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The British housing problem in a nutshell

Summary:
Apparently there’s a thing called “garden grabbing”. Which is where people who have land a house can be built upon build a house upon that land. Tsk and don’t we just have to invent a phrase to condemn such behaviour? With the recent changes in planning law announced more people are inquiring about how to do this. Which seems, neatly, to tell us that the recent announced changes in planning law are going to lead to more housing. Within this report there is this though:The planning process is protracted and expensive, but if you can secure permission, the rewards could be big. Homeowners can increase the value of their land at least 10-fold by getting the green light to build on it, said Mr Bainbridge. “Say you had an acre paddock worth £10,000, if you got planning permission for one house,

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Apparently there’s a thing called “garden grabbing”. Which is where people who have land a house can be built upon build a house upon that land. Tsk and don’t we just have to invent a phrase to condemn such behaviour?

With the recent changes in planning law announced more people are inquiring about how to do this. Which seems, neatly, to tell us that the recent announced changes in planning law are going to lead to more housing. Within this report there is this though:

The planning process is protracted and expensive, but if you can secure permission, the rewards could be big. Homeowners can increase the value of their land at least 10-fold by getting the green light to build on it, said Mr Bainbridge. “Say you had an acre paddock worth £10,000, if you got planning permission for one house, it could be worth £100,000.”

The same piece of land, with the same entire lack of utility connections, is worth ten times as much after the wave of a bureaucrat’s pen. Or, if we prefer, the absence of the wave of the bureaucrat’s pen deprives society as a whole of the creation of £90,000 in value. We would, therefore, all be richer if more bureaucrats would wave more pens. This being true even if enough waving is done for the price premium to entirely disappear. For at that point the value would still be being created, it would just be enjoyed as the consumer surplus - what people would be willing to pay but don’t have to - rather than being something that must be forked over. We, like all sensible economic types, thinking that increasing the consumer surplus is a jolly good idea indeed.

Or, of course, we could just get all medieval on that planning bureaucracy and return to a system where property actually is property and leave people to deploy their land as they see fit. It is this last which is our preferred end state although we agree that the occasional detail will need to be considered.

The heart of our point here being that the very existence of a rise in value upon the allocation of planning permissions shows us that there is something deeply wrong with the allocation of planning permission. Not enough is being allocated for why on Earth would we want a system that increases the costs of life via a bureaucratic permissioning system?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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