From the BBC:
Mr Levett had hoped to downsize but said he held out no hope for selling his house because of the HS2 plans. Despite being vehemently against it he said: "In a way I hope that it does go through my garden because if it goes through part of your property you can get the government to buy the whole plot. That's probably the only way we are going to be able to move now."
Some estate agents believe the development could help home owners in the neighbouring village.
Anita McKeogh, director of Connells Estate Agents in nearby Balsall Common, said: "For those who live too close to the line it will have a negative impact on their ability to sell, but for other people in Balsall Common I think it could help house prices. Homes have been selling well here and we had a good year last year. People want to buy here because of the good schools, it's close to the motorway and close to the train stations too. You can get to Birmingham from Berkswell train station in 15 minutes and then pick up the high speed rail, so yes, it could make it more desirable to have better rail connections."
The point being of course that rental values are determined by the surplus which society generates as a whole, and total rental values are thus more or less constant. It is quite true that rental values are not permanently attached to exactly the same physical bit of land in eternity, but this is no more than the shifting of the tides; when we have a high tide, somebody else has a low tide and vice versa - the total amount of water in the ocean does not change. Except that rental values move around over a period of years or decades rather than every 6.25 hours, obviously.
Whether or not the whole HS2 thing is a waste of money, it is not being paid for by people who 'own' the land affected (whether adversely or favourably) and in terms of total rental values, or from the point of view of land 'owners' as a whole, HS2 is at worst a zero-sum game. So Mr Levett might lose out but somebody else in Balsall Common wins; and ultimately that rental value (as capitalised into the selling price of their houses) which has passed from one to the other didn't belong to either of them in the first place.
Surprised by the outcome
1 hour ago
23 comments:
Mark, how do you think the train system should be set up? I think we agree that a disproportionate amount of the value seeps into the land market, but personally I've never come up with an ideal model. Could we fund a free train system with the proceeds of LVT, or would some sort of ticket pricing be necessary to let operators know where they should invest their resources.
CD, it doesn't really matter, does it?
A private railway company will set its fares at the revenue maximising price, whatever that is, but in doing so, they maximise the monopoly privilege of having a railway along that exact route, so end up paying maximum LVT.
If publicly owned, maybe prices are below market price, but so what? That pushes up rental value of resi and commercial land and the government more than gets its money back.
And whatever happens, railways tend to push up land values, there'll always be a premium on being near a station, so whether it's private investment pushing up land values or public investment, it all adds up to the same thing - the surplus which society as a whole creates, and which can either be collected privately or publicly.
M, have you read Harrison's Wheels of Fortune? In the book he tells the story of a pair of American brothers that wanted to build a private tunnel link in London because they also owned the surrounding sound and could capture all the surplus value. The railways have been a notoriously bad investment for private enterprise, because legally they're unable to get their hands on all the value they create. I believe the Channel Tunnel got into similar financial difficulties (due to a misunderstanding of Georgist economics).
I'm juts not sure whether a private train system is viable without heavy government subsidy. But that's just Crony Capitalism.
CD, the example was actually Canary Wharf, where the owners of the land in distant East London offered Thatcher that they'd pay for the Tube extension to their patch, as they knew perfectly well that the uplift in the rental value if their land would vastly exceed the cost of building the railway.
Thatcher turned them down of course, and then spent three times as much taxpayers' money on building the same Tube extension but better, and the owners of CW banked all the lovely land value uplift.
M, yes that's the one. The moral of the story seemed to be: don't invest in the railways unless you happen to be a local landowner. From a private investor's perspective the trains offer a very unattractive ROI, you'd be better off speculating in local real estate prices.
As the rail industry receive masses of gov't subsidies anyway I wonder if we'd be better of re-nationalising the whole lot thus sidelining the parasites.
This really boils my pish. Much of my meagre pension will depend on funds currently invested in OEICs and similar vehicles. I've held them (or similar funds, adjusting for risk along the way) for a good many years. Some investment decisions I got right, some I got wrong (oh yes...)
Leaving aside questions around whether saving for a pension is nuts or not, over the past few months and years there've been times when the fund values rocketed, and times when they fell back. Right now, they're recovering (I hope!), but I'm still down on where I was this time last year.
