“Homeowners could get payout if house values fall” – Nick Clegg on garden cities

In an unexpected intervention – an interview on BBC’s “Countryfile”, Nick Clegg has suggested that existing homeowners in areas where new garden cities are to be built could be compensated for any fall in value that might be caused by the building work;

We could maybe give deductions on [homeowners’] council tax over a period of time during which the garden city is being built, we could possibly also say to those homeowners where they think the price of their homes will be effected, we will guarantee the price of their home, by buying it, if you like, up front.”

The concept is based on the compensation package proposed for the HS2 rail project, and he went on to suggest that compensation could instead be given by means of a reduction in council tax bills.

And clearly, something needs to be done to get houses built, with 2013 seeing the lowest number of new homes constructed for four years, just 109,370. However, given that two of the first three proposed garden cities are planned for South East England, where house prices are already disappearing out of range of first-time buyers across broad swathes of the region, the cost of such a proposal might be seen as giving money to those who have already done well out of house price inflation.

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20 Comments

  • Alan E Locke 4th Aug '14 - 4:47pm

    Why just Garden Cities? That would be just another typical political bodge. What the lib-dems need are good well thought through coherent policies,

    But the concept of compensation for all planning decisions could be developed. Wind farms, new roads, new houses and whatever. If someone gains maybe it shouldn’t be at someone else’s expense. That should please the capitalists. And it would get my vote.

    But, of course, the converse could also apply. Capital gains on property, at least when realised, treated as income. That should please the socialists. This would also get my vote.

  • matt (Bristol) 4th Aug '14 - 5:08pm

    Alan, you’re getting into tempting but dark and deep territory there, and so is Nick; and what about tenants evicted by such processes? do they get compensation for having to seek rehousing?

  • Or the Lib Dems could actually suggest a long term Liberal policy that appears to have been forgotten – Land Value Tax anyone?

  • Daniel Henry 4th Aug '14 - 5:16pm

    As Lennon said, if we implemented LVT then homeowners negatively affected by external developments would be compensated automatically through a lower tax.

  • David Evershed 4th Aug '14 - 5:57pm

    The first HS2 compensation package has had to be changed and is being consulted on again.

    It is not based on the disruption during building but the distance from the proposed rail line. Not sure this approach would work for new towns.

    The HS2 scheme proposal is as follows:

    For homes and small businesses up to 60 metres of the line the state would buy up properties at the full unblighted market value, plus 10% (up to £47,000).

    For those within 60 and 120 metres of the line who do not wish to sell the government would pay out cash compensation of 10% of the market value, up to a maximum of £100,000.

    Those within 120 and 300 metres would be offered between £22,500 to £7,500 on a sliding scale, based on distance from the line.

    The payments are proposed to be tax free.

    Some farms and businesses would be cut in two and made unviable. I think they will have to go to Court to get full compensation.

  • @matt (Bristol)

    Eviction and frequent moving is part of the deal of private renting. If they need stability, then there’s the Lib Dem backed Help to Buy scheme to give them a property of their own, no?

    Renters are still largely considered electorally insignificant in terms of political appeasement. They tend not to vote, and quite often fail to register at all. Targeting home-owners and our 1.5 million BTL landlords will likely reap more votes.

  • PT
    “If they need stability, then there’s the Lib Dem backed Help to Buy scheme to give them a property of their own, no?
    ……Targeting home-owners and our 1.5 million BTL landlords will likely reap more votes.”

    Sod the renters then, not interested in their votes. If they can’t afford or don’t want to buy, the LDs are not interested in them.

    Good luck with that message….

  • Lennon

    A LVT should be implemented but I am not sure it addresses the question here, the suggestion of cash or tex credit compensation doesn’t make sense either though.

  • Alan E Locke 5th Aug '14 - 9:30am

    Land Value Tax (is this really an increase in rates?) could resolve some of the issues around planning and house values and capital gains. Except I don’t know any details about Lib-Dem LVT policy so I can imagine issues around existing property owners , who didn’t expect and don’t want a property value increase, needing help to pay or avoid increased LVT. So maybe, on deeper examination, it might or might not be an excellent idea.

    A Lib-Dem LVT policy proposal probably needs a few well informed and right thinking people to get together, discuss the idea and issues and injustices that might be raised and present a good coherent policy that would, in their informed opinion, contribute to the future well being of our United Kingdom.

    Like many discussions this one touches in several really important issues (housing / planning / house prices / rates / tax/ ??), without a solid foundation to build the discussion on. And no good common goals to measure possible solutions to issues about.

