Kevin Cahill: The myth spun about Britain is that land is scarce

[Tony Gosling]

The great property swindle

http://www.newstatesman.com/life-and-society/2011/03/million-acres-land-ownership


The myth spun about Britain is that land is 
scarce. It is not – landowners are paid to keep it off the market

BY 
<http://www.newstatesman.com/life-and-society/2011/03/http://www.newstatesman.com/writers/kevin_cahill>KEVIN 
CAHILL PUBLISHED 11 MARCH 2011

<http://www.newstatesman.com/life-and-society/2011/03/http://adcentre.magnetisemedia.com/click?layoutType=static_text&layout=114&ad=761&site=377&ba=875>You 
may be owed compensation!

Modern British history, excluding world wars and 
the loss of empire, is a record of two 
countervailing changes, one partly understood, 
one not understood at all. The partly understood 
change is the urbanisation of society to the 
point where 90 per cent of us in the United 
Kingdom live in urban areas. Hidden inside that 
trans­formation is the shift from a society in 
which, less than a century and a half ago, all 
land was owned by 4.5 per cent of the population 
and the rest owned nothing at all. Now, 70 per 
cent of the population has a stake in land, and 
collectively owns most of the 5 per cent of the 
UK that is urban. But this is a mere three million out of 60 million acres.

Through this transformation, the heirs to the 
disenfranchised of the Victorian era have 
inverted the relationship between the landed and 
the landless. This has happened even while huge 
changes have occurred in the 42 million acres of 
rural countryside. These account for 70 per cent 
of the home islands and are the agricultural 
plot. From being virtually the sole payers of 
such tax as was levied in 1873 (at fourpence in 
the 240p pound), the owners of Britain's 
agricultural plot are now the beneficiaries of an 
annual subsidy that may run as high as £23,000 
each, totalling between £3.5bn and £5bn a year. 
Urban dwellers, on the other hand, pay about 
£35bn in land-related taxes. Rural landowners 
receive a handout of roughly £83 per acre, while 
urban dwellers pay about £18,000 for each acre 
they hold, an average of £1,800 per dwelling, the 
average dwelling standing on one-tenth of an acre.

Britain urgently needs land reform, but there is 
a problem. The "tenants" of between 30 and 50 per 
cent of the Home Island land mass are unknown. I 
use the word tenant deliberately. Here's why. In 
a written response to a question by Andrew George 
MP in February 2009, Bridget Prentice, a 
parliamentary undersecretary at the Ministry of 
Justice, replied, "The Crown is the ultimate 
owner of all land in England and Wales (including 
the Isles of Scilly): all other owners hold an 
estate in land. Although there is some land that 
the Crown has never granted away, most land is 
held of the Crown as freehold or leasehold."

Prentice omitted to add that, as the preamble to 
the Land Registration Act 2002 put it, "the 
concepts of leasehold and freehold derive from 
medieval forms of tenure and are not ownership". 
What this means is that, in relation to land in 
the UK, we are all tenants on the basis of the 
feudal superiority of the Crown, a superiority 
created in 1066 and founded on legal norms that 
were created to uphold that same feudal superiority.

This expensive medieval legal miasma in relation 
to land might not matter, if the confusion did 
not directly impinge on the size of our homes and 
even more directly on the price of land, which 
can be as much as 80 per cent of the cost of a 
new home. Both the size and the cost of houses 
are predicated on the idea that land is scarce in 
the UK, but this is a myth propagated by those 
with an interest in selling plentiful land expensively.

The home islands together with Northern Ireland 
are 60 million acres in extent. It is estimated 
that there are 62 million people living on those 
acres, giving every man, woman and child a little 
under an acre apiece. An acre is a little over 
half the size of a standard Football Association 
pitch, which is why that measurement is used 
here. Almost everyone in the country knows what a 
football pitch looks like. Very few people know how to visualise a hectare.

