Not in my back yard!
Changing NIMBY’s to IMBY’s – The Case for Community Land Auctions
The biggest symbol of the failure of Britain’s planning system is the huge rise in the ratio of house prices to incomes. In the East, the average house price in 2010 was nearly eleven times the average annual wage. To obtain a mortgage to purchase an average priced home a buyer with a 25% deposit would need an income of just over £50,000 per year.
The planning system is simply not delivering the houses that people in Britain want and need, in places that they want to live, at prices that they can afford. This harms those who are badly housed, and reduces economic growth. By not releasing sufficient land for housing when demand is high, rises in demand – caused by increases in the number of households, increasing affluence, or falls in interest rates – are translated into higher land prices, rather than increasing the supply of land available for housing.
The government is addressing this problem by changing legislation so that it is easier for communities to exercise control over the planning system and determine what happens in their neighbourhood. This approach argues that local people will vote for development, in sufficient quantity, provided that it is the right sort of development, sympathetic to the needs and views of existing local people.
But new housing is not, in general, popular with existing voters and while it is clear that people will prefer nice developments to nasty developments, it is not at all clear that they prefer nice developments to no development at all. Localism without incentives is simply a charter for widespread NIMBYism. We cannot expect to see more houses built by simply wishing that it would happen.
The government recognised this and created the “New Homes Bonus”; a grant of around £7,000 to local authorities from central government for every additional home created. The intention was that this money would incentivize communities to opt for growth as it would be spent directly in the places that were most affected by the new development. Yet ‘Inside Housing’ magazine reports this week that more than 70% of local authorities that have received the grant have chosen to hold onto to their share of the £200 million cash bonus, to meet deficits in other council budgets, rather than spend it locally as intended.
I believe that there is a case for a more radical approach to persuade people to accept more home building in their backyard. At the end of last year, economist Tim Leunig outlined the case for the implementation of Community Land Auctions.
The concept is simple and is based upon the principle of capturing for the benefit of the local community some of the uplift in land value that accrues to the landowner when planning permission for housing is granted.
Mr Leunig sees Community land auctions as “being akin to competitive tendering. The local authority invites offers of land, and accepts those that are good value. Good value is a combination of price and appropriateness for development, where the latter incorporates both sustainability criteria, as well as desirability for the final purchaser. The council grants planning permission, and then re-auctions the land that it accepted for development, keeping the difference in value to be spent in the local community”.
This is a good idea in principle but given the experience with the New Homes Bonus cash there must be a question mark over whether the local authority can be trusted to act in the best interest of local communities. Council budgets are (always) under extreme pressure and there is a danger that any new money raised by a land auction may not reach the beneficiaries for whom it was intended; those most directly affected by the development of the new homes.
I believe that there is another way. The land auction model could be effective if the process is managed by an organization that is truly representative of, and crucially, controlled by the local community. A Community Land Trust is the perfect vehicle to do this, and I am now working with a CLT in rural East Cambridgeshire that wants to try out a variation of Mr Leunig’s model. It will be an interesting pilot which could catch on quickly in other areas if it works. NIMBY’s might yet be persuaded to become IMBY’s when they see real economic and social benefits for their local community!
Tim Leunig’s paper ‘Community Land Auctions: Working Towards Implementation’ was published in November 2011 and is available for free download at centreforum.org/assets/pubs/community-land-auctions.pdf
Phil Rose, Community Land Trust Development Manager