They own land, give them money

From City AM:

LEADING house builders are exploiting the planning system to boost their profits, according to a paper released today by the think-tank Policy Exchange. It claims that residential development is delayed by an outdated planning system, rather than an inability to access credit.

The organisation says that 2012 is on course to be the year with the second lowest annual level of new homes since World War II, mainly because councils only allow small plots of land to be developed. As a result it is often more profitable for developers to simply sit on land with planning permission, and watch its value rise, rather than build houses.

Yup. There's the problem. We're stuck between the NIMBYs who want no new development to push up land values, and developers who are quite happy not to develop, precisely because of those rising land values. Now, what simple fiscal policy could we adopt to give those land bankers the kick up the arse they need to get on with building houses..?

The Telegraph explains*:

Home owners living in the countryside should be given payments worth thousands of pounds to encourage them to accept major new developments on green belt land, a report recommends.

Righty-ho, this is like negative land value tax and makes things worse; the payment will not be triggered until development starts, and there is still every inventive for NIMBYs to have as little new development as possible because that pushes up their land values, and worst case (from their point of view), pushes up the compensation that a developer can be made to pay if he actually builds a few houses, and no doubt, the more your house is worth, the larger the payment you will get, tenants won't get a bean, will they?

* Via Dill at HPC.