A while back I had an exchange of emails with the chap from Universal Inheritance, who propose an idea a bit like a Citizen's Income, only people would get larger one-off capital sums at certain ages, rather than a modest weekly cash income.
My main objection was that some people would just waste the money, and more sensible people would use it to buy their first home, so all it would do is push up house prices, so there'd be a transfer of cash (via the tax system) to younger people and then an equal and opposite transfer of cash back to people who want to sell a house without having to buy another, i.e. people moving abroad or people who have inherited. In the end, we agreed to disagree.
But I do like the general principle. Now, ask yourself, what is it that most of the older generation have that future generations don't, and which the older generation could grant the younger generation at no immediate cash cost?
Without going into the administrative details too much (1), and bearing in the mind that the market value of planning permission for a house in the UK is now about £100,000, how about a non-financial 'Universal Inheritance' of planning permission for half a house? In other words, landowners would not be able to apply for or be granted planning, but every UK citizen, on reaching the age of (say) 25 years old gets a voucher entitling him or her to planning permission 'worth' £50,000 (2), so that a young couple could club together, buy up a three-hundred square yard plot (3) and have their own house built (4), which costs £70,000 for a basic semi, or £100,000 for a nice four-bed detached? (5)
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Here are a few first thoughts on the administrative and practical details.
(1) The problem is always the transitional measures, so it might be kinder to start off by giving everybody aged between twenty five and thirty five one tenth of a voucher each year, so that those people who had already paid top whack for a home in the past few years can cash in a bit by selling off the vouchers they don't need to help cover the mortgage payments.
(2) The value of all new and pre-existing but unexercised vouchers would be re-set each year at the average selling price of all 3-bed semi's in the UK minus the notional rebuild costs of £70,000. If the additional new supply made houses cheaper, then there'd be less need for the vouchers and they'd fall in value.
(3) Of course, some land is more expensive than others, so if you want to build in the Highlands, you'd get planning permission to build on six hundred square yards, and if you want to build within the M25, you'd get planning permission to build on one-hundred-and-fifty square yards, so people might club together and arrange for a block of flats to be built.
(4) Again, people might find it more convenient to sell their voucher to a construction company and put the proceeds towards buying an existing home, or a group of like-minded families might club together and have an estate built, but without a stack of vouchers, construction companies and landowners simply would not be given planning permission. The best they can do is lobby intensively against the system, so we'd have to make sure there is popular support for it, which in turn depends on how deep the British notion of 'fairness' runs, or whether this year's generation of new owners just turn into next year's NIMBYs.
a) So that would put a cap on the number of new homes built of about 400,000 a year (i.e. the housing stock would increase by no more than one-and-a-half per cent a year). Or the measure might depress new construction to zero, because existing home-owners no longer have the whip hand and so have to sell their houses for a lot less.
b) The right to sell all or part of your vouchers is especially valuable for lower-income couples who can only afford (say) £50,000 for the bricks and mortar, which they could finance by selling off one of their vouchers. Or perhaps they can't even afford that, and they would give their vouchers to the local council in exchange for a council house, on which they pay a below market-rent which approximates to the value of the voucher they have foregone.
(5) The model is a bit trickier with densely built areas, so existing publicly accessible open spaces like parks or nature reserves, AONB's etc would remain protected (a). Once every 'brownfield site' is used up, it is used up. But that would just drive up land values, so you'd end up with the choice between (i) 200 square yards outside London but within the M25 or (ii) seven square yards of Chelsea Barracks. Seven square yards of land isn't much of course, but it's still equivalent to a one-bedroom flat in a ten-storey block without car parking spaces.
a) Of course, every NIMBY in the country would be clamouring for the field that happens to be behind their house to be declared an AONB. To put a stop to that, only the registered freeholder of the land would be able to apply, so people like the National Trust wouldn't have to worry too much, and proper NIMBYs would be forced to club together and buy the field for whatever the farmer holds out for. I'll let regular commenters Dearieme and Sobers battle that one out between themselves.
Sunday, 29 November 2009
Universal Inheritance
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25 comments:
"a) Of course, every NIMBY in the country would be clamouring for the field that happens to be behind their house to be declared an AONB."
Under the current system, although you don't own the view from your home, you sure as shit have paid for it. Under this proposal you can be robbed of this amenity without any sayso.