So, who wants the acre on the top of Ben Nevis? 
You don't have to go to a Scottish mountain to 
find plenty of land, however. England, one of the 
most urbanised countries in the world, has 
abundant spare acres. This is because less than 6 
per cent of the entire island of Britain - and 10 
per cent of England - is urban. Put another way, 
for every acre that is bricks and mortar, home or 
business premises, nine acres are not. This is 
not counter-intuitive. Most people understand it 
as they get out of urban areas, big or small, and 
journey by train or car through some of the 
greenest and most pleasant land on earth.

What runs counter to what you see is the 
propaganda, unremitting and relentless, from the 
environmental and countryside lobbies, telling 
you that the UK is a small and crowded island and 
that within 30 years the last blade of grass in 
England will be concreted over. At the current 
rate of urbanisation, which is about 14,400 acres 
a year, England won't finally fall to "concretisation" for 2,014 years.

Behind the scare stories is a very simple 
financial fact: an acre of rural land worth 
£5,000 becomes an acre of development land worth 
between £500,000 and £1m once planning permission 
is obtained. Moreover, most land granted planning 
consent is registered offshore and is thus 
tax-free, or virtually so. If the true 
availability of land in the UK were known, the 
conversion factor would not be quite so generous. 
The true availability of land starts with who tenants or holds it freehold.

What we need in this country is a debate about 
land, informed by facts. The obvious place to 
look for the facts is the three land registries 
of England and Wales, Scotland and Northern 
Ireland. Here we encounter two extraordinary but 
related anomalies: we have land registries that 
do not record the ownership of land at all and a 
second Domesday book that did record the 
ownership of all land in the UK but vanished. These facts are not unrelated.

First, the land registries. Most people think 
that this is where the ownership of all land in 
the UK is recorded. They are wrong. Formally 
created by the Land Registration Act 1925, the 
current three land registries only partly succeed 
where a series of earlier attempts failed, 
beginning in 1875. Before that, there were deed 
registries in most counties in the United 
Kingdom. The effort to create a land registry 
happened at roughly the same time as the 
publication in 1873 of the Return of Owners of 
Land, the so-called second or new Domesday Book, 
a coincidence that almost certainly led to the 
failure of the push for a registry.

The second Domesday of 1873 exposed the inequity 
of land ownership in Victorian Britain - that all 
land in the UK was then "owned" by just 4.5 per 
cent of the population, while 95.5 per cent of 
the population owned nothing, not even a blade of 
grass. Domestic home ownership was in its infancy 
at the end of the 19th century; most of the land 
was the property of a very small network of 
aristocratic families, most of which had dual 
links to the House of Commons and the Lords. 
Those who owned everything also had political control of everything.

The second Domesday recorded the ownership - yes, 
the word used was ownership - of at least 98 per 
cent of all land in the four countries of the 
then United Kingdom: England, Scotland, Wales and 
Ireland. The details of each owner's holding, 
name and address, together with the valuation of 
any land of more than one acre, were recorded and 
printed in four volumes running to 2,300 pages 
and containing 321,000 names and addresses. The 
details of the owners of less than an acre were 
recorded but not printed. And it was all 
completed in four years. The current Land 
Registry for England and Wales is at least 35 per 
cent short of that achievement after 86 years of 
trying, and in the age of computers.

The failure to record the ownership of land in 
the UK arises not from failures by the staff 
running the registries, but from the way they 
were constructed by lawyers on behalf of 
landowners. The land registries were designed to 
conceal ownership, not reveal it. Shocked by the 
detailed revelation of the actual acreage that 
they held, the great landowners did two things. 
First, they refused to register their land with 
the new land registry in 1875. Second, they had 
one of their own, the Hon George C Brodrick, Old 
Etonian warden of Merton College and second son 
of Queen Victoria's chaplain, the landowning 7th 
Viscount Midleton, damn the Returns in his 1881 
work, English Land and English Landlords. No 
academic work relating to the Returns appeared subsequently until 2001.

By the early 1920s, the pace of urban home 
ownership in London and throughout the UK 
necessitated an expansion of land registry 
activity. This resulted in a series of land 
registration and land regulation acts that 
reaffirmed the Crown's feudal superiority by 
creating two forms of lease - for a term of 
years, or freehold of indefinite duration. The 
structure passed into law in 1925; nothing significant has changed since.

