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Speculation and high land prices are driving housing crisis

Words: Huw Morris

Excessive land prices driven by speculation are making a major contribution to the country’s housing crisis and putting up significant barriers to solving it, according to a think tank.

Research by the New Economics Foundation (NEF) reveals average rents swallow up to three-quarters of ordinary households’ pre-tax income in areas of high land prices. This is 20 per cent in places of low land values.

High land price areas are also hotspots of homelessness, with the top 10 per cent of local authorities in land values accounting for 73 per cent of households in temporary accommodation.

These authorities experienced a 70 per cent drop in the number of new affordable or social rent homes between 2011 and 2015, compared with a fall of 20 per cent in the rest of England.

The NEF says landowners, whose price setting earns billions of pounds in windfall gains, are determining what is built for communities in their areas, and this must be reversed.

It calls for an end to public land sales, which benefit the highest bidders, after only delivering 20 per cent affordable homes and six per cent social rent on former public land.

Such land should be put to the service of long-term public good and form the basis for a People’s Land Bank to be used strategically in partnership with communities to meet their needs for affordable housing This should be supplemented by private sector land bought at existing use value, which enables the benefits of land value to be shared.

Other recommendations include establishing an English Land Commission, along similar lines to Scotland, to identify policies for a more equitable distribution of land and values. The viability loophole, which enables developers to evade affordable housebuilding, should also be closed.

The NEF’s report, What Lies Beneath, is available at: https://neweconomics.org/2018/07/what-lies-beneath

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