‘There is always an easy solution to every problem – neat, plausible, and wrong.’ HL Menken
Act one: Amend Compulsory Purchase Order law to allow authorities to buy land at existing use value on sites zoned for homes to generate Land Bounty. Use 80% of Bounty to fund Half Market Rent (HMR) homes. Councils spend 20% on local improvements. Bounty realised by JV with private sector or Housing Assocs. Equity in HMR slow-released to occupant.
Act two: Set aspirational 5-year target of 300,000 new homes a year. Aim for consensus. Accept aim leaves 70,000 shortfall. Accept downturn will hit aim. Burgeoning Built to Rent (BTR) sector included in Bounty initiative to boost numbers. Embed Bounty powers into urban development and New Town corporations to galvanise building programme and cut public spending.
Orchestration: Decry factoids, such as: ‘more new homes will lower prices’; ’fixing planning will fix the crisis’; ‘prefabrication, hurrah!’ Re-score mood music from regretful to rousing. Prime Minister to echo the Churchillian message, ‘Build the houses for the people.’ Bounty lets more people ‘step up’ the equity staircase and buy. Bounty bonus – it supercharges New Towns programme.
Added political options: Go Right: Offer the landowner a fixed percentage of the uplift, determined at time of sale by independent valuer and subject of appeal. Compress time scale to allow occupants 100% equity in 2 to 3 years. Go Left: No HMR Homes. All money goes to pay for homes rented in perpetuity. Go down: Let individual councils decide Left/Right options.
ACT ONE: Lead actor, Planning Minister
‘Democracy is the art and science of running the circus from the monkey cage’ H. L. Mencken
Allow the state to benefit from the uplift in land values conferred by granting planning permission. Not a new idea. The concept of ‘Land Value Capture’ has been around since 1909. A June 2018 paper by planning QC, Richard Harwood, gives the full inglorious history, up to the present-day Alice in Wonderland rules, which attempt to define and divide unrealised gains between seller, buyer and state.
A Commons Select Committee on Land Value Capture reported on 13th September 2018 concluding ‘the present right of landowners to receive ‘hope value’ – a value reflective of speculative future planning permissions – serves to distort land prices, encourage land speculation, and reduce revenues for affordable housing.’ The Committee called for a ‘significant portion’ of any uplift ‘to be available to the state.’
What are the chances for a Land Bounty that simply pays the owner the current value of their land, rather than trying to figure and apportion mythical profits? Labour’s housing spokesman, John Healey is pushing for a variant of the plan and Conservative MP, Nick Boles, has written in favour. But it will need a politician of great courage to risk saying ‘why not just pay the current use value?’ But look at the rewards:
Housing land differentials.
Government Land Value estimates for policy appraisal.
Prevent abuse, promote consensus
There must be rules to prevent the spoils wrested from an existing landowner being speedily divided among those who profit from selling homes. First, to ensure the idea meets the ‘politically possible’ test – being acceptable to both main parties. Even the threat of repeal by either will kill the idea in the womb. Second, to mute uproar from landowners. Harder to argue against spreading wealth via home ownership.
Land Bounty can turn renters into owners, slowly
Therefore 80% of the Bounty should go towards providing Half Market Rent (HMR) homes. The remaining 20% to be spent on local amenities. Equity in units sold to occupants under the government Affordable Home Ownership scheme. Equity released for sale over 10 to 15 years to prevent profiteering. Result? ‘Slow release’ of Land Bounty to allow stable renters become stable owners.