Despite your belief, Mark, that NIMBYism is some vast national conspiracy of thousands of economically aware home-owners, AFAICS, it mostly boils down to objecting to a perceived loss of amnenity and hence quality of life. After all, NIMBY stands for "Not in my back yard", i.e. not "don't build more houses, because that way the supply is restricted and the value of my house is increased", but "don't build something slap bang in my view". Most NIMBYs have nothing against a development on the other side of town, in the next village, town, county etc. and those who do usually are concerned about the wider aesthetic concerns of covering the countryside in housing rather than the value of their own dwelling.
I think the term you want is BANANA.
Warmth and generosity nestle within these complex proposals, Mark.
The lawyers would make the most from such complexity, assisting other scoundrels to remove from the table all that could be carried.
B "Under the current system, although you don't own the view from your home, you sure as shit have paid for it."
No you haven't, unless the farmer who is prevented from building on his land was paid compensation by the person benefitting from the restriction.
What you probably mean is that some people over-pay for some houses on the assumption that no new ones will ever be built. Which was pretty stupid of them, frankly.
"Under this proposal you can be robbed of this amenity without any sayso."
You can only be 'robbed' of things that actually belong to you. S
econdly, if people ask the farmer whether he'll sell them a bit of land to build on, he is not forced to sell it, and if he is happy to do so, the local home-owners are perfectly entitled to put in a higher offer.
Just for clarity - I have no objection of principle to someone building on a field behind my house if that field was not in a Green Belt. It happened to us once and we accepted it as just Tough Titty.
But, by Christ, I objected when the odious Prescott demolished our Green Belt so that a small town could be built behind us. I don't recall seeing you making this distinction between Green Belt and other land.
D, we both know perfectly well that about ten per cent of the UK is designated Green Belt (i.e. roughly as much as the bit that's actually developed). As the designation is completely arbitrary and imposed by statute, my logic is not bound by those rules.
The other eighty per cent is neither developed nor Green Belt, but nobody particularly wants to build there, almost by definition. So what happens is that instead of towns growing organically (with correspondingly short commutes) new towns have to be built in the middle of nowhere (with correspondingly long commutes).
A laissez-faire systems is so much more preferable.
It's a lovely idea. I guess the vouchers (while changing in value) would never expire, and so for that reason the cap would only be an average 400,000/year, you might get 1.2m in one year (although I've not thought whether that is likely, perhaps in recessions it'd slow down?)
It does (like a LVT) require every bit of land in the country to be continually valued though, doesn't it?
The other issue (only a small one) I can see is that home owners don't have freedom to build what they want - I can't extend my house more than one foot backwards without getting planning permission, so those would have to be massively eased in order to make it fair.
Matthew, thanks, at last, a supporter!
Yup, does require some averaging of values, that's not a big deal. As to extensions, do not forget that this is (usually) imposed by private agreement, i.e. restrictive covenant (i.e. all houses in one development are usually subject to certain restrictions for the benefit of the neighbours).
So while you are losing out slightly because you can't extend, you are gaining from the fact that others can't extend massively either. These covenants are usually beneficial overall (else the builder wouldn't have imposed them), so they seem perfectly fair to me, actually.
My main objection was that some people would just waste the money, and more sensible people would use it to buy their first home, so all it would do is push up house prices
Yes, it does seem that way to me too.
I'm not sure it applies to me - I live in a London terrace and I'm pretty sure its Brent Council who have the say-so?
Anyway all small details. Can you say how you get your poll question this week - as far as I can see the UK has 6m in public sector, which divided by 15 (for share of population) gives 400,000 in Ireland, and in fact they have 375,000. I was surprised actually how similar each category (defence, health, education, police and so on were).
This proposal accepts that doing this would create £50 billion of wealth each year (£50,000 times about 1 million 25 year olds. That in turn suggests that somewhat more (ie without administrative friction) would be created simply by abolishing planning restrictions. I suspect this is an underestimate since part of the cost of housing is not the planning permission itself but the outmoded building processes the planners mandate. Add the same, or a slightly lesser effect from freeing commercial building & I would guess about £150 bn a year or 10% of GNP.
M, I based my calc's on what I read in the FT that there were 300,000 in RoI (which may be an under-estimate, but other sources suggest a similar number) and there are 8 milion taxpayer funded jobs in the UK (not 6 milion).
