unlawful, un punished landbanks

Fri Jan 6 08:37:18 GMT 2012

I am touting this paper around OFT, JRF, RIBA, RITP  MIn of Housing , M.P.s etc  etc with a view to getting some support .
James.

                               Transforming
unlawful landbanks into houses at accessible prices

James Armstrong  

1  There is an unprecedented  and persistent housing crisis in UK  which is
a  major detriment to  the human rights of individuals in stress of
housing.

2 It is caused largely by the
monopoly behaviour of  a tiny number
of  plc housebuilders  who both dominate the supply of houses in UK and monopolise building land in landbanks. 

3 Their  method is to corner all the available land
suitable for new houses in the UK  -landbanking.-and
reduce the supply of houses they build (trickling out)  which because of their dominant position
in  supply and their oligopoly of land,
ensures the  present and continuing fall in
UK  house supply .

  4 This serves them two purposes.  They make more profit from the increase in
land value of their landbanks, than they do on building houses (Barker p77) and
the prices of the  fewer houses they construct
and  trickle out,  increase and yield greater profits at less
cost. .

5 The UK government is complicit in the failure of supply
.  The supply of housing being a major
factor in the UK economy  and of
employment and consumer expenditure - the Bank of England, HM Treasury and the Office
of Chancellor explicitly use the housing market 
(which comprises mostly the stock of existing houses) as a lever to
manipulate the economy so neglecting  the
proper  role of houses  to provide shelter for home-making  and family life. .

6 The specific tool
Governments mis-use is not houses themselves but the availability of finance
for housing.- mortgage debt. 

7 This is a major component
of the  finance  industry. 
Promoting this industry in the City of London is another goal of government  and central to their balancing – actually
unbalancing-  the political economy of UK.

LANDBANKING  AND THE SPECIFIC ERRORS IN THE OFT  DCLG ,

Evidence OF THE CHARGE THAT
PLC HOUSEBUILDERS LANDBANKS ARE A MAJOR CAUSE OF THE HOUSING CRISIS AND REASON
FOR THE FALL IN SUPPLY O F NEW HOUSES.

8  Self builders 
hold zero landbanks .  Landbanking
is specifically the product of giant plc long established housebuilders with
market power who use the non availability of ‘other’ building  land as a means of  reducing supply of new houses, increasing  unit returns and land values and pushing
up  all house prices.   

9 Having failed  to  consider existing landbanking practices from
the viewpoint of self builders 

surveys and conclusions such
as Barker and Calcutt and OFT are flawed . Barker completely overlooked self
build. 

The DCLG arguments relying on
the above are therefore also flawed.

10 In addition, because the
evil of landbanking is not identified nor corrected , the most dynamic and “largest
sector of supply”, self build , (OFT 2008 Survey)  is 
restricted – at the very time when self build could significantly help solve
the nation’s low house supply and out of reach house price problems . 

11 Housebuilding  has been in decline and house  prices in 
crisis since 2003 .     Government has failed to solve the
crisis.  But government  has no interest in solving the price crisis and
supply crisis since high house prices achieve (temporarily) the  government goals of growth in the economy
via  a boom in consumer credit and consumer
spending.

12 High mortgages required
for high house prices and easy (reckless) mortgage availability are the
explicit 

policy of B of E, Chancellor
and HM Treasury.  Unregulated credit card
availability, high university fees and ready availability of student loans are
other examples of promoting debt.   

The combination of these
factors  explains the continued  ten year failure of governments to  halt both  rising house prices and the fall in new house
supply and the rise in land prices..

ADDRESSING LANDBANKING 

13 As above ,  Barker  and OFT and DCLG relying on Barker , fail to
see landbanking from the perspective of  self builders 
- the dynamic sector.. 

14 There is a complete
absence by  OFT and in DCLG  in their reports-  of 
consulting self builders – the sector most affected- on the question of
the evil effects  of landbanking. 

(Acknowledging self
build  in Appx R in OFT is not the same
as considering the implications of landbanking for self builders.)  

15 .In contrast DCLG says, in
correspondence to me -

“Developers need a stock of
land to cope with fluctuations in the housing market”

We would ask “Does Wilson
Bowden need 33.8 years  supply, Persimmon
19 yrs and Wimpey 16years? (figures from the Barker Review) 

How is it that Barratt,
Bellway and Berkely need zero landbanks? 