With rare exceptions, ownership dictates how land 
is used. Those who now "hold" the bulk of the 
acreage of the UK are extremely hard to identify, 
almost entirely because of the defects in the 
land registries. But they are for the most part 
the descendants - the so-called cousinhood - of 
the great landowners of 1873. Among them are the 
current Duke of Buccleuch, with his 240,000 
acres, the Duke of Northumberland, with 131,000 
acres, the Duke of Westminster, with 129,000 
acres, and the Prince of Wales, with 141,000 acres.

With ownership information missing, planning of 
any kind, whether national or local, is extremely 
difficult. And finding out who is getting the money is almost impossible.

In 2002, Michael Wills, then parliamentary 
secretary in the lord chancellor's department 
with responsibility for the Land Registry, wrote 
to the Liberal Democrat MP Adrian Sanders setting 
out the limitations of its remit:

1. The Land Registry does not record ownership of land.
2. It records two forms of tenancies: leaseholds 
for a term of years and freehold tenancies of indeterminate duration.
3. It creates titles without recording the acreage of each title.
4. Its records are not kept in a manner which 
would enable the registry to establish with any 
certainty what land was owned by a particular organisation or individual.
5. The titles to only about 65 per cent of the 
acreage of England and Wales are recorded; in 
Scotland and Northern Ireland it is 85 per cent and 50 per cent respectively.

What the land registries do is record the 
freehold titles of the domestic dwellings of the 
UK, and they do that in an exemplary way. This is 
to damn with faint praise, however, given that 
domestic dwellings cover three million acres in 
the UK at most. Those may be the most valuable 
parts, but they still constitute only 5 per cent of the country's land mass.

The 60 million acres of the UK are broadly 
comprised of 42 million acres of "agricultural" 
land, 12 million acres of what is called natural 
waste (mountains, bog, moor and so on) and six 
million acres of the urban plot (houses, shops, 
businesses). When it comes to our homes and the 
taxes we pay, only two of the three sectors are 
significant. These are the taxed land where most 
of our homes and businesses are, and agricultural 
land, which is untaxed and subsidised.

Many businesses are subsidised by the taxpayer, 
for various reasons - to retain jobs, to improve 
technology, to keep businesses in the market. But 
the agricultural subsidy is strange. Pared down 
to its essentials, it is a permanent and 
unaudited gift from the taxpayer to the owners of 
rural land. Introduced in America in the 1920s, 
in Britain after the Second World War and in the 
European Union in the 1970s, subsidies were 
intended to keep the agricultural sector viable 
and food supplies secure. In practice, the 
agriculture subsidy appears instead to have 
become a permanent prop to an unprofitable 
business as well as a free handout to the rich.

If the business of farming is profitable, why 
does it need the subvention? It is most abused 
internationally by the United States, whose farm 
subsidy regime distorts trade throughout the 
world, making it impossible for many farmers in 
the developing world to enter international 
markets, much less trade in them. But the EU, and 
its member states, mirror every bad American practice.

In the UK, the average "farmer" receives between 
£18,260 and £23,000 every year from the taxpayer 
for an average farm of 220-plus acres, whether or 
not he or she grows or herds anything. There are 
no current subsidy figures specifically for 
England and Wales, according to Jack Thurston, a 
London-based expert on the subsidy regime. "The 
UK government has refused to supply them," he says.

However, according to Andy Wightman, author of 
The Poor Had No Lawyers: Who Owns Scotland (And 
How They Got It), quoting figures from the 
Scottish government: "During the ten years from 
2000 to 2009, the top 50 recipients of 
agricultural subsidy received £168m - an average 
of over £3.3m per farmer. Among the top 50 are 
some of Scotland's wealthiest landowners, 
including the Earl of Moray, Leon Litchfield, the 
Earl of Seafield, Lord Inchcape, the Earl of 
Southesk, the Duke of Buccleuch, the Earl of 
Rosebery and the Duke of Roxburghe."