NC, it's difficult to work out how much bigger our GDP would be if we didn't have this self-imposed limit on building houses, roads, factories, ports. I'm sure it restricts growth level by 1% or 2% a year, so cumulatively, we must have lost much more than 10%.
But as to housing, I'm not bothered about GDP, it's supposed to increase the sum-total of our population's happiness at zero cash cost to the taxpayer.
It's about 370,000 in Ireland (see http://www.cso.ie/releasespublications/documents/earnings/current/psempearn.pdf) although admittedly the population has risen to about 4.4m now (although the UK population might be somewhat higher than 60m).
On the 6m rerated to 8m, would it be safe to assume Ireland has much the same hidden employment? Which by defintion would keep the ratio the same.
M, you might well be right, in which case [rude word].
"What you probably mean is that some people over-pay for some houses on the assumption that no new ones will ever be built. Which was pretty stupid of them, frankly"
Yeah, I wasn't talking about the right to a view, which no-one has, though I do think that, under the current system (but not under the system you propose), it is not stupid to assume that certain land will not be built on, like Dearieme above. He would have been pretty stupid to assume the land behind him couldn't be built on, but it was reasonable of him to expect that the green belt wouldn't be.
Yes, I should have used "deprived" instead of "robbed". It was early in the morning.
"Of course, some land is more expensive than others, so if you want to build in the Highlands, you'd get planning permission to build on six hundred square yards"
Doesn't 600 sq yards with PP for one house cost only slightly more than 300 sq yards with PP for one house, the difference being the cost of 300sq yards of agricultural land without any planning, which is about £300?
B, "Doesn't 600 sq yards with PP for one house cost only slightly more than 300 sq yards with PP for one house, the difference being the cost of 300 sq yards of agricultural land without any planning, which is about £300?"
True, if you look at houses within the same area, the premium for houses with a very big garden isn't very much. Ergo, big gardens are an inefficient use of land. Smaller frontages need fewer streetlights, and make it cheaper to deliver letters, collect rubbish, lay internet cables etc.
But if you look across the UK, there are colossal disparities in the value of land with PP, so it only seems fair to allow people to have bigger gardens if they want to build somewhere less desirable.
Or our theoretical Highland couple might be happy to build on only 300 sq yds and sell off half their vouchers, maybe to another couple who want to live in central London and who would rather have a two-bed flat in a seven-storey block than a one-bed flat in a ten-storey block.
Sounds good to me: my ideal garden size is about 15 sq yds.
I like the idea in principal, but it's a bit too utopian to actually work isn't it?
B, each to his own, my personal ideal is about 72 sq yds for a back garden.
S_L, why is it utopian? Planning permission has to be given to somebody (unless you are a BANANA) so why give it to land-owners for free so that they can sell it on to first time buyers for £100,000 per house? Is it not more cunning to give the PP direct to FTBs for free? It's only a minor tweak to the planning system, i.e. that PP goes with the person and not with the land.
Maybe I'm missing something, but are you saying people would be allowed to build houses absolutely anywhere (assuming they could provide the vouchers)? If not, then you'd still need the planning application system. And then your vouchers just become yet another bureaucratic imposition on the housebuilding process.
If you are suggesting they should be allowed to build anywhere, on the other hand, then why not just let them do it? Why do you want to restrict the building of houses via the vouchers?
did not there use to be such a thing as 'ancient lights'?
"then why not just let them do it?"
I think the idea is it allows for redistribution.
Thinking some more Mark, why not just have a free market in planning permission? Auction off planning rights to the highest bidder, which solves the problem of the government trying to price it. You can still give the vouchers to the 25yr olds, based on the average national rate.
Adam, "are you saying people would be allowed to build houses absolutely anywhere" Yes, as long as it's not AONB, publicly owned land, flood plain or crumbling cliff-top, and providing the owner of the land agrees to sell it to them.
I don't want to restrict building of houses, I think we don't build enough houses. But the ones we do build are far too expensive for average FTB couple.
Matthew, that is a cunning plan and might come to the same thing, depending on how you administer it. But the problem is the NIMBYs, they'll hate that plan even more than mine.
Maybe less so if the money was kept within the community/local area etc?
Matthew, frankly I don't care much for this whole "within the community" stuff, the point is, even NIMBYs have children and grandchildren, whether or not they live in the same area.
Are the Home-Owner-Ists so hard-hearted as to sell their children and grandchildren into debt-slavery just so that they can see a bit more green fields than otherwise?
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