A little history, from Wikipedia
"The 1947 Act (the Town and Country Planning Act), in effect, nationalised the right to develop land. It required all proposals, with a few exceptions, to secure planning permission from the local authority, with provision to appeal against refusal. It introduced a development charge to capture the planning gain which arises when permission to develop land is granted. This was abolished by the 1954 Town and Country Planning Act passed under subsequent Conservative government.
That such development charge should be abolished by a Tory government surprises me not in the least. However it remains a fact that it was an essential part of the architecture of the original act by which the concept of planning permission was introduced and the concepts of building land as distinct from agricultural land were invented.
I think it is time this charge was reintroduced: there is no moral, philosophical or logical reason why the windfall gain caused by a decision of the state should accrue to anyone other than the state. There is an argument that the gain in land values should accrue to the original owner from whom it was taken in 1947, but that would be wholly impractical to implement.
As the system stands, it is an incitement to corruption. The person supplying the necessary permission does not benefit from that supply, neither does their employer, whereas the person to whom the permission is supplied benefits greatly and so has a great incentive to make it worth the while of the person giving the permission.
Nor would there be any negative effects of reintroducing this charge. The landbankers, sorry, developers, would lose a large share of their profits, but otherwise things would go on as normal. The huge boom in housing in the 1930s which gave us the benchmark house for house prices, the three-bed semi, which took place before the Act was passed, shows that development would not be slowed down. If anything, it would be made easier, as councils would be keen to allow development in order to boost their coffers with the charge.
Merry Christmas
1 hour ago
6 comments:
As a general sort of principle, agreed, but...
1. All awards of government contracts or privileges are rife for corruption.
2. In the countryside (i.e. where I live, just), the councillors are all farmers, landowners, developers, estate agents and land agents. Not brown envelopes change hands, they just award planning to themselves (and deny it to outsiders).
3. I don't get the point about the 1930s building boom - did they have planning taxes back then?
4. Like you say, Labour govts have introduced this sort of tax a few time and each time the next Tory govt abolished it.
5. Between landowner and final residential purchaser, there are already a heck of a lot of taxes. Two layers of SDLT, capital gains tax, planning fees, roof taxes, s106 and the like, income tax or corporation tax, plus a couple I forget. This could all do with being rolled into a single tax (let's call it LVT).
6. A typical KLN is to say "but I just own my own home. Why not go after the Big Fish the property developers?" This is verging on that. Then the big developers say "why don't you go after the really Big Fish - Facebook and Google?" and so on.
7. Best thing is to keep house prices down, either with Georgism Lite or with proper LVT, then the land gains will be minimal and the only people making money will be the actual builders, carpenters, architects, people who put up risk capital etc, all of which should be rewarded and not discouraged.
2. Yes, corruption, English style, so much superior to Johnny Foreigner, who deals in bribes.
3. The lack of the windfall gain in changing land from agricultural to building land was not a bar to massive development.
5. The only taxes there that are particular to development as opposed to any other moneymaking activity are planning fees, roof taxes, s106 and other "planning gain". Ideally, these would be absorbed into the "development charge". BTW what is the "roof tax"?
6. Not really, it's the same as LVT, both are taxes on value created entirely by the state. Yes, the major developers would end up paying it most, but then they are the ones benefiting from the state's action most.
7. Agreed. Also sensible interest rates.
B, when you say "lack of windfall gain" is that because house and land prices were just low, or because there was a planning gain tax?
I meant that, before 1947, all land was worth the same whether it was going to be used for farming or built on. Yer farmer on the outskirts of the city knew what he could sell his land for for building, so that's what he sold it for, even if the buyer wanted to continue to use it for farming.
B, sure, but location values would have varied wildly. So the farmer got the 'planning gain' and not the developer who gets the planning gain'.
Well, no, there was no planning, so no planning gain. Land on the outskirts of towns would always have been worth more, so there would have been no rise in value. In any case, the point remains that people were not put off development by the lack of an increase in land value between purchase and sale.
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