Lib Dems should support Community Land Auctions to tackle the housing crisis

We are living through an acute housing shortage unprecedented in British history. The severe lack of homes drives house prices and rents, and there seems to be no end in sight. At its heart, the reason is simple: we haven’t built enough homes for decades. The Liberal Democrats should be at the forefront of this debate, leading the charge for a localist and progressive housing policy that delivers the homes we need to see. Community Land Auctions were originally proposed with Ed Davey in 2007 and promise just this.

Currently, communities that say yes to development near them get very little out of it. Existing mechanisms like Section 106 are insufficient to outweigh the significant disruption and impact of larger schemes, meaning that locals see all of the downsides as landowners walk off with huge value uplifts. Agricultural land given planning permission for homes can see its value jump by over 100x, almost all of which goes to the owner and middlemen. Community Land Auctions would capture this gain for local authorities, allowing them to spend it on vital local services, new green infrastructure or whatever other priorities are most important for their area.

Community Land Auctions use an innovative new process to make this work. First, a council invites sealed bids from landowners, who indicate which land they would be willing to sell and for how much. The council then evaluates these bids, deciding which land is most suited for development, how many homes should be allowed and other key aspects of the planning permission. They then auction the permissioned site or sites to developers, who then build it out. Landowners are incentivised to offer low prices for their land to win their auction, whilst developers are pushed into high bids to secure the right to develop. This maximises the income to the council and ensures that they capture the vast majority of the planning uplift.

On large sites, a CLA could deliver huge income to the local authority. After years of underfunding, this could be a lifeline for struggling councils. The income could be used for any of the council’s priorities, meaning they would be able to deliver social housing, better schools, a new GP surgery, improved green transport infrastructure, or whatever else matters most in their area. In that way, CLAs are a highly liberal and localist policy, trusting local people to spend the money best in their area – not dictating from Westminster.

CLAs could also help give communities a reason to say yes to new development. At the moment, development is an us-vs-them process, where local people can feel building is forced upon them with nothing in return. Under a Community Land Auction, people would see real improvements in their area, encouraging them not to oppose, or even to support new development. In that way, Community Land Auctions are similar to street votes: both policies encourage new homes by working with residents, not against them.

The Government are proposing trials of the policy first introduced by Ed Davey and Tim Leunig all those years ago – and I hope that, as Lib Dems we can support the idea. This is a localist idea with a strong liberal pedigree which will help us fight the housing crisis. We owe it to everyone that we at least give it a go.

* Joshan Parmar is a Lib Dem Member, Co-Director - Lib Dems for Housing and Director of Outreach - Priced Out

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14 Comments

  • Daniel Henry 7th Jun '23 - 11:06am

    I would have assumed that we already are? Is that not the case?

  • One of the primary causes of house price increase is immigration and increasing number of people living in the UK. It is simple supply/demand economics. There are 2 solutions

    1. More restrictive immigration policy
    2. More houses being built.

    If you have a more liberal immigration policy then you need to build more houses
    If you have a less liberal immigration policy then you need to build fewer houses

  • It’s not just buying houses, it is rental prices too. It is simple market dynamics, more people means more demand and therefore increased prices until supply increases.

    You therefore either increase supply of houses or reduce demand by more restrictive immigration, which is where all the population growth is coming from as the birth rate is below replacement levels.

    If you don’t sort out supply/demand then all the other policies are just window dressing.

  • Sandy Walkington 8th Jun '23 - 10:51am

    It was a great pity that we lost our nerve on this, it was a great idea to persuade local communities to unlock the Green Belt (some of which is going to have to be built on) in a way that gives the value-add back to the local community rather than to the landowner who happens to luck out because his or her land is designated for development.

  • Peter Davies 8th Jun '23 - 3:58pm

    One axiom of the green belt policy that has remained almost unquestioned is that the optimum shape of a city is round with a circular belt of green around it. This is not inevitable especially with larger cities. It strikes me that the most useful green bits around London are not the bits around the edge but the green corridors that poke into it like Epping Forest and Richmond Park. Rather than let the green belt narrower uniformly or just get steadily less green, we should be picking a number of specific corridors of expansion along good rail links and with good secondary centres. We could then afford to green a small number of brown field sites closer in where people can enjoy them.

