ bollocks. Firstly the £2m/acre is for serviced land. Ie where the roads have been built, the drains and sewers installed, all utilities are on site, all the buyer has to do is start building houses and sell them. Getting the land to that condition takes £££, so the landowner doesn’t see anywhere near £2m/acre (which is also far to high a price, apart from maybe the SE). Then there’s also the fact that you don’t get to sell every acre on which you have planning for £2m/acre. All the roads, storm water lagoons, open spaces, schools, cycle paths, etc etc have to be be provided gratis. The developer gets no money for that area, he has to absorb the cost of that from the remaining land that can have houses built on it. As a rule of thumb its two thirds developable vs one third non developable. So if one took a 10 acre site, after all the work had been done building roads etc there’s be roughly 6-7 acres available to sell for the £2m/acre. So the gross proceeds would be £12-14m. Off which come all the civil engineering costs of doing the roads etc and the Section 106 contributions (or nowadays the Community Infrastructure Levy, which is basically a roof tax on every house built). All of which will probably cost half the money on the table. Leaving £6-7m to be split between the landowner and the developer. Usual split is 85% landowner vs 15% developer, after the developer has taken out any land promotion costs of getting the planning permission in the first place. Thats going to be a few hundred K at least. So the best the landowner will do is sell a 10 acre field for 85% of c. £6m. Which is about £5m, or £500k/acre. Not £2m/acre.

    Now this is still very good deal, but that is top end – I know of a farmer local to me who sold 200 acres for development, he ended up with £18m, or £90k/acre. Still better than a poke in the eye with a sharp stick, but a very long way from £2m/acre.

  18. Well said, Jim
    I can remember (when I was at school, or maybe uni, so not very comparable with the present day …) a small private development built next to one of our better council house estates and immediately across the road from some older private houses, each dwelling in which sold for less than it cost to build a Parker-Morris council house or flat on land purchased without planning permission (which the council subsequently granted to itself) from a farmer.

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