What a weird idea

But the rising cost of housing benefit is a consequence, surely, of the private sector\’s failure to provide enough jobs paying a living wage, or enough affordable housing for rent or purchase. The private sector has all the power in both cases. The state has all the responsibility.

The majority of the cost of housing, in those places where people want to live, is the value of the government issued permit to build housing.

It is thus the government that has the power: the power to lower the cost of housing by issuing more permits.

17 thoughts on “What a weird idea”

  1. People keep saying “the majority of the cost of housing is the cost of planning permission” without a scrap of evidence. Show me a regression that says that.

  2. Look at the relative cost of land with and without planning permission. That’s a starter.

    Or the difference between the sale value and the insurance rebuild valuation of most houses. And that has to factor in demolition costs.

  3. @ Richard Allan
    The existence of firms whose only livelihood is from negotiating planning permission/a change in permission.
    The conditional sale contracts for agricultural land for housing developments (or even commercial developments) – the conditional price with planning permission is often 50 times the price for sale as agricultural land to another farmer.

  4. Right-wing get-out#1. There is enough building-land with extant planning permissions in London to build 20,500 houses p.a. until 2016 and has been since 2007.The developers don’t want to flood the market because that will bring the unit price down.
    As Jim Claydon of ther RTPI said at the earlier date: “All landowners including housebuilders maintain land values by managing supply.It is not in their interests to release large quantities of land because this deflates its value.” So they’ve got the land with planning permission but are n’t using it.
    @SE : getting to know a lot about land values !

  5. Ummm.. don’t developers have to figure in the time to get new permission too? Is 20,500 houses enough in such a small city per year? To be honest I’d have expected more.

  6. @ DBC Reed
    20,500 sounds a lot! Nearly 7% of the early-50s building rate. Fantastic – that’s three weeks of construction every year!!
    Now how about reading the question? Which concerns the *cost* of building a house.

  7. @J 77
    Dunno about reading the question:there is n’t a question.There is a bald statement by TW:that the government has the power to lower the cost of housing by issuing more permits.
    So the developers are going to build loads more houses and sell them at lower prices? Are you having a laugh?As Claydon says the obvious thing for the developers to do is build only so many houses as people willing to pay the current inflated prices are going to pay for.Then sit on their chuffs while their land banks appreciate in value by more than other really safe investments.

  8. @dbc reed: You are conflating ‘landowners’ and ‘housebuilders’. Yes house builders are landowners, but they are only a small subsection of all landowners. They do, as you point out, hold most of the land with planning permission, and for obvious reasons, tend to allow it onto the market at controlled rates. The power to do so is entirely created by the difficulty in gaining such planning permissions, particularly for large scale developments. Once you have achieved such a pot of gold (at great expense of both time and money) you are not going to devalue it by flooding the market.

    If all landowners were allowed easier access to planning permission, then the supply of land for housing would undoubtedly increase, and the price would fall. Indeed, in the event of a sudden liberalisation of planning there would be a mad rush by landowners to get to the market as soon as possible in order to take advantage while prices were still good, thus creating a downward price spiral until a new equilibrium price was reached. It would be in no individual landowners interest to hold out for higher prices, as there would always be another who would take a lower price (for whatever reason).

    Contrary to what you may imagine, there is no grand conspiracy of all landowners to control land sales for housing.

  9. DBC Reed (#7) – we’ve gone over that here plenty of times before.

    The number of unbuilt planning permissions is roughly enough supply to keep them going for the time it takes to get more planning permissions.

    It’s not a stockpile, it’s a pipeline.

  10. “So the developers are going to build loads more houses and sell them at lower prices? Are you having a laugh?”

    Why do you need ‘developers’, unless the government gives them a monopoly on building land?

    Over here, you can just buy some land, drive to the nearest house store, pick a house you like, pay them to deliver it to your land on a truck, install it and move in. You probably need to hire a contractor to build the basement, connect the water/power, etc, but that’s something any competent person can organise.

    Those who’ve only lived in a Nanny State like the UK may not realise just how insane its housing market is compared to the free(r) world.

  11. The local authority can also impose specific conditions on building, such as requiring so-many “affordable units” as part of a given project, effectively forcing developers to subsidise ownership which, I understand from local developers, makes the whole project pointless financially. They do not build.

  12. DBC Reed,

    There is enough building-land with extant planning permissions in London to build 20,500 houses p.a. until 2016 and has been since 2007

    Citation?

  13. Citation?
    “Planners accuse homebuilders of hoarding land to keep prices high” Independent 17th Feb 2007(on Net).
    I note I understated the number of London building plots being speculatively withheld p.a.:it should have been 30,50. (Could n’t read my handwriting) I also did not mention the call for government intervention.
    It would be somewhat revolutionary if the citation of sources became de rigeur on the blogosphere,though customary practice for arts graduates who are expected to give three citations,quotes or instances for every proposition they advance. Most on the blogs seem to have a science or technical background and rely on “statements of the truth” without giving any evidence ,folllowed by maximum bad temper when crossed.

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