Were I to retire today, I'd naturally do so in the confident knowledge that someone from da Guvvermint would step forward and compensate me for any losses as I crystallise my investments.
Errrrr.........Not.
For my money, Mr Levett and his cronies can go stick their heads where the sun don't shine. Risk affects us all when we make decisions; I imagine he bleated not when his Cotswold pied a terre was rocketing in value a few years ago. I don't suppose it's doing too badly just now, and in 15 years when it all becomes an issue the prices will have bounced back and gone up some more just because the railway I helped to fund is near their town.
Bollocks to the lot of them, and the MPs they rode in on. I hope the track is routed just far enough away that the compensation will be sixpence.
CD: "you'd be better off speculating in local real estate prices."
See also Metroland, another tale which we LVTers like to tell each other round the campfire. Or the key scene in Once Upon A Time In The West.
FT, indeed. People like Mr L paid £10,000 for their houses decades ago and will end up selling them for £500,000. He's pissed off about the fact that three years ago it might have sold for £800,000 so he imagines that he has been cruelly robbed of £300,000. Nope, he's been given £490,000.
"how do you think the train system should be set up?"
How they did it in Hong Kong.
Mark re Metroland, I heard years ago that there were rules (alled the MERCEL rules?) that prevented British Rail (and possibly Railtrack?) investing in property in advance of building new railway lines (insider trading?).
B, yes, a lot like HK.
I don't know about BR or Railtrack, but re Metroland, for a summary see e.g. here:
"The Metropolitan Railway opened on January 9th, 1863, and earned its shareholders reasonable dividends, though these were mostly due to its policy of building railways overground into the suburbs like Amersham and taking advantage of the increase in land values which occurred when agricultural land was developed for housing in ‘Metroland’."
It's the same principle, whether you call it Hong Kong, Jubilee Line/Canary Wharf or Metroland, and whether a private rail company uses the land value uplift to finance the railway, or the government finances the railway out of incremental extra tax receipts (on land values or general increase in profits of local businesses).
I imagine he bleated not when his Cotswold pied a terre was rocketing in value a few years ago.
I think you will find Balsall Common is just outside Birmingham near to the NEC, close to Solihull.
Anon 2135:
Meh. I live nowhere near (and I do mean, nowhere near) and it changes nothing of the basic premise or argument.
Whatever.
The point being of course that rental values are determined by the surplus which society generates as a whole, and total rental values are thus more or less constant...the total amount of water in the ocean does not change.
How does this then affect the analysis of public spending on railway projects, does it just move the tide over to another location, at a recovered cost for that location? Doesn't it create any net gains to the economy?
As far as HK; as far as I understand, the MTR (now listed and partly privatised), was given consessions, excempt from lease-payments, and was available to fund itself by land value increases on it's own properties + actual incomes, and even turn a profit. Fine, but that sort of concession is giving a now private entity a pretty big hand.
This article I think presents an interesting perspective on this matter. I quote: Under a regime of “burdenless taxation” the return on public investment would not take the form of profit, but would aim at lowering the economy’s overall price structure to “promote general prosperity.” This meant that governments should operate natural monopolies directly, or at least regulate them.
-Kj
Well, let's see what Wikipedia has to say about Balsall Common:
Balsall Common is a large village and one of the larger rural settlements in the Metropolitan Borough of Solihull, situated 7 miles west of Coventry and 13 miles to the east of Birmingham, to which it serves as a commuter village in the West Midlands. It is currently undergoing gradual suburbanisation and is increasingly considered as a small town in terms of its population. Balsall Common is also considered to be one of the most prosperous communities in the West Midlands region.
So not exactly a rural idyll but not really an urban slum either. In fact Quite Nice.
Anon 21.35, you are missing the point. Please refer to the post.
In any event, the man doing the bleating does not live in Balsall Common. These rail planners aren't completely daft - the route is such that only a few hundred houses between London and Birmingham are actually directly affected, anything else would be too expensive. The railway does not go through yer common or garden suburbs, or even the posher ones like BC, it goes through the FBRI, ergo Mr L lives in the FBRI aka 'Cotswolds' or 'Chilterns' or 'Tory heartland' or whatever you want to call it.
