The housing crisis and many of Britain’s deep-rooted economic and social shortcomings trace back to extraordinarily unequal and distorted land ownership. No-nonsense land reform is needed.
With property prices and rents outstripping earnings, people are being priced out of homes. For years, only 35-40 per cent of the new homes that were needed have been built. In the meantime, public housing provision fell by 40 per cent. The root cause is the shortage and high price of useable land thanks to effectively rigged land ownership.
Nearly 70 per cent of the land is owned by 0.6 per cent of the population and 0.06 per cent, just 36,000 people, own over half; overwhelmingly the same families who’ve owned the country for centuries. Allowing for the crown and public institutions, 98 per cent of the population is left owning two per cent of the land.
Land is then classified so most of it cannot be used by most people. Seventy per cent is classed as agricultural and 20 per cent ‘natural land’, which cannot be built on. Another five per cent is designated business uses, leaving five per cent, three million acres, for everything from homes to roads for over 90 per cent of the population.
Cities and towns have then been ringed with ‘greenbelts’ to prevent expansion, despite their populations having since risen by half. Contrary to widespread belief, the countryside is not being concreted over. Only six per cent of Britain is urbanised and urbanisation is nearly static at 15,000 acres a year.
Together these create an artificial cleavage whereby most land – where ownership is most concentrated – is held at suppressed values outside the ‘property market’. Conversely, the vast majority of people are constrained to live and do business in bottled-up towns and cities, where inherent scarcity and demographic pressures drive property values ever higher.
High property prices are then sustained by a growing mountain of debt. This leaves most people handing over ever larger amounts and an increasing proportion of their incomes in mortgage payments or rent while exposing housing to financial market volatility.
This ‘property market’ in aspic cannot and never will provide enough decent or affordable housing, let alone make best use of the country’s land.
Trying to mitigate the market soon runs into the buffers of land scarcity and cost. Incentives for developers, government underwriting of mortgages or easing planning procedures simply put further pressures on land prices. Equally, building significantly more public housing quickly becomes prohibitively expensive.
High property costs cut into incomes, business earnings and competitiveness, dragging on demand, productivity and growth. The economy and people’s finances have in turn become overly reliant on property, its debt and rentier activities. Yet economic policy then needs to prop up the whole system out of sheer dependency. Meanwhile, Britain has for decades woefully underinvested in its productive capabilities.
Land and property goes to heart of marked inequalities. Now resurgent inequalities have brought with them deepening economic closure and declining social mobility, with wealth tightening its grip on institutions, top jobs and the levers of power.
Land reform is needed to meaningfully address any of these issues. The start is a thorough audit of land resources and overhaul of land use. A national strategic land plan then needs putting in place under a dedicated agency, which has available to it a combination of strategic land bank, authority to designate land use and compulsory purchase powers to recover land from large landowners.
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