Tuesday, Jun 22, 2010
More evidence of Home-Ownerism in action...
The Welfare State We're In: Housebuilder has to spend more money on getting planning permissions than on buying bricks
...if it were needed.
Posted by sceneclub68 @ 10:31 AM (734 views) Add Comment
6 Comments
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1. mark wadsworth said...
It is the scarcity of land with planning permission that drives up the cost of houses, that is what matters.
How much it costs in admin and hassle to obtain planning permission (for a given maximum amount of planning permission) is absolutely irrelevant to the homebuyer. The post points out that the admin and hassle is a hidden tax, and yes it is, but it is a tax on the profits of the landowner, it does not cost the construction side of the business anything, because they will adjust the price for land down accordingly.
Sure, we should scrap the hidden tax (and all the bureaucrats) and have an in-your -face tax (like Land Value Tax) and liberalise planning laws, different topic. The only regulations they should have are on the actual physical quality of the housing (and its outward appearance) and not on quantity (a bit like in Germany).
2. the number cruncher said...
MW - agree entirely, well said
The idea that building a housing estate means you need to build some social housing for free is an excellent idea. But as MW said it would be far better to be an open tax like LVT and the consciously decide to spend the money on social housing than a stealth tax.
Liberalisation of the planning system though still has to pay for the externalities such as wildlife enhancement, transport provision, water supply etc. So a strong central planning system is still needed to co-ordinate it. We need a spatial planning system like the Dutch or Germany where a central/regional planning system allocates an ideal percentage of land devoted to industry, housing, wildlife and farming. Then local authorities work to implement this in a sustainable way, taking into account local issues such as flooding, economy etc. This spatial system extracts the NIMBY element to a some extent. You still end up with the problem that it is the rich areas that can actively campaign to protect their area and dump development on poor and inarticulate sections of society.
Of course this will be even further from Tory Doctrine than Labour
Recaptcha= "astutely rigging" sounds like our election system
3. sceneclub68 said...
I see your point, MW, but in many cases the landowner and the construction side will be the same entity, given that house-building companies tend to amass land banks without planning permission with a view to obtaining permission in the future. If planning permission for a particular plot is then granted to the house-building firm, would it not attempt to recover the administrative costs associated with obtaining that permission from the eventual buyers of the houses by pricing them accordingly? Granted, the only reason it could do this is the scarcity of land with planning permission which you mention, which serves to inflate the price of development land and houses, but aren't they two sides of the same coin?
4. crash bandicoot said...
HPC action seems to be getting scarcer these days as our view continues to become mainstream.
I still read HPC everyday but I have little to add to the debate. MW you are a trooper, keep up the good work.
5. mark wadsworth said...
TNC, CB, thanks.
Sceneclub, it is easiest to imagine the big homebuilders as two quite separate divisions: the landowning division (the tail) and the actual construction division (the dog). Unfortunately, the tail wags the dog - when land prices started sliding two years ago, they mothballed a lot of projects. And now the Tory NIMBYs are in charge, their construction income will fall a lot, but the monopoly profits to the landowning side will go up. So yes, to some extent, the landowning division passes on the cost of the hidden tax, but it can only do this by restricting supply (and thus damaging its construction division). All a very unhappy outcome.
6. maihem said...
@MW /me is a broken record again, but an open lease system would force planning to be cheaper as beuraucracy has a cost to the beuraucrat if they choose to involve themselves.