    Ultimately I have to ask what is it all about?

    Hoping for a hung parliament with enough Lib Dem MP’s elected so that Nick Clegg can continue as Deputy Prime Minister? Seeing out the days of the current coalition, so that the Deputy Prime Minister and his parliamentary colleagues can hold their heads high and say “I was there”

    Or just continue working towards building a Stronger Economy and Fairer Society? At least no one can argue with this apple pie sentiment – just as as long as no one intends to really build it in someone’s own back garden.

  • matt (Bristol) 5th Aug '14 - 9:35am

    @PT – I was meaning to suggest (in response to Alan) that the implications of allowing a principle in law of statre compensation for changes in housing value are numerous, complex, and likely to be an almighty mess, that will have many people saying ‘me too’. The reference to renters was a f’rinstance (based on my knowledge of similar arguments in history), rather than something I’m perosnally comitted to. Basically what I saying is that fools rush in…

    Your emphasis on ‘political appeasement’ is a bit odd and to me the phrasing suggests you may be trying for a tone of irony, particularly when I read your subtle elbow nudge about the Help to Buy scheme again.

  • andrew purches 5th Aug '14 - 10:35am

    What Nick Clegg neglected to mention in his telly speak was that one of these “garden /market” town projects is probably down here in West Sussex – the Mayfield proposal for a market town of some 10 000 houses initially – in a stunningly beautiful area of the Low Weald,overlooked by the South Downs National Park, where land values will increase staggeringly from £10 – £15000 per acre – to something in the region of £ 250 – £300.000 per acre. At the end of the day, the majority of this land will be acquired at this sort of price ( which is in fact tantamount to market bribery ) to build ten thousand or more houses,along with all the additional infrastructure needed that will be in the wrong place and for the wrong reasons. If land is to be earmarked for large scale building, then it must be bought at its current market value as superior agricultural land, and no more than that. It is patently wrong to do otherwise – allowing the market to rig the land price will make the proposed development neither sustainable, nor affordable. The 1946 New Towns Act is still on the statute book, and that was underwritten by the threat of compulsory purchase. Furthermore such proposals as this Mayfield project referred to above should not even be considered when fronted by a group of partners who have been involved with public housing projects and with one person in particular,Lord Matthew Taylor,a Lib Dem peer and ex M.P.,who also happens to have been a house building advisor to the Government and a lead figure in the National House Builders Federation. Is it any wonder that our party stands for so little that is straightforward and good around this neck of the woods ? Mind you,the local Tories are spitting teeth as well.

  • Matthew Huntbach 5th Aug '14 - 10:45am

    Caractatus

    Here we go again, Clegg inventing policy, not having thought it through and ignoring party policy.

    Yes, now Clegg has come out with it, it will probably get written up in the national media as “Liberal Democrat policy” and commented on as if all Liberal Democrats members were enthusiastically behind the idea.

    Quite obviously, it’s a dangerous throwaway comment, one can see all sorts of problems with the idea, it’s something that needed careful thought and discussion, not just pulled out of the hat in a radio interview.

    I think I might be tempted to be supportive of the idea if it were generalised – a tax on capital gains on houses, which would be negative in those cases where the capital gains are negative. Otherwise, trying to draw up some arbitrary loophole whereby some certain sort of house price change is treated in a special way different from house price changes which occur all the time for many reasons, is daft.

  • David Allen 5th Aug '14 - 10:46am

    As David Evershed’s post makes clear, actual “compensation” for the adverse effects of planning decisions has to be based on a rigid and usually rather ungenerous basis. The reasons are as indicated by matt – if government were to make it possible for millions of people to try putting an argument that a planning decision has harmed them and that they ought to get compensated, then millions of people would indubitably try it on – with a mix of reasonable cases, weak cases, terrible cases, and totally dishonest cases! Result, massive legal costs.

    So what Clegg is suggesting is populist nonsense. Tolerable from a minor backbencher, horribly naive from a party leader.

  • Matthew Huntbach 5th Aug '14 - 11:04am

    andrew purches

    What Nick Clegg neglected to mention in his telly speak was that one of these “garden /market” town projects is probably down here in West Sussex – the Mayfield proposal for a market town of some 10 000 houses initially – in a stunningly beautiful area of the Low Weald,overlooked by the South Downs National Park,

    Yes, but this IS the reality behind the lines “solve the housing problem by building more houses”. It’s very easy to glibly say those things as if that’s the obvious solution, but people will say yes they agree with the idea, but will always have reasons why the houses should not be built in any place it is proposed to build them.

