Monday, 7 August 2017

A veritable feast of Home-Owner-Ist double standards...

... for those who like that sort of thing, in The Telegraph:

Operating in the murky world of “strategic land” promotion, these firms prepare sites for development by doing the time-consuming work of gaining planning permission. It is then sold on “shovel-ready” to housebuilders...

According to Simon Hodson, head of residential land at JLL, while an average acre of agricultural land may sell for £5,000 to £10,000, land with planning permission for residential development is normally worth £1m-4m per acre, depending on its location and the amount of infrastructure and preparation needed before building.

It's The Telegraph and their ilk who insist on measures which push up land prices, are they so surprised when others try and cash in? If they wanted, we could put them all out of business tomorrow by collecting taxes from land values instead of employment and output, but that would go against Rule One.

These companies will then take a cut of 10-30pc of the sale value, depending on the size of the site. This means that the murky underbelly of the land market is highly profitable: in the year ending March 31 2016, Gladman made a pre-tax profit of £11.6m, while Gallagher’s was £79m in the year to June 30 2016.

So one group goes through the strain, hassle and expense of getting planning and banks 10-30% of the sale value and they are the baddies in the piece. Why no ire for the large landowners who take no risk, do precisely nothing and bank the other 70-90%?

When promoting land, these companies will seldom purchase it upfront, but instead either pay the owner an option for exclusive rights... The options don’t need to be registered anywhere, and they are not obliged to detail their deals in their results.

That's quite simply not true.

The approach of many of these land businesses put them in the crosshairs of “Not in my back yard” residents. Local newspapers are full of references to acrimonious planning meetings caused by Gladman’s plans.

NIMBYs oppose all new development, regardless who is behind it.

Late last year the former Archbishop of Canterbury, Lord Carey, accused Gladman’s firm of “reflecting the worst features of capitalism” when it applied for planning permission opposite his Berkshire home, disrupting his plans to sell up.

What was that bit about "do unto others"?

... by charging a premium for a clean site that’s ready to be built on, it forces developers to increase house prices to recoup the high outlay on land, while cutting the viability of building affordable homes.

“Land promoters deliberately pump the cost of land higher and higher, then reap the rewards when they sell it,” says Catharine Banks, policy officer at Shelter.

Nope. The actual builder starts with the ultimate likely selling price, then deducts build costs, the cost of "infrastructure and preparation" (as explained in the second paragraph above!!) and hoped for profit margin. The price he'll pay for actual land is a balancing figure.


Lola said...

I know it's a cult, but what I just cannot understand is why these people cannot see the flaws in their logic. Alright, it's a cult and that's the end of it.

Mark Wadsworth said...

L, in a Homey society, your best bet from a personal level is to be a Homey. Therefore Home-Owner-Ism is a good thing because being one enables you to be better off (superficially at least).

Which is like saying in a dictatorship or one party state, your best bet is to be a faithful and dedicated follower of whatever the regime wants you to say, think and do. That is also quite true.

So I suppose it doesn't matter that there is no underlying logic to the belief system, your best bet on a personal level is always to go along with it.

DBC Reed said...

There has been a lot of going along with it, and some serious brown nosing by people in public organisations forced into privatisation which have appear to have been captured by the management under the James Burnham control without owning or rent seeking system.
The problem now is that homeownerism has collapsed as house prices have inflated beyond what the next generation can afford while the average rent is now just below £1000 a month.
People will have stayed loyal to this while they were being bribed to occupy their own houses or there was a real prospect of getting on the housing escalator.Now this bet/bribe is off and the Tories and the ruling class is scrabbling around to fix up some new rallying point ;my suspicion is that this is Brexit or the old stand-by "busy giddy minds with foreign quarrels".
Going along with this will result in a general collapse. We have not escaped the one that started in 2007 .

DBC Reed said...

On the other hand,it is surprising that the Telegraph should be so critical of big business. I don't think they should be faulted for not being critical enough or of not being critical of all the guilty persons.A few years ago a piece like this would have only appeared in some low circulation non-mainstream publication.

Steven_L said...

it doesn't matter that there is no underlying logic to the belief system, your best bet on a personal level is always to go along with it

It's bonkers isn't it? Someone at work was hassling me about why I've not bought a house the other week and if I ever will. During the conversation I pointed out that UK houses have actually been a bad investment for the last decade or so, and Aberdeen houses for the last 4 or 5 years. By the look on their face it was like I'd uttered a blasphemy.

Part of the conversation went along the lines of:

Them: "Prices haven't actually fallen that much in Aberdeen"

Me: "But everyone who puts anything on the market starts complaining they can't sell it and nothing is shifting"

Them: "There's not really any buyers about but prices haven't really fallen much"

Me: "Well if they lowered their prices maybe they'd get offers?"

Them: "But nobody is going to accept less than the value are they?"

Me: "If nobody is making any offers then maybe the valuations are wrong?"

Them: "The valuations are fine, it's just a 'slow market'"

It is like a religion, in a way moreso in Scotland where everything is advertised as "offers over", where nobody, as a matter of principal, accepts less than the asking price, where asking prices are based on 'valuations' (based on a textbook) and nobody questions the validity of this book or the valuations it produces, despite any evidence to the contrary.

Mark Wadsworth said...

DBC, agreed and agreed.

SL, tenants have to put up with this crap constantly. You are seen as a second class citizen.

Steven_L said...

I'm not just a tenant (although her indoors keeps telling me it's not a hotel and I'm not a lodger/tenant) but an English tenant!

Lola said...

S_L. That whole argument / discussion about 'valuations' (of anything actually) is the really delusional bit. If you don't have a willing buyer at the price you are asking it's not worth what you're asking.

This is indicative of a deeper problem infecting the (our?) market economy. People are not / have not been educated into understanding what a 'market' is. And what it's for. In lots of ways I think people have forgotten how to 'shop'.

Lola said...

DBCR. Trouble is it ain't just the Tories. It's all the whole bloody ruling extractive elite. (Look at that twat Blair - made £zillions out of land.) Quite why they think that having a house price go up under you makes everyone better off eludes me.

Bayard said...

"it forces developers to increase house prices to recoup the high outlay on land, while cutting the viability of building affordable homes."

Ah, the myth of cost-plus pricing again,

Rob said...

People are not / have not been educated into understanding what a 'market' is. And what it's for.

The Market is a spiffing thing which allows the value of your house to go up and up and up. Yipee!

When it stops going up and up and up the Market is broken and the government should step in and fix it.

Lola said...

Rob. Hahahahhaha. yes. Eggsaktly

Mark Wadsworth said...

B, exactly. The article contradicts itself on that point.

R, that's a fair summary of Homey double think.

DBC Reed said...

Its the Tories' man in charge Sayid Javid that's saying the market's broken;but they've no idea how to fix it .Please show them some sympathy or they will come up with some extreme policies to disguise the fact that they only ever had one idea post Macmillan and it died on them.