London’s Green Belt is simply a subsidy to land owners
YES, yes, I know, it’s absolutely lovely that people can’t build over Surrey and Sussex and Hampshire: not that anyone would care of they did Essex. And that’s what the Green Belt around London is said to achieve: to stop those horrible ribbon developments of the 1930s. You know, those large spacious houses with a decent garden that everyone wants to live in and which cost over £1 million a pop these days?
The truth is though that the Green Belt is really one of the largest subsidies that we have in the UK: it’s a subsidy to the people who own the land inside it. One writer at The Economist is moving to London and he describes what prices are like:
In a 2008 paper, Paul Cheshire and Christian Hilber estimated the “shadow tax” imposed by such regulations on office prices in London and other major cities. They found a shadow tax rate of planning restrictions (above construction costs) of about 800% in London’s West End, and of nearly 500% in the City of London. The comparable rate is about 300% in Paris, 68% in Brussels, and 50% in Manhattan. (The Manhattan estimate is for the year 2000; other city estimates are for the early 2000s.)
That shadow tax is how much extra you have to pay as a result of the planning restrictions.
Sure it’s nice that people in Surrey can have golf courses: but wouldn’t it be a better idea to build on at least some of them so that people could have houses they can actually afford?
Posted: 6th, June 2013 | In: Money Comment | TrackBack | Permalink