    The Brighton and Hove conurbation has the worst ratio of house prices to income of anywhere in the country. Therefore if you are actually going to solve that problem by the usual line “build enough houses to solve it”, throwing up those houses in the Weald is just what you are going to have to do, assuming you don’t go the whole hog and plonk them all on the South Downs (which is where Brighton and Hove houses were plonked, downland valleys filled in with the big council estates – I grew up in one of them, and in my childhood saw more of the Downs around us built over – until it was decided we needed to protect the Downs and call a halt). Maybe there’s some big chunk of the Sheffield Moors that Nick Clegg would be happy to see covered with houses, but are Brighton kids really going to want to move oop north to such places to get a home? Some of us (well, me for sure) think London is far away up north enough.

    So, if we don’t want to pour concrete on our green land, yes, we do have to do difficult things i.e. have financial measures which ensure the housing we do have is more equitably shared out, and that there is most definitely no financial benefit in hanging on to housing you don’t need as an “investment”. The political parties are far too timid to say this, and existing homeowners have all the voices. It’s the kids themselves who need to be calling for it, and demonstrating that there are votes for any politicians brave enough to agree with them.

  • Tony Rowan-Wicks 5th Aug '14 - 11:33am

    I’m significantly involved in several non-political groups and understand the process Nick Clegg and others are going through now. As long as the leader and influential thinkers [including on LDV] keep to the correct process of evolving ideas, going to party members for development of them and voting for them under constitutional measures, I’m agreeing with the evolving period. This is the right time to evolve policies – before the party decides on its manifesto. Sorry that our visitors don’t like the way we create policies but actually similar systems are used by all parties. Total negativity gets us nowhere so let’s get on with the manifesto please – and debate as a party [we know who the others are and they are not here to help our own way forward].

  • David Allen 5th Aug '14 - 12:16pm

    Who is this leader who keeps to the correct process of evolving ideas, going to party members for development of them and voting for them under constitutional measures?

  • David Evans 5th Aug '14 - 12:47pm

    @ Matthew Huntbach – “The Brighton and Hove conurbation has the worst ratio of house prices to income of anywhere in the country.”
    Interesting point. I always thought South Lakeland was one of the worst (alongside other bijou tourist areas), but in South Lakeland we have a Low Wage, relatively High Income economy, income boosted by retirees with personal pensions. Question to Matthew – Do you know where I can get the data on this and does it differentiate between earned and unearned income? Any guidance would be appreciated.

  • Matthew Huntbach 6th Aug '14 - 11:13am

    David Evans

    Question to Matthew – Do you know where I can get the data on this and does it differentiate between earned and unearned income? Any guidance would be appreciated.

    I don’t know offhand, but I do recall reading recently a list of places where the ratio of house prices to wages was highest, and the place where I was born and grew up and where most of my relations live came at the top.

    Many northerners have this blinkered image of the whole of the south being wealthy Tory types, but that is just so wrong. It is encouraged by the electoral system whose distortion ensures that few or no MPs from the south are there to give a voice to the millions of people living in the south who are poor.

    Brighton and Hove is not a “bijou tourist area”. The seaside tourist part is just a small part of the whole. Once you include also the continuation of the conurbation into Adur district, you have a place with well over a third of a million people. The sort of big house inhabited by wealthy types stereotype is restricted to just a few wards. The outskirts include several large deprived council estates, built in downland valleys so outsiders never see them. Much of the housing in the centre has for decades been split up into squalid multi-occupied flats.

    When I was young, Brighton and Hove were fairly industrial areas, with lots of small workshops scattered across the conurbation. My father, who had jobs in various of these would talk of northerners coming down looking for jobs, and going right back to where they came from when they found out how low the pay was compared to what jobs in industry up north would pay, and how very much higher housing costs were. However, much of that industry was devastated by Thatcherism, just as industry was elsewhere.

    Wealthy retirees tend to go to the up country parts of Sussex (like where Andrew Purches was writing about), and those that do go to the coast are more likely to go to the quieter Worthing or Eastbourne to the west and east respectively. Students coming to Sussex university and Brighton university are a bigger factor in the population of Brighton and Hove than retirees. Of course there’s also the Julie Burchill trendy types, coming in and helping push house prices up and push out working class Sussex people from their homeland. But where are we to go?

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