House prices arent the issue land prices are (and how Dutch and our past law can fix it)

[muriel_volestrangler]

As long ago as 1909, Winston Churchill, then promoting Lloyd George’s “people’s budget” and its controversial measures to tax land, told an audience in Edinburgh that the landowner “sits still and does nothing” while reaping vast gains from land improvements by the municipality, such as roads, railways, power from generators and water from reservoirs far away. “Every one of those improvements is effected by the labour and the cost of other people … To not one of those improvements does the land monopolist contribute, and yet by every one of them the value of his land is sensibly enhanced … he contributes nothing even to the process from which his own enrichment is derived.”

When Britain’s post-war housebuilding boom began, it was based on cheap land. As a timely new book, The Land Question by Daniel Bentley of thinktank Civitas, sets out, the 1947 Town and Country Planning Act under Clement Attlee’s government allowed local authorities to acquire land for development at “existing use value”. There was no premium because it was earmarked for development. The New Towns Act 1946 was similar, giving public corporation powers to compulsorily purchase land at current-use value. The unserviced land cost component for homes in Harlow and Milton Keynes was just 1% of housing costs at the time. Today, the price of land can easily be half the cost of buying a home: £439,999 is the cost of land with planning permission for one terraced home in a less salubrious part of London such as Peckham.

What happened? Landowners rebelled and Harold Macmillan’s Conservative government introduced the 1961 Land Compensation Act. Henceforth, landowners were to be paid the value of the land, including any “hope value”, when developed. Today a hectare of land is worth 100 times more when used for housing rather than farming. Yet when a bureaucratic pen grants permission, all the value goes to the landowner, not the public. Bentley says landowners pocketed £9bn in profit from land they sold for new housing in 2014-15. For each new home built that year, £60,000 went as profit to the landowner. Major infrastructure projects such as Crossrail 2 and the Bakerloo tube line extension are estimated to cost the public purse £36bn. Landowners, meanwhile, will pocket £87bn from increased land values nearby.

In the Netherlands, the only sizeable country in Europe more densely populated than England, the Expropriation Act allows local authorities to buy land at current-use value. They prepare it for development, use part for social housing and sell the rest for commercial use, often at a large profit.

https://www.theguardian.com/money/blog/2017/nov/18/house-prices-land-prices-cheaper-homes

A simple fix, but I didn't know a Tory change in the law in the 1960s gave us the current situation. And I think we ought to say "the Dutch have the same crowding problem we do; let's use the same solution".

[msongs]

1. so u are ok with government stealing your land (like eminent domain)?

you will note that the dutch govt is allowed to steal the land use it for various purposes then sell what's left "often at a large profit". so the govt can drive up the price and sell for large profit but the citizen cannot?

[muriel_volestrangler]

2. "Steal"? No. That's a misuse of language.

As the article points out, large amounts of the costs of developing an area come from the public; it's the landowners who happen to hold the agricultural or other land at the right moment who get a windfall.

I grew up in one of those post-war new towns. That system paid the landowners a fair price for their land, and enabled affordable housing. If the government ever profits, then taxes can be less.

Do you want profit to go to the few, or the many? A simple question for a Democratic website, you'd think.

[Cicada]

3. Maybe land created by the owner should be exempt

For land the landowner created himself he should be able to reap the profit. But if someone else created it, such as God, and the landowner had not paid the land creator...why should he be paid?

Some guy wrote a song about this: this land is your land, this land is my land...

Here’s a different solution: tax land at its value were it developed fully per zoning. Land zoned for four apartments would be taxed at its value with 4 apartments, whether the apartments were built or not. Then landowners would build 4 apartments on it or would sell it to someone who would build. That way the supply of buildings would rise and rents would come way down.

We are getting royally screwed by land owners who did absolutely nothing to make that land. Why is that just?

We need some way to increase housing supply to lower rents and home purchase prices. This change in taxation would help.