These people are mad

Britain should limit the windfall gains of landowners by freezing the value of plots newly designated for housing, according to a thinktank urging sweeping reforms to tackle a national shortage of affordable homes.

Calling on the government to pursue land market reforms similar to the German model, the Institute for Public Policy Research said planning authorities should be given new powers to zone land for development and freeze its price.

It said speculation by landowners awaiting planning decisions that can trigger vast increases in the value of a plot, had the effect of exacerbating wealth inequality and was a “driving force behind the broken housing market” in Britain.

That uplift in value is a result of not granting enough planning permission. Grant more planning permission and the uplift will disappear.

Sigh. They’re going to try and fix he price, instead of make the price disappear. Idiots, madmen.

16 thoughts on “These people are mad”

  1. Theft, pure and simple.

    1. Confiscate the land at gun point, paying agricutural value.
    2. Grant yourself planning permission on ‘your’ land
    3. Sell it to the builder for loadsamoney.
    4. Pay hush money as required. All councillors agree. hic.

    Wasn’t there a scandal like this a while back…Crichel Down…
    Seems we are due for a remake.

  2. Britain should limit the amount of flooding by freezing the amount of rainfall.

    Economy == Weather, morons!!!!

    What’s the smileychars for head bashing against desk, but it would need my fist at the back of their head.

  3. Reasons the British housing market differs from Germany’s:

    1. Germany is less densely populated and half the population isn’t crushed into one corner surrounding the capital.
    2. Germans who live in towns or the suburbs don’t mind living in apartments.
    3. Germans don’t mind renting, even as families.

    But yeah, dicking with land values will really make Britain like Germany.

  4. No, not mad at all. Politics dictates that you can’t issue as much planning permission as the market desires. This creates the uplift in value. There’s no point in bleating that they should issue more planning permits when it simply won’t happen.

    Try applying the same logic to carbon trading. The government deliberately issues fewer CO₂ permits than the market desires. Our housing market is akin to randomly awarding big polluters with free extra permits, just because they’ve jumped through some bureaucratic loopholes.

    Thus the correct way for government to capture the planning gain value, given the stated desire to cap numbers, is simply to auction off planning permissions. Not sure how workable that is in practice, given that PP is far from fungible, but it’s the right approach.

  5. Bloke no Longer in Austria

    Also TimN, it is bloody hard to get a loan in Germany and Austria. People have to save forever to afford a deposit. The Building Society accounts (Bausparkasse) are as the name suggests only to be used for saving for a house.
    There is no concept of a “property ladder”, once one buys, it is for life. Usually houses only come onto the market due to death or divorce. Moreover in a rural environment, people tend to build their own houses ( or buy a kit house these days). Teutonic friends are astonished at the number of houses that I have bought and sold and can’t understand the attraction of buying and renovating an old one.

  6. Yes, but…….

    Planning permission is pretty easy to get nowadays and some councils are crying out to issue more.

    So why isn’t it taken up?

    Because those same councils will then take most of the increase in the land value in the form of s.106 payments, infrastructure contributions, SANGS, and social housing allocations.

    No developer is going to look at investing in a site if he can’t see a profit margin of 20% after the cost of acquisition and construction.

  7. How do you “freeze” the value of property?

    Don’t say things like that, the Daily Mail will have a breakdown. They must always go up because they are owned by Hard Working Families, amen.

  8. How many times do I have to tell you that you could issue planning permissions on the entire south of England and it would not make any houses built much less expensive? In fact the authorities pretty much have done that , there’s house building either going on or in the pipeline everywhere in the South.

    The landowner uplift on grant of planning permission is in the region of 15-25k per house, depending on the type of housing and density achieved. Thats it. If you expropriated the land for zero cost, thats all you’d reduce house prices by, once. All the rest of the cost is fixed – the cost of infrastructure, the cost of providing utilities, the cost of building the actual house, the cost of providing the facilities all the new houses will require (schools/hospitals etc). None of those costs change on a per unit basis if you want to built 100 houses or 100,000.

  9. @Bongo: No one has offered that chap £275m for his land. Not in cash, today. They may have said ‘If you sign an option with us you could get ‘up to’ £275m over 20 years. Developers NEVER pay cash up front, they want options that allow them to control the land, gain planning then buy small plots as they need it over time, with a valuation process they control from start to finish. Its a badge of honour among developers to never pay the landowner more than the minimum price promised at the start , which will be far below the headline figure they tell you you will get when you sign the option. Developers are the biggest sharks and liars going, I wouldn’t believe one if he said the sky was blue and grass was green, chances are he’d have had a plane out earlier spraying the sky green and grass blue. The chances of any developer offering a genuine £275m in cash up front for that land are about the same as finding Elvis down your local chippie.

    As a counter data point I have personal knowledge of one landowner local to me who sold 400 acres of land for development for £17m, ie just over £40k/acre. Admittedly over half was undevelopable (being a flood plain) so the value of the developable area was c. £100k acre.

  10. @Jim – I’ll take it that developers will only punt that money if this, and if that condition is satisfied, and over a certain number of years. I’ll maintain that it still represents the total uplift.
    The uplift to the gent local to you is still around 4 times the value of it being subsidised farm land, and a bigger multiple compared to an unsubsidised price with no CAP, VED exemptions, inheritance tax exemption and cheap red diesel in play.

  11. Tried to explain to DM reader types moaning that their children ‘ despite earning a good salary can’t afford an apartment in London aged 25’ that it is perfectly possible to get a 2 bed apartment with parking in South Ken for 30k a year rent. They told me it was impossible, I explained that I had just rented exactly such an apartment for the last 12 months.
    Share with a friend and spend the remaining cash on a long term saving product within a tax free ISA because the biggest wealth gap is really between those who have a fat public sector pension and those in the private sector who either have nothing or have seen the value of what they have eroded by a continuum of government mendacity and stupidity.
    The market in London at least (and let’s face it, the property ‘crisis’ is always about London) has offered a solution to this. Often accidental and sometimes reluctant landlords are offering out property on a ‘yield’ of between 2 and 3 per cent including maintenance. Why buy yourself? For a start you can pay several year’s rent equivalence in stamp duty and the prospect of capital gain is limited from here. Sure it would be CGT free, but so is your ISA, with the advantage of compound growth in your savings.

  12. Thirty Grand and year for a two bed apartment sounds like a lot of money to me! My house (not in the cesspit of the South East) costs me about four grand a year for a three bed.

    I’m struggling to believe that houses are as expensive to build as @Jim says – people in my kneck of the woods are throwing up new houses for sale at about £140k a pop – including the planning uplift, S106 bribes the lot. Probably £100k a pop on the actual house. Unless it costs a lot more to build houses in the SE, that implies land value uplifts in the order of at least £100k a house.

    At the stuff about planning changes being politically impossible is changing, as the percentage of the voting base without one increases.

  13. ” I’ll maintain that it still represents the total uplift.”

    Is £275m today worth the same as £275m spread over 25 years?

Leave a Reply

Your email address will not be published. Required fields are marked *