At the moment, the planning system rewards speculators with huge profits if they are successful at lobbying planners to have their land zoned for housing. An acre of land can increase in value from £6,000 to £1 million or more — all at the stroke of a planner’s pen. That isn’t a free market: it is an invitation to corruption.
Development land — identified as such by democratic process — should be purchased by development corporations at agricultural or other current-use value. It should then be parcelled up, granted planning permission and auctioned off to developers: some in the form of large parcels of land for volume housebuilders and some in the form of individual plots for private individuals. That would prevent the present situation where a few big developers have a virtual monopoly over building.
The profits should then be ploughed into infrastructure. That would allow enforced social contributions, known as Section 106 agreements, and the new Community Infrastructure Levy to be abolished, cutting thousands of pounds from the cost of building a new home.
No, that’s not the way to do it.
For a start you’re arguing in favour of using compulsory purchase to benefit the pockets of other private citizens. This is an abuse of eminent domain and a trampling of property rights. The second is that redistributing the profits made from artificial scarcity isn’t the point: abolishing those profits from artificial scarcity is.
It isn’t simply a case of dismantling the planning system, as Nick Boles, the Planning Minister, seems to believe.
We don’t even need to dismantle the system. We just need for it to approve many more plans. So that the scarcity value of planning permission falls to, ooh, say £0?
For if houses cost too much because the price of a piece of paper is high then the the way to reduce house prices is to reduce the price of the piece of paper by issuing more pieces of paper. An analogue of Milton Friedman’s point, inflation is always and every where a monetary phenomenon. We’d actually rather like to see hyperinflation in planning permissions: so that the value approaches zero in real terms.