Bartek Staniszewski is a researcher at Bright Blue. He also sits on the editorial board of the Journal of the Oxford Graduate Theological Society.
Housing is a prime ideological battleground for the Conservatives. When Tory rebels persuaded the Government to accept their amendments to the Levelling-up and Regeneration Bill, it was portrayed by the media as a victory for the traditional Tory support base, and a defeat for the modernisers who believe serious change is needed. Ruth Edwards MP spoke at one of Bright Blue’s Conservative Party Conference events about how there is no issue more likely to get Conservative MPs to “line up…for battle than housing and planning.”
Indeed, those disagreements are partly the result of a long-term struggle between the Conservative commitments to free markets, property, and conservatism. As such, consensus on policy proposals is hard to come by. One of the most radical proposals to tackle the housing crisis is to exercise Compulsory Purchase Orders (CPOs) to buy land for housing at sub-market prices without the consent of the landowner. This is something the Conservative Party itself entertained under Theresa May. But, regardless of a Conservative’s ideological priorities, such a use of CPOs may seem to contravene them. This impression, however, disappears when appropriately examined.
The reason why house prices in the UK are as high as they are is largely due to land prices. The value of residential land is usually about two-thirds of the value of a housing development, and this proportion is even higher in high-housing demand areas. Indeed, around 40 per cent of all wealth held in the UK is just land value.
This is largely due to planning gain, the uptick in land value resulting from planning permission being given on a piece of land. This uptick amounts to around £15 billion every year, and, at some sites, constitutes an increase in value of 275,000 per cent. And at the moment, the government must purchase land at ‘market value,’ which includes the value of land with planning permission, irrespective of whether it already has it or not. Back in 2017, the Government considered amending legislation to permit the use of CPOs to buy land below “market value.” The difference this could produce in the cost of new housing developments is monumental.
Back then, this was criticised as something that is not “fair and reasonable in a democratic society.” Indeed, forcing somebody to sell their land at a lower price than they would like to sell it, and, furthermore, at a lower price than what it will be worth in the future, seems to be a case of government intervention in the markets that is normally so despised by God-fearing capitalists.
But markets function best when they function competitively, as Adam Smith would attest to, and the Competition and Markets Authority (CMA) with their government-given powers have been hard at work to make sure anti-competitive markets are tackled. Collusion has been punished and monopolies have been forcibly broken up, all in the spirit of capitalism. The same powers ought to be applied to the market for land.
Land ownership is very prone to monopolisation. A given parcel can only have one owner, and therefore, for that particular plot of land, they control a hundred per cent of the market. Naturally, for a given housing development, nearby plots may be similarly suitable, but, the likelihood is, they are owned by landowners who are unwilling to compete on the price of land, or, even more likely, owned by the very same landowner. Just 25,000 landowners hold over half the land in the UK.
Using CPOs to buy at sub-market rates is not anti-capitalist – it is a reasonable way to force a local market for land to be more competitive.
Of course, not all things can be sacrificed on the altar of market competition. Forcing somebody to forfeit their property for less than they would want to, and indeed for less than it is soon going to be worth – once there are houses standing on top of it – infringes on property rights and so seems unjust.
While the issue of justice deserves a more thorough treatment than this, it is worth highlighting that liberal notions of property rights are based on the Lockean proviso; that one can justly acquire, transfer and hold property by virtue of their labour howsoever they wish, provided they do not worsen the situation of others by doing so. Locke uses the example of water to demonstrate that it is not unjust to appropriate water from a river if there is still enough water in the river for others to quench their thirst.
Plainly, this is no longer the case with land.
The situation of many is not only worsened, but brought to a desperate level by the lack of appropriate, affordable housing, which stems from the lack of land on which to build it. There are over a quarter of a million homeless people in the UK and, recently, two-year-old Awaab Ishak died due to the woeful conditions in his inadequate flat. The conditional of the Lockean proviso no longer applies.
CPOs ought not to be the government’s go-to tool for land acquisition. They are always going to be politically unpopular among landowners and can result in legal challenges and regrettable loss of property. But they are not unjust, and they are not anti-capitalist. If CPOs at sub-market land prices can be a part of the solution to the housing crisis, they ought to be considered.