FT, B, ta for back up. I had a swift look on Rightmove, BC seems to be above English average in terms of prices (cheapest semi's around the £200,000 mark), certainly for the West Midlands area.
Loth though I am to stick up for Mrs T, Olympia & York came up with a ridiculously low-balled gbp400m estimate for a railway that only benefited Canary Wharf. They didn't offer design-and-build, just funding (so the government would still have been liable for the inevitable cost overruns).
LRT (as it then was) instead planned a railway that'd provide the maximum total benefit, based on some understanding of what was actually involved (O&Y's proposal was entirely handwavey), at which point Mrs T got O&Y to agree to put that gbp400m towards the project.
As it happened, O&Y went bust before they'd forked over more than half the money. Instead, the value created by the extension went to O&Y's creditors.
Kj, your comment went to spam so I had to retrieve it. You might want to try setting up some blogger account or something.
"How does this then affect the analysis of public spending on railway projects, does it just move the tide over to another location, at a recovered cost for that location? Doesn't it create any net gains to the economy?"
Yes of course nearly all rail spending or road spending creates net gains - imagine what sort of state we'd be in with neither! Whether that's public or private spending is a separate issue.
And yes, new rail spending can create net gains even though some areas lose out as a result. So the "shifting tides" are important - even though the areas which lose out might still be just as good in absolute terms, they are just worse in relative terms (because somewhere else is now even better).
John B, maybe so, in which case Thatcher should have held out for the money up front and/or collected it from O&Y's creditors. But I'm not too fussed, as most building at CW are liable to Business Rates, as close to LVT as makes no difference, so I'm sure we (the taxpayer) got most of our money back.
Kj., having skim read the article, I'll respond to this:
"This meant that governments should operate natural monopolies directly, or at least regulate them."
Personally, I'm against the government operating anything other than the core functions of the state, but I'm happy with them skimming off all the super-profits of a monopolist in tax/licence fees/LVT, or where necessary by regulating, such as minimum standards on water quality (consumer rights are no good if there's a cholera outbreak) or capping prices (if that leads to a better outcome than high prices/high tax receipts).
The ever schizophrenic, sometimes we recognise the perils of home-ownerism and at others we fully embrace it G had a "special feature" on this yesterday :-
http://www.guardian.co.uk/money/2012/jan/10/hs2-house-prices-high-speed-rail
HS2 and house prices: what the high-speed rail link means to you : More than 65% of the responses to HS2 consultation mentioned property. Here's what the go-ahead could mean for your house.
Here are the end para's:
Jonathan Bramwell, partner at The Buying Solution, says: "In North Oxfordshire/Buckinghamshire, we expect the HS2 announcement will make the countryside around Banbury and Bicester more popular, especially for the school-driven buyers who want easy access to the Chiltern line.
"Sadly, many homeowners along the route of the line will be faced with years of battling over compensation. On the flip side, it could provide an opportunity for savvy buyers to pick up a good deal."
As someone who has lived next to railways most of my life, I would be happy to buy his property for an agreeable discount. An abbatoir isn't opening up next door, for fucks sake.
He wants the illusion of a permanent rural idyll but is perfectly happy to have his house valued at x hundred thousand pounds, a valuation only possible because he lives in an advanced industrial society generating the wealth possible to afford this.
Anon 5.22. Ooh, tricky one. Some people's houses have fallen in value and other people's houses have risen in value; the former group want compensation, what strikes you as a good source of funds to pay for this? (with LVT there simply wouldn't be an issue as such compensatory transfers are automatic).
Rob, yup, that's the thing about living next to a railway, after a few years you get selective deafness and just don't notice the noise any more. But you never really get used to road noise.
One key aspect I have not seen is the locations of stations along the route. Are these published?
MA, as far as I can see, it's non-stop L to B. There are no stations.
"There are no stations."
Which leads me to suspect that the most important aspect of HS2 is the fact that the trains can do 250mph. The rest is fairly irrelevant.
Post a Comment