  • I hope at least one of the areas selected for a Community Land Auction trial is a London borough, given the high demand for housing with easy access to London. Doubling the density of a London borough would help to minimise the additional development necessary for a greenfield site.
    Ie. The idea of community land auctions sounds nice but it needs to be based in reality, remember adding more people and homes simply further degrades our quality of life.

    > Which immigrants have the money to be buying houses?
    Well given net immigration over the last 25 years is circa 6m and I’ve not seen an increase in rough sleepers they are obviously living somewhere with a roof, as to who is paying for that roof…

  • Community Land auctions would have little impact in inner London boroughs where there is no agricultural land to grant planning consent on. What is required is reform of the 1961 Land Compensation Act as Shelter has been campaigning for and Labour have announced recently Labour to reform land valuation to make new developments cheaper. This is already LibDem policy.
    Helen Hayes MP in a 2019 debate Affordable housing and land compensation cited the following example from Southwark
    “In a recent example in south London, a site with an existing use value of £5 million was put on the market at £25 million on the assumption that it could be developed for housing. It was later withdrawn from the market on the expectation that the value would rise even further, setting back the delivery of any housing at all on that site by years and making it almost impossible to deliver affordable housing, even by the current broken definition. This inflation of value either places sites far beyond the reach of councils and housing associations or requires a significant quantum of private homes to be built to cover the costs—homes that either push up density to levels that are unacceptable to the surrounding community or are built at the expense of genuinely affordable homes”
    London councils (where the housing crisis is at its worst) need to be able to acquire brownfield sites at existing use value (by CPO where necessary) if we are ever to be able to deliver the social housing required to address the housing crisis.

  • Helen Dudden 10th Jun '23 - 10:56am

    Let’s build on farm land. Get rid of farming. Just cover our island in often badly built new housing.
    I asked the Bath MP for a meeting on the severe lack of accessible homes. I’ve waited 7 years.
    This is the problem we have, lack of the willingness to listen.
    Housing Association’s are often poorly run.
    Unless there is a willing approach to look at immigration and the need to have more control this is my view of how things could be in the future.

  • Peter Hirst 10th Jun '23 - 2:03pm

    We need the right sort of homes for the next century that houses our population and helps us to counter climate change. Architects need to look again at houses of multiple occupation and high rise dwellings that reduce energy needs and leave more land for green spaces, growing food and recreational activities.

  • David Garlick 12th Jun '23 - 10:05am

    @Slamdac.
    It’s all the fault of the immigrants?

    Without them industry, housebuilding included, the NHS et all would grind to a halt. Wake up to reality and blame the Conservative Government who have responsibility to sort this out.

  • @ David Garlick re. ”It’s all the fault of the immigrants?”
    Yes and no !

    Mass immigration, since and including Windrush, have enabled successive governments to sidestep some awkward questions and investments and brush them under the carpet.

    We see this particularly in the house building industry. We could of been building low to zero carbon homes twenty years ago, but the house builders were wedded to cheap labour and a business model that didn’t really invest; it being perceived as being much better for surplus revenues to be given out to owners and shareholders than reinvesting in the business.

    If the UK IT industry had moved at the same pace it would still be building computers out of discrete components – something that was going out of the door in the 1980s… It is perhaps this little ‘c’ Conservative mindset of little Englander that has contributed to the decline of the UK…

    Unfortunately, given the roots of the Tories and their demographic, they aren’t the party to lead a transformation of the UK, but then, neither are Labour, so we have a void…

    I suggest going for a near zero immigration policy, would work wonders in forcing people to wake up and smell the coffee. It will help massively in achieving our climate change and sustainable society/economy objectives…

  • @joe – I get your point, but I was thinking along the lines of redressing some the worse aspects of the current planning system.

    As you note and there are many examples in recent years where the drive to build “homes” has overridden common sense, because money talks… Hence for example old hospital sites that contained mature parkland were put over to housing when if the community were given a voice, like you are suggesting for land auctions, they would have been able to reject the proposal and gain a green space instead of reduced air quality, more traffic, more crowding and having to travel (more emissions) to enjoy parkland.

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