Speculation and Inflation: Land in the UK

Within the UK land is controlled in the strangest of ways. Planning laws constrain building projects and artificially inflate the price of land. Through this de-facto government control, land is then made available to the most wealthy of companies and speculators, who do one of two things. Either they land bank, assuming inflationary increases well above general affordability. The creation of a series of corporate landowners akin to the aristocracy of old develops. The second is to develop the land for expensive housing or useless infrastructure projects, usually with subsidisation from local or national government. This leads to landlordism, as the houses are bought by potential landlords to rent out at high rates. This all leads back to speculation and land centralisation which creates artificially high prices, restricting the movement of people into a certain area and blocking small business and local infrastructure development.

Historically this centralised control of land began with the enclosures, whereby land was enclosed by wealthy landowners via the coercive power of the state, restricting the rights of the common men and their access to land. Land ownership became significantly concentrated and allowed for a process of rent extraction which favoured the wealthy. Frankly not much has changed since then, with land being concentrated into the hands of wealthy developers and speculators or being owned outright by government. The process of centralised ownership has led to an exacerbation of business cycles, particularly as speculators fuel increasing land and home prices, favouring wealthier home owners at the expense of individuals looking to own or even rent housing. This also favours an increase in large infrastructure projects which are meant to provide for wealthier homeowners.

This is all part of what Foldvary calls the Geo-Austrian business cycle, where credit cycles are fuelled by easy money and low interest rates, with a large amount of the speculation created by this credit expansion going into easy investments i.e. housing and land development. These are meant to produce lasting returns due to government intervention in the form of planning laws, which restricts land use via inflationary pricing, making land extremely expensive. This is most clearly seen around the outskirts of London and the city limits of Oxford. With recent credit expansions by the Bank of England and other central banks, we’re potentially witnessing another housing bubble, this time in London, as quantitative easing-based credit is pushed into easy investments in already inflated housing prices and speculation.

The centralisation of land in the UK means a limited stock of housing and subsequently increased house prices that allow for continued speculation and bubble creation and a modern version of landlordism. It also damages the ability for communities and individuals to develop their own housing and infrastructure projects which leads to a reliance on government spending via coercive taxation. Community led housing projects, such as social housing and land trusts, are effectively priced out of land development due to planning laws layered with land speculation. The same can be said of small road development and rail infrastructure. Overpriced, piecemeal projects like HS2 and large motorways become the norm yet don’t allow for economic growth in any meaningful way. On the other hand, small connecting roads between market towns and intra-city rail developments are restricted because of the inflated cost.

Solutions to these problems are wide ranging. In relation to speculation and its resultant price inflation, the development of a land value tax could go a long way to ending this, as well as ending the current process of rent extraction of common land and natural resources. It would allow for the re-socialisation of rents that could be put into back into communities. Foldvary himself has come up with a similar proposal of geo-anarchism, where voluntary governance institutions use an LVT to socialise rents for community projects, such as housing, infrastructure or a guaranteed basic income. A reimagining of the commons and the associated rights that came with them would also allow for community land ownership and decentralisation of land and housing in the UK. David Harvey’s idea of the right to the city also introduces the idea of common rights to land into the urban environment. This allows for economic development and doesn’t restrict land to the wealthiest. Scottish land reform, seen in both the Land Reform Act 2003 and the proposed Land Reform Bill have developed some of these concepts. The former has allowed for unhindered access to the countryside, as is seen historically in common law rights of way. There is also the Community Right to Buy as well as the limited ability for rural labourers to homestead the land they work on. In the latter, we see proposals for a clearly delineated land registry and an end to state-privilege for large landowners. The redevelopment of communal rights and an LVT can move the UK towards full land decentralisation, allowing for voluntary relations, an increase in economic development for individuals and small businesses and an end to land banking and the centralisation of land.

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