The high cost of land is the most important reason why we can’t build enough affordable homes. But things haven’t always been this way. Daniel Bentley, Editorial Director of think tank Civitas, charts the history of UK land policy, showing where things went wrong and how they can be put right.
Following the Second World War and a desperate need to build homes and new settlements, the 1947 Town and Country Planning Act allowed all of the increase in land value created by granting planning permission to be collected by the state. This held land prices down and enabled councils to acquire land cheaply for housebuilding.
Under pressure from landowners this policy was reversed in stages during the 1950s until, finally, the 1961 Land Compensation Act gave landowners the right to get not just the current value of the land, but its ‘hope value’ – what it might be worth if it ever got planning permission in the future.
This became a charter for hoarding and speculation: land prices rocketed and council housebuilding became increasingly expensive.
Since then land values have increased many times and council housebuilding has wound down from more than 100,000 homes a year to barely a trickle. Councils have tried instead to secure affordable housing from private developers as a condition of granting planning permission. But this has never delivered the volume of new homes that the post-war system delivered.
The cost of land isn’t the only reason we have not built enough affordable homes for decades, but it is a major one. Enabling councils to buy land at fairer values once again would make it much easier to kickstart a renaissance of council building.
For more on the history of land and housing, read ‘The Land Question’ by Civitas (2017)