The crucial point is that the subsidy ultimately 
winds up with landowners, giving them greater 
flexibility in relation to the release of land 
for building homes. Wightman cites the case of 
Frank A Smart & Son Ltd, a company that owns 39 
farms in Speyside. In 2009 it received over £1.2m 
in single farm subsidy, the largest payment in Scotland.

The same company sold 18 building plots and six 
building properties on one of its farms, bought 
for £300,000 in 1991, for £1.3m. It made a profit 
of over £3.1m in 2008, and in March 2009 sold 24 
plots of land with planning consent for more than £2.9m.

This pattern is repeated throughout the UK. A 
subsidy originally intended to help poor farmers 
winds up padding the profits of rich landowners 
while keeping poor farmers in the developing 
countries out of the market altogether. Is this 
the worst case ever of unintended consequences?

Together, homes and businesses in the UK pay as 
much as £57bn annually in de facto land taxes, 
such as business rates (£22bn) and council tax 
(£35bn a year, including stamp duty and charges). 
The subsidy of up to £5bn that the UK 
agricultural sector receives comes from British 
taxpayers, not some remote bureaucracy in Brussels.

In the UK, 90 per cent of the population lives on 
the three million acres of the urban plot. They 
work in the remaining three million acres of 
industrial and business land and live in an 
estimated 27.1 million homes, 18.9 million of 
which are privately owned and 8.2 million of 
which are publicly or privately rented. So 90 per 
cent of the population has made a deliberate 
choice and has paid for it, usually at double the 
cost of the home over the term of the mortgage needed to secure it.

The annual cost of that choice in terms of tax 
paid by the 70 per cent of us who are private 
owners, in addition to mortgage interest, 
averages out at £1,851 per home. Those in rented 
accommodation pay no mortgage but do pay some 
rates. People living in rented accommodation end 
up without an asset, whereas private home­owners 
at least acquire an asset. It comes at a very 
high cost, however, one that is subject to severe fluctuations in value.

The estimated gain on a UK house over the past 20 
years, inclusive of tax and mortgage, is less 
than 4 per cent per annum. Over the long term - 
and most people change homes perhaps only once or 
twice in a lifetime - homes turn out to be a very modest investment.

The financial crisis demonstrated the raw 
capacity of capitalism to destroy or place entire 
economies at risk as well as to expel hundreds of 
thousands of people from their home through 
repossession. The world financial system had to 
be rescued by emergency state spending and the 
imposition of taxes on entire populations and 
countries. A properly functioning system should 
not require subsidy on that scale to save it. 
Free-market capitalism failed because it suffers 
from huge design flaws. It is inherently unstable 
and lopsided. And nothing in the UK demonstrates 
this quite like the housing market.

Most land in the UK held monopolistically by 
large landowners or estates follows the rules of 
what the American social economist Mancur Olson 
called "hidden coalitions". How these work in the 
UK and their impact on the housing market is very simply explained.

First, no one knows just how much land is 
available for development or from whom it is 
available. The result is that UK homes are both 
the smallest in Europe and the most expensive, 
with the land or site costing a vast proportion 
of the value of the dwelling. From the 
perspective of the 31 million people, or half the 
UK population, who pay direct taxes, what we are 
doing is in effect paying an inefficient business 
- the 325,000 "farmer" holders, or 0.5 per cent 
of the population - to keep hold of building 
land, further falsifying an already rigged 
market. The finer figures are worse. Only 
two-thirds of UK farms are owned; the other 
one-third is rented, mostly from the owners of 
the other two-thirds. In effect, the agriculture 
subsidy goes to the 0.36 per cent of the 
population that owns 70 per cent of the country.

If the 65,000 "farms" of under two acres are 
subtracted as economically meaningless, what you 
have is 50 per cent of the population, the 
taxpayers, paying 0.28 per cent of the population 
to hold the bulk of the country's landed assets 
and to make those plentiful assets scarce. The 
result is that the cost of a building site is two 
or three times what it should be for 70 per cent 
of the population. This is Britain's great property swindle.

