Tim Leunig gives his idea about auctioning off planning permission another outing in the Local Government Chronicle.
As part of the growth review, the government is considering “Community Land Auctions”, based on my CentreForum pamphlet “In my back yard”. Under this approach, local councils capture the rise in value when they rezone agricultural or industrial land for housing, creating a big incentive to support development.
It works like this... Having decided which land can be developed, the council [buys it off farmers for slightly above its agricultural value and] auctions it to developers, keeping the difference between the price named by the original landowner, and that paid by the developer. There is no risk to the council - if no developer wants the land, there is no sale and the original landowner retains the land.
A typical 57 hectare farm in the south east - where housing is most needed - is worth around £1m as a farm, and over £100m for housing (even more in housing hotspots). Most farmers will sell their farm for five times fair value, and many for double fair value, which is, after all, a £1m windfall. (I will sell my house for £1m more than it is worth, if any reader wants to buy it!). The council therefore makes at least £95m per farm, which comes to at least £50,000 per house. That is far greater than the incentives currently proposed.
If Horsham DC allowed housing on one average size farm, they could halve council tax for four years. That, surely, is a winning electoral prospect. More radically, were Cambridge to allow a million new houses near the city - like America’s Silicon Valley - it could give current adult residents around £700,000 each. Again, that should be a vote winner.
Ho hum. This plan to 'halve council tax for four years' sounds like windfall gains for existing homeowners. Why not tweak the plan to make it more like a proper Universal Inheritance thusly:
1. Councils buy the land and auction it off, making a cash profit (same as under his plan).
2. Councils can keep (say) a fifth of the cash profit for placating local NIMBYs, and the other four-fifths is pooled nationally.
3. The amount pooled nationally is then divided up between all UK-resident British Citizens who get married each year (or all UK-resident British Citizens who reach the age of 25, or whatever) and handed out in cash, earmarked for the cost of their first home.
4. The amount each new couple receive would be about £50,000 (using his figures), which they can use to buy an ex-council flat Up North, or as a 25% deposit for a semi-detached in most of England or a ten per cent deposits on a rather nice new 'executive villa' near Cambridge, that's entirely up to them.
Thursday 17 March 2011
Like a Universal Inheritance... for existing homeowners.
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5 comments:
Or just auction the permissions per square meter, including the right to build higher on NIMBY 'conservation zones' in cities.
That way urban LA's can also benefit and effecient use of land is encouraged.
LA's should only keep 10% of the money, the rest of which should be used to start a SWF.
SL, you can invent any old auction process you see fit, the key is: what happens to the proceeds?
As to the 10%/20% debate, don't forget we have to leave councils with enough money to buy off the NIMBYs.
PS, Do you mean "Sovereign Wealth Fund"? Sod that! Government surpluses are just as dangerous as government deficits. Get the money dished back out to citizens in as fair a way as possible and let them get on with it.
I'm not sure what all this housebuilding is supposed to achieve. It's not as if there are not plenty of empty houses already, so it's not going to bring house prices down and if first time buyers can't afforfd to buy now, they won't be able to afford to buy after the building boom.
It's a bubble, FFS and prices in a bubble are determined by what people think they can sell on for, not by availability.
Give money to wannabe house buyers? Eh?? Did I miss the punch-line?
Rarely a day goes by when I don't wonder at some point if age is slowing me down a little, but I missed something there, clearly.........
B, sure there are empty houses and under-occupied houses. Plan A is to bring them all back into full use with LVT.
This is Plan B. The gimmick is that the easy money is taken from the land owners and given back to young couples. So even if prices don't go down, at least young couple will be able to afford a deposit. And if prices go up, the amount of cash they get goes up to match. And if prices DO go down, then the amount of money they get goes down, but so what? What they lose in cash, they make up for in a smaller mortgage.
FT, if young couple want to take that money and move abroad, they are free to do so.
What we do is tax unearned planning gains at close to 100% and give it back to the people who have to buy the overpriced houses. This is quite different to MIRAS where most people's incomes are taxed at a higher rate so that a smaller group have more money to spend on housing. What MIRAS did was take money from the productive economy and give it to land owners. This suggestion takes money from land owners and gives it back to landowners.
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