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?