16 How is it that Self
builders need zero  landbanks and build
more houses than Wimpey? (which reportedly has 44 subsidiary companies) 

17 Why does Barker and OFT
pause to consider the  pleadings of
Wimpey on their reasons for holding vast landbanks etc and totally ignore the
views of self builders on Wimpey’s landbanks when self builders require zero
landbank and worse, self builders are 
detrimentally affected by these corporate  landbanks? 

EVIDENCE

18 The Duchy of Cornwall was granted planning permission for 8,000 new houses
on Middle Farm and Poundbury  Farm in Dorchester in 1990.

To date, some  twenty years later  some 2,300 have been built.      

 Since the Duchy are not the developers, it is
doubtful if their views on the need to hold landbanks  is relevant.

19 What is clear is that
Duchy have a sophisticated house price fixing policy.  Each individual house is successively
priced  only when completed. This enables
day by day incremental increases in price in conditions of a  rising market.

20   Delaying building at a time of  huge demand is anti-social.

21 The global UK market for houses is destroyed , demonstrated by
the  huge waiting lists, the unfulfilled
demand and people ‘priced out’ and the sustained failure of supply to meet the
demand and the counter trend of supply to decrease in time of increased demand.

OFT  COMPLICITY 

22   I offered this evidence of market power used
unlawfully by the Duchy together with sources and contacts,  OFT failed to follow up this evidence.

23 OFT subsequently  wrote 
“there is no evidence that landbanking 
is against the public interest “_having failed to follow up the evidence
supplied.

24   The landbanks surplus to present or imminent
needs of  seven named corporate  plc housebuilders equate to 731,974  new houses (Barker p 81)

25 Barker at length, and OFT.
quoting Barker advance the  spurious
arguments of the plc house builders that planning delays are a major concern
and the cause of failed housing supply and explain the size of landbanks.   Can such a delay  account for the largest single housebuilders
–Wimpeys’ landbank of 19 years’ supply of land 
in reserve at their present rate of building (Barker Table 5.1) 

26  Named housebuilding plc’s with £bn
capitalization ,  lobby government and
are consulted by regulators who personally have no background in house
building  and with no practical
construction experience or of finance , or of land assessment or
acquisition  of which firms  have exhaustive experience in the building
industry over some fifty years, with  a
staff of professional advisers who lobby ministers and infiltrate and
brief  advisory  committees- while the house-needy individuals
who outnumber the errant housebuilders one million to one are not consulted.  

27 Any  conclusion , that landbanking is a rational
response to the limited amount of viable land being allocated ….  Is undoubtedly correct .but fails to reflect
that PLC’s first duty is to their shareholders and their very rational motive
is maximizing profits.  In that context
it is very rational –but unlawful .

Monopoly (of building land)
is a rational response to maximizing profit. But happens to be unlawful when
against the public interest.

28  In short if you consider the self builders as
a good representative of the public you will see that landbanking by plc
house-builders is not a rational response to the goal of the  welfare of the community.  Neither is it lawful  when it hurts the community.  Using a monopoly (of land locally) is
unlawful when against the public interest …under the Competition Acts. 

 CONCLUSION

29  At the heart of the  crisis are the unlawful landbanks of the plc
house-builders, as recorded in Barker and advertisied in the Balance Sheets of
giant plc housebuilders,   withholding availability of scarce land with
potential for houses in massive amounts from use .

30 OFT although  charged with prosecuting unlawful monopoly and
by failing to act are unlawfully complicit in 
the crisis.

31 The Government using  increased house-prices as a way of increasing
credit availability and stimulating growth in the economy ,are complicit in the
crisis.

32 The government policy of
stimulating the  financial sector through
a) increased ‘asset’ values and 

b) promoting the trading of assets
 - harms those stressed  by housing need. The interests of those in
need are sacrificed  to those of  the financial sector in the City of London.  Welfare is
sacrificed to interest .

OFT and Barker etc consult
corporations and lobby groups and completely ignore individuals..  

33 Government complicity  explains but does not excuse the  reluctance of OFT to carry out their
statutory duty to prosecute unlawful landbanking.

34 Among the available
solutions  is for OFT to prosecute land
bankers and fine them in land and sell the land to would-be self occupy self
builders. 

35  The Premise to the above is that there is a
crisis of supply, the land is in the landbanks of the plc house- builders and
without releasing that land- the same land which has been designated in the
town plans up and down the country for expansion of house supply, there is no
other land  on which to build the
required new houses without abandoning 
the present rational planning system.

James Armstrong .

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