You seem confused over what land banking is. It's exactly what Letwin described – not building homes at a rate which would cause local prices to fall. Of course private house builders won't do that; that's why we used to have social housing construction, which specifically did.
A great post. I'll definitely be referring people to this in the future.
Housing remains a problem were the evidence points to a clear solution and the commentariat searches for a more complex one.
We really need a shorthand to refer to these two types of landbanking: landbanking as a way of creating a planning pipeline in response to unreliable planning permission and landbanking as a form of pure speculation.
In theory, speculation should exist with any finite good that does not become obsolete or decay. All things being equal, the economy of the future has more money than the economy of today. So in a truly competitive market, I would be surprised not to see some speculative land banking, given how rare a good with the qualities of land is in the economy.
We do see plenty of speculative land hoarding like behaviours in video games were these conditions of competition and non-decay do exist.
However, the UK is far from a truly competitive market. UK planning is a form of alchemy, transmuting land from a good that does not become obsolete or decay to a good that changes in value year-on-year depending on the whims of governments and officials.
Planning remains the key limit in medium to longterm horizons for housebuilding. Pipeline landbanking is a rational response. In 'Home Truths' Liam Hannigan talks about in detail how the UK has ended up with an usually large number of big housing firms compared to peer nations because scale is necessary to support a planning pipeline. If the UK adopted Japanese style planning permission lots of small building firms would be able to take on the risk of more projects. The pipeline landbanking would mostly disappear.
The UK probably never gets anywhere near the limit where purely speculative landbanking makes sense.
You seem confused over what land banking is. It's exactly what Letwin described – not building homes at a rate which would cause local prices to fall. Of course private house builders won't do that; that's why we used to have social housing construction, which specifically did.
Your insights are both thought-provoking and clearly conveyed.
Looking forward to reading more of your work!
Great post! It could only be better if you linked to my Substack. 😉
A great post. I'll definitely be referring people to this in the future.
Housing remains a problem were the evidence points to a clear solution and the commentariat searches for a more complex one.
We really need a shorthand to refer to these two types of landbanking: landbanking as a way of creating a planning pipeline in response to unreliable planning permission and landbanking as a form of pure speculation.
In theory, speculation should exist with any finite good that does not become obsolete or decay. All things being equal, the economy of the future has more money than the economy of today. So in a truly competitive market, I would be surprised not to see some speculative land banking, given how rare a good with the qualities of land is in the economy.
We do see plenty of speculative land hoarding like behaviours in video games were these conditions of competition and non-decay do exist.
(See "Land value tax in online games and virtual worlds: A how-to guide" https://www.gamedeveloper.com/design/land-value-tax-in-online-games-and-virtual-worlds-a-how-to-guide)
However, the UK is far from a truly competitive market. UK planning is a form of alchemy, transmuting land from a good that does not become obsolete or decay to a good that changes in value year-on-year depending on the whims of governments and officials.
Planning remains the key limit in medium to longterm horizons for housebuilding. Pipeline landbanking is a rational response. In 'Home Truths' Liam Hannigan talks about in detail how the UK has ended up with an usually large number of big housing firms compared to peer nations because scale is necessary to support a planning pipeline. If the UK adopted Japanese style planning permission lots of small building firms would be able to take on the risk of more projects. The pipeline landbanking would mostly disappear.
The UK probably never gets anywhere near the limit where purely speculative landbanking makes sense.
great post. this will be more go-to link for refuting this bs! thanks