When home ownership became endemic, two things 
happened. First, the banks, highly monopolistic 
institutions with a profound lack of 
understanding of money, as they recently 
demonstrated, commoditised and monetised the most 
basic human need for shelter: our homes. But then 
those of us who managed to buy a home and hold on 
to it finally had a stake in the capitalist 
system. This was economically novel. It had never happened before.

The Domesday Book of 1873 records the beginning 
of private home ownership in the UK - in effect, 
the beginning of popular participation in the 
capitalist market system. No economist, not even 
Karl Marx, who was still alive when the second 
Domesday was published, foresaw the 
transformation that this would bring about. Marx 
thought that capitalism would always be confined 
to a minority, and that the majority would be a 
rent-paying proletariat. A superficial look at 
the second Domesday would have confirmed this. 
That is how it was then, but it's not how it is 
now. The transformation is fundamental to both capitalism and democracy.

Private home ownership destroys the notion of 
rent as a significant element of the overall 
economic equation. The estate agent Savills 
recently demonstrated what this means. The 
national debt, which we are supposed to lie awake 
at night worrying about, is roughly £1trn. The 
total value of the privately owned national 
housing stock is over £3trn. The ratio of debt to 
equity in the housing stock is about 1:4. In 
other words, for every £1 of mortgage debt, there is £3 of free asset value.

Back in 1870s, for a UK population then of 28 
million, there were just over 3.84 million 
dwellings, of which 703,000 were privately owned. 
Between 1873 and 2010, the population multiplied 
by 2.2, but the number of houses jumped more than 
sevenfold. The number of privately owned houses 
increased to 18.6 million, a 26-fold increase, as 
the majority of the population moved from 
landless to landed, from a waged proletariat to an asset-owning democracy.

Today the great popular asset pile is threatened 
by tax addicts on one side, acting for 
inefficient government, and defective 
bank-dominated capitalism on the other. The 
banks, knowing the real situation about the land 
supply market, that it is rigged and opaque, 
recently felt safe enough to inflate a 
house-price bubble that showed reckless disregard 
for housing's primary purpose - to provide 
enduring shelter for people. That problem could 
have been contained eventually by normal domestic 
fiscal adjustments, no matter how brutal. What no 
one allowed for was that the banks, the masters 
of money, would blow a second, and even more 
destructive, asset bubble in their own basic commodity, money.

The banks created fictional assets and ran a 
bubble market in these, using other people's 
money. They incinerated about half the global 
stock of money, other people's money. When the 
banks' internal bubble burst, it left no assets, 
just worthless paper. The property bubble at 
least left some habitable assets behind. No 
matter how financially damaged, something could 
be rescued from the crash in house prices. The 
only rescue available for the banks was for money 
to be printed and for a lien to be taken on the 
entire nation's taxes for the next ten to 15 
years. We owe the banks nothing except our debts.

What we urgently need is a clear, simple and 
logical land registry in each of the four nations 
of the Union, with all land ownership recorded 
and the names of the owners indexed, as at the 
present Scottish land registry, and with the acreage stated.

In parallel with that change, we need formally to 
extinguish the Crown's expensive, legally 
meaningless and complex feudal claim to all land 
in the UK, a claim that was informally challenged 
by parliament in 1873 by using "owners" in the 
title of the Return of Owners of Land. Finally, 
and even more urgently, we need to simplify both 
land law and the appalling and wholly unnecessary 
language in which it is dressed up by fee-farming lawyers.

If these three things can be achieved, it will 
lead to a simplification of documentation and a 
lowering of lawyers' fees for land 
transactions.Yet those three steps, useful though 
they might be, will not take us to the heart of 
the matter, which is the urban acreage of the UK 
and the houses we live in, which stand on it.

To become environmentally efficient and more 
habitable, and with ever larger numbers of people 
working from home, houses need to be larger and, 
wherever possible, to have a garden. To achieve 
this transformation, we need to know the facts 
about land and its use, not the fiction spun by 
those trying to sell plentiful acres as if they were a scarce commodity.

Next week, in the second part of his 
investigation into land ownership, carried out 
exclusively for the New Statesman, Kevin Cahill asks: "Who owns the world?"

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