Friday 3 January 2014

The indestructibility of land values

From yesterday's Metro:

A detached 17th-century home is available for as little as £25,000 – and is expected to go fast.

The property is just 8m (26ft) from the edge of cliffs in Easton Bavents, Suffolk. It was 1.6km (one mile) from the sea when first built, but coastal erosion has placed it under threat.

Waveney district council will give the home’s new owners help and planning permission to demolish it and rebuild elsewhere.

Insolvency practitioners McTear, Williams & Wood said: ‘Plots of land near Southwold with planning permission are clearly highly sought-after, so we hope to be able to sell the cliff-top home – even in the knowledge it will have to be demolished.’


So basically what is being sold/bought here is the right to build a similar new home elsewhere in the vicinity, whatever the final selling price is tells us exactly what this council-bestowed monopoly right is worth. Why the council should bestow this right on whoever owns the land at the time it tumbles into the sea rather than to anybody else is unclear.

The whole thing is similar to the plot of Superman: The Movie:

… criminal genius Lex Luthor has developed a cunning plan to make a fortune in real estate by buying large amounts of barren desert land and then diverting a nuclear missile test flight to the San Andreas Fault.

The missile will sink California and leave Luthor's desert as the new West Coast of the United States, greatly increasing its value.

7 comments:

ageing man said...

In it's simplest form it is the transferable right of greed. Of course our dumb ass media talk about the house being for sale, which really is about as dumb as it gets. Living on that/this part of the coast, leads me every time to wonder why it is insisted that we try and hold back the tide. There are many commercial interests always at threat on this part of the coast. But I made sure mine was put way above the highest tide level. But should I make some other crass decision that puts my business in jeopardy will I be bailed out with rights of transferable greed ? Not fooking likely, but I am a realist, so instead I just get on with it. As for the buyer of the £25,000 cliff top retreat, he/she {greed is not gender specific in my book} will rub his/her hands with glee. {S}He'll pay a lot more than £25,000 though; those insolvency practitioners were not dumb ass when they garnered the publicity. So what does this tell us ? every one is shafting every one..... bend over patient, you're next in the queue.....

Votefor said...

Happy New Year, Mark , here's one to get your teeth into to start the year!

http://paulkirby.net/2013/12/31/a-simple-idea-to-sort-out-the-housing-market-and-make-the-economy-boom-for-the-next-5-years/

Bayard said...

"Why the council should bestow this right on whoever owns the land at the time it tumbles into the sea rather than to anybody else is unclear"

Because, just as the one ring in the "Lord of the Rings" conveys immortality to the wearer, however short a time they wear it, owning land admits you to the chosen race of landowners for however short a time you own that land.

Mark Wadsworth said...

AM, yes, agreed. If some of your plant and machinery were destroyed or worn out, would the local council compensate you by granting you a transferable planning permission worth £25,000? Methinks not.

VF, Lola already alerted me to that, it is a load of sub-Thatcherite codswallop. Why sell off the valuable council housing? All that is is a free gift to the bankers who can know collect the rental value via mortgage interest ad infinitum.

Far better to bump up the rents and use the surplus to build new council housing, which overall would make a profit anyway.

For sure, that means an exodus of the unemployed from central London to the new council housing further out, but so what? That would happen if it were sold off as well so is not an argument.

B, I suppose so, they look after their own.

Dinero said...

Surely the new owners are not being compensated for anything, they will simply get what they pay for. It is the current owers who are getting compensated.

Mark Wadsworth said...

Din, yes, good point, the gift goes with the land, whoever buys to the previous owner for the value.

Mark Wadsworth said...

Din, yes, good point, the gift goes with the land, whoever buys it pays to the previous owner for the value.