know a friendly MP , publicist etc?

Mon Jan 12 19:06:36 GMT 2004

I am currently trying to get Office of Fair Trade to do their job and 
investigate the monopoly of land holding and housing supply by a tiny 
minority of big landowners and declare it as against the public interest,  
using the interim report of the Barker Review of Housing Supply set up by 
Prescott as ammunition and throwing it back to the OFT.

The local MP Letwin is not likely to push  the Govt on the issue  so does 
anyone know which MP is sympathetic to  reforming the land issue?  or 
radical change in the housing supply?   Or who could publicise the issue?

You'll get the flavour from the attached  letter to OFT.
james
Office of Fair Trade,
Copies                Barker Review of Housing
                           Oliver Letwin MP
                           Private Eye Magazine
                           Office of Duchy of Cornwall                       
                                         10th January 2004

Dear Sirs,                                              Re Barker Interim 
Report  on Review of Housing Supply Dec 2003

  My  letter of    9th Jan   asked the OFT to consider the existing  supply 
of housing by large building contractors as a restraint of trade.     I now 
enclose examples of monopoly conditions in the supply of houses.

  - Dorchester - An example of local monopoly conditions in the supply of 
housing as a restraint of trade.

-  Duchy of Cornwall as an example of  housebuilding  and house pricing  
being  in the hands of few individuals  operating multiple local monopolies, 
and  able from  their monopoly landholdings to influence the market to their 
advantage .in Dorchester, and other population areas in which the duchy owns 
land.

- Price Fixing  'trickling out'
-price setting policy- cost plus or "Market pricing " policy ?
Captive Housing Consumers
In  conditions where the  consumption of housing is not optional  .and the 
supply is restricted   the suppliers are in a position both to limit the 
supply raise prices.   The presumption must be that they will act in their 
own and not the consumers, interests.      In these conditions , the price 
and the quantity of the new houses supplied will have a disproportionate 
effect on the price of existing stock of housing.
This is in fact what is happening and no doubt led to the setting up of the 
Barker Commission.
The Commission should therefore look at the supply side of housing in 
detail.
An analysis of unit building costs in relation to unit selling prices will 
determine if the large  landbanks
Held by  a restricted group of  building contractors allows them to control 
the supply of houses and their price..

The examples of the Duchy and the scarcity value realised  from just two 
sites of £0.9 billion(my estimate)  from just this one operator in the 
business of house supply suggests where the Barket Review should look in 
detail to explain the crisis in House supply in UK
A Lacuna in Barker is that it does not analyse the price fixing strategy of 
Contractors.or principals. . Barker describes large building contractors 
"Trickling out" completed houses over a period. This also clearly restricts 
supply. And restrains trade   Self build house builders do not "trickle 
out."
Price Fixing Policy   The "What the market will bear" price fixing strategy 
for new houses as is the case in Poundbury, involving mark ups of over 200% 
over building costs is also a restraint of trade affecting would be 
purchasers for the existing housing stock which rise in sympathy in a non 
elastic supply situation. (see Barker)
At Poundbury high prices  and very low site costs of £100's per unit  
suggest that Included in the quoted selling  price is an up to  £100Kper 
unit  component to realise the windfall gain  as agricultural land is re- 
designated..
No doubt the Duchy will give Barker full co-operation in confirming this.
  Would you please consider these considerations point to the present  
supply of houses by contractors  is a restraint of trade and therefore   
subject for review by the  Office of Fair Trade?
Would you please send me a list of subjects OFT has reviewed  since 1990 
offering a larger restraint of trade than land and housing supply in UK ?    
                         Yours faithfully,

James Armstrong,
Dorchester
                                                     13th Jan 2004

Dorchester as an example of local monopoly conditions of  building land and 
housing supply

1990 Town Plan
The 1990 town plan for Dorchester drawn up by the West Dorset District 
Council  designated agricultural land to the west of the town  consisting of 
Poundbury Farm and Middle farm for housing and mixed development.    Part of 
the land is an area of Outstanding Natural Beauty.            Approx 500 
houses are being built on this land,  most selling at over £200,000 and some 
over £300,000.    The estate belongs to the Duchy of Cornwall.

2003 Town Plan
The new plan for the town of Dorchester was issued in Jan 2003 looking ahead 
  for the years up to 2011.
This designates farm land to the west of Dorchester, also on the Middle and 
Poundbury farms  for development as housing.  Some of this land is an area 
of Outstanding Natural Beauty.   This land belongs to the Duchy of Cornwall.
532 additional houses are planned for this   area of which 30% are to be in 
the category called "Affordable Houses"
The balance of 70% will be sold at prices which  we may anticipate will be 
in excess of £300,000 per unit .

Both in 1990 and now in 2003 the Duchy of Cornwall is the largest developer, 
in both cases having more than 50% of the land newly designated for housing 
in Dorchester.    We may anticipate that without any change in the 
procedings that in 2011 when the next plan is drawn up the same developer 
will  again be the largest developer who will realise another windfall of 
£300million.....

This , together with the "market price fixing" policy  is clearly a 
situation which acts in restraint of trade in the housing supply
Figures produced by the Barker review show that just 10 building contractors 
hold enough land in land banks (which is likely to be suitable for 
designation for housing development ) to  build the UK total requirement of 
housing for the next 6 years at the present annual rate of construction.

Landowners, including the Duchy of Cornwall are not investigated   in the 
Barker review, which restricts itself to  the landholding of the building 
contractors.   Thus the Duchy of Cornwall is not mentioned since the houses 
are built by Independent contractors.  In Dorchester the contractor isMs    
Fry while the land owner and the housbuilding principal is the Duchy of 
Cornwall

Duchy of Cornwall an example of monopoly landholding on a national scale. 
exerting local monopoly
Refer to Simon GrayEstate  Surveyor to the Duchy for number of sites 
nationally where housing is being built or where land is designated or might 
be expected to be designated in up to 2016.
Refer to  Simon Conibear  developmwent manager of Poundbury , Dorchester for 
analysis of duchy's pricing policy.

Duchy is curently building   two tranches of 500 houses in Poundbury 
Dorchester .  . The scarcity value of the completed houses  is estimated to 
net the Duchy £600 million.
Duchy is proposing to build 500 houses  SE of Newquay which may be expected 
to net in excess of £300 million profit  representing the scarcity value 
element of the completed houses

Other large landowners and buildng contractors with land banks can be 
expected to be realising  larger net profits as they realise scarcity valu.e

          James Armstrong

                                                 22 Dorchester DT1 1LE
OFT  Barker
13th Jan 2004

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