Grounds for Change is an important new book for all those who campaign for economic justice.
The price of land in impacts on Local Council’s ability to increase the supply of homes for rent. This is particularly the case in London and other major towns and cities. Southwark’s Cabinet Member for Social Regeneration, Great Estates and New Council Homes notes:
Council has over 20,000 thousand people on its housing waiting list. Many of those ‘waiting for a home’ are children… thousands have no prospect of finding an affordable, secure and decent place to live unless it is provided by their local Council. But Southwark faces what has become an insuperable problem for elected representatives and policy-makers in many parts of Britain:
“…the extortionate asking prices [sought by sellers of development land]…mean[s] any successful bids [for developable sites] would make a significant hit on the viability of future [council housing] schemes and impose a further burden on an already constrained budget for housing investment.”
The task of building decent and affordable homes – where the need for them is greatest – can only be made manageable if development sites can be brought into use at prices that make it possible to rent, lease or sell new homes at a cost that takes into account the limited means of households whose disposable income places them close to or below the first quartile of the income distribution.
Public policymakers, who want to do the right thing and address the chronic and deep-seated failures of the UK’s housing systems and markets, have been rendered impotent. They have been incapacitated by the march of land monopolists, whose monopoly empowers them and their agents while, at the same time, disempowering new households, young households and, most grievously, poorer households and their representatives.
Work from Civitas has estimated that reforming the Land Compensation Act 1961 could slash 38% off the total development costs of a new scaled-up programme of social housebuilding across England. This would reduce the total cost of building a new social rent home from £354,478 to £217,643 in outer London and from £381,103 to £254,925 in inner London.”
The Conservative politician Iain MacLeod observed:
“You cannot ask men to stand on their own two feet if you give them no ground to stand on’.”
Siobhan Benita, the LibDem London Mayoral candidate for 2020 had made housing a top priority and is focused on providing support to councils to bring empty homes and disused spaces back into use.
Current LibDem policy calls for “Urgent amendment of the New Towns Act to transfer its powers to Local Authorities to acquire land at above existing use value”.
Reform of the Land Compensation Act 1961 to make needed land available at existing use value (excluding the hope value that comes with prospective planning consent for residential development) can make these aspirations a reality at the kind of scale needed.
* Joe is a member of Hounslow Liberal Democrats and Chair of ALTER.
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6 Comments
I am all for bringing empty homes and brownfield sites into use.
I hope you are not otherwise talking about greenfield land? Covering it in concrete, and building roads for access to housing estates and to commute back into your (English) cities?
How does it work, by the way? It sounds like giving councils powers to force people to sell land at below what they could get for it on the open market. Not clear if it means forcing people to sell who don’t want to at all?
Land is given value when the local council gives it planning permission. So why should the landowner get all of that added value for doing nothing?? The land should be valued before planning permission, and after planning permission is given, 10% of its increase in value could then go to the owner, with the council getting the other 90% of the increased value if it is sold to a developer. So if pre-permission value is £7000 per acre, and post-permission value is £70,000 per acre, the owner would get £14,000 per acre if he sold to the developer (£7K original value plus £7K increase), and the council would get the other £56,000 per acre, because they were the body that had brought about the increased value. Or the owner could sell direct to the council with his 10% value increase, and the council could build on the site themselves, or sell to non-profit housing companies or sell to individuals to build their own houses.
Alison, declaring my interest as a farmer and former Planning Committee member, I can see your approach working in 2 tier local authorities where the District Council determined the planning application and the County benefitted but in unitaries there would be a huge financial incentive to grant planning permission. In towns and cities where there is very very little completely undeveloped land have suffered from land banking since the 1947 Town and Country Planning Act. Labour Government’s introduce development land taxes at rates upto 80%. This causes prices to slump. Speculators swoop in and buy at rock bottom prices. Tory Governments then repeal the tax and the speculators make a killing. To answer the present cycle the Government has introduce a property development tax. A brief glance at the Guidance from HMRC shows why it does not work. http://www.gabelletax.com/blog/2016/12/20/hmrc-publish-their-guidance-on-property-development-tax-and-new-transactions-in-land-legislation/
The collection of essays is available on the Shelter site https://england.shelter.org.uk/professional_resources/policy_and_research/policy_library/policy_library_folder/report_grounds_for_change. The collection of essays reviews the issue from every perspective – including protecting the countryside and dealing with the housing crisis
“Over the last 50 years we have created a system where almost every scrap of land for new communities and homes is maximised to deliver the highest possible return for the landowner. Almost all land value—which is created by infrastructure, communities and the granting of planning consent—flows to the landowner. But if we shared that value more evenly between communities and the landowner we could address our housing emergency and get back to doing development better. ”
In much of the country social housing is the only tenure affordable to minimum wage earners, and the only tenure where rents are low and stable enough to give households on modest incomes the breathing room to save money each month. And – unlike in private renting – social tenancies are usually secure, so families can’t be turfed out on a landlord’s whim. We then have to ask the question: why shouldn’t the millions now struggling with high rents and poor security in the private rented sector have this same opportunity?
By reforming the broken land laws at the heart of our housing crisis, we can reduce the costs of building homes and wrestle back control over where and how we build.
Land is extremely expensive – especially in the places where new homes are most needed. The total value of residential land in the UK has exploded in recent years, rising by 290% in real terms between 1996 and 2017. The high cost of land is the single biggest barrier councils face in getting social housing built. Elsewhere, housing associations also cite access to land as their biggest barrier to building more.
We know we can’t meet the target of 300,000 new homes a year by building only the most profitable kinds of schemes. There are not 300,000 households a year ready, able and willing to buy homes at current unaffordable prices – meaning these homes will not get built, and more and more people will be without a home of their own.
Cassie,
Crispin Truman, Chief Executive Officer of the Campaign to Protect Rural England, writes:
“Our current housebuilding model is broken. It leads to sprawling, piecemeal development, making a fortune for some landowners and developers and doing little to address the root causes of the affordability crisis…”
Clive Betts MP – who is the Chair of the Housing, Communities and Local Government Select Committee of the House of Commons – notes his Committee’s conclusion:
“It is our view that reform of the Land Compensation Act 1961, alongside the enhanced CPO and land assembly powers that we recommended, would give local authorities the power to acquire land at a fairer value, build a new generation of garden cities, towns and villages, and capture uplifts in land value to provide new infrastructure and public services.”
Alastair Parvin – Chief Executive, OpenSystems Lab – observers that:
“In recent decades, we have allowed [the] leap in [land] value to be captured entirely by the landowner, who then sells the land for as much as someone can afford to pay for it. The problem is that — by definition – [this] is a price that most people can’t afford.”
Andrew Potter – Chief Executive, Hastoe – comments, with rural as well as urban locations very much in mind:
“A focus on securing land at lower values will help to deliver the quality, energy efficient and affordable housing that Rural England badly needs.”
Nicholas Boys Smith – Director of Create Streets observes that:
“Frankly, it is often only possible, at present, to build great places if you own the land at an eighteenth-century book value. This is absurd.”
Kate Henderson – Chief Executive National Housing Federation – writes that:
“If as a society we value social housing, and if together we are to fix the housing crisis, we need the land to build on and substantial long-term government investment to do so.”
Joe – thanks for the info. I shall study it properly. For sure, the current system is broken.
Wales has led the way in abolishing Right to Buy. I don’t know if anyone in England is pushing for the same, but I think they should be.