Property, Planning & Protest chapter 5

Housing as a Collective Concern

Here are some extracts from Chapter 5

Land value as common property

Land reformers argued from the late eighteenth century that the community is entitled to a share in the uplift in value created through their common labour. Pierre-Joseph Proudhon famously claimed property is theft; Marx advocated the common ownership of land; Henry George proposed the taxing of land; Thomas Paine argued that landowners owed the community ground rent, and Thomas Spence called for community landownership. Spence advocated the repossession by commoners of their stolen property rights and the collective ownership of land by democratic self-governing parishes. In The Real Rights of Man published in 1793 he advanced the case: “that every man [sic] has an equal property in the land in the neighbourhood where he resides” (quoted in Tizot, 2016: 13). Ebenezer Howard (1965) referenced Spence’s Land Plan in his blueprint for the Garden Cities of Tomorrow in which the community would appropriate for itself the land values it created by its own existence. The land for Garden Cities was to be owned collectively, administered by a Board of Trustees, and the cost of purchase paid back in a rate-rent by residents. Once the initial investment was paid back, the rate-rent would supplement the revenue from rising land values to finance collective services and facilities, including welfare benefits. The Garden Cities at Letchworth and Welwyn bore some of the characteristics of private company towns and the Garden City Pioneer Company was heavily indebted to its philanthropist creditors who were also its directors and impatient for their dividends (Hall and Ward, 1998). It took an Act of Parliament to finally secure community ownership of Letchworth in 1962. The Letchworth Garden City Heritage Foundation now owns the 600-acre estate on which the first Garden City was built, and community land ownership brings an annual revenue of £9 million to residents to spend on additional social services, leisure facilities and the upkeep of a high-quality public realm.

The Garden City idea is discussed now primarily in relation to its design template and architecture rather than its innovation in property rights and its disruption of the rhetoric of exclusive ownership. The Garden City extended possession beyond private ownership and assigned common property rights to its residents who shared in the rising land value of their community. The amenity planning for which the Garden Cities are most renowned also signals an extension of property rights to the wider community. Letchworth’s heritage, together with its lush greenery and high environmental quality, is maintained by the regulation of private ownership rights and covenants stipulating the maintenance of amenity in privatised spaces as well as in the upkeep of communal land. There are parallels with the homeowner associations that run one third of all private housing estates in USA (Nelson, 2004). In homeowner associations formal title to the public areas of the neighbourhood is held in common and the allowable uses and maintenance of privately owned properties are governed by the Covenants, Conditions, and Restrictions of the association. The association holds a protectable interest in private individual property rights that recognises amenity – in the maintenance of a high-quality environment in private lots for instance – as the common property of all residents. 

The model of community land ownership advanced in ideal form by the Garden City Movement recognised that an increase in land value is “created by society at large and it should not be privately appropriated” (Ambrose, 1986: 56), but also accepted that value is generated, at least initially, in one place, and as a result of the collective social labour expended in the immediate proximity. Land values, like property rights, are relational. The Garden City approach was to distribute a share in the uplift in land value to residents that recognised their situated cumulative labour in the social development of the town and their common investment in its value. In the same way that amenity can describe the protectable property interests of identifiable individuals, as well as a wider public interest, land values are attributable to the collective actions of people in place, as well as to wider public investment and general economic activity. Property rights, as we have seen, are rights to value. If private property is understood as a relationship between the formal owner and third parties with a common interest in that property, the interests at stake are not just about land use; they concern a fair distribution of value. 

Community land value capture 

The increase in the rental yield of land brought about by public investment, or by the social development of a community is known as betterment. How the state should recoup this betterment became an increasingly vexed question in the late 19th and early 20th centuries as public infrastructure projects transformed the urban landscape and boosted private land values at taxpayers’ expense. Henry George’s popular campaign to shift all taxation on to land value presented one resolution to the problem. In Britain, the Land Nationalisation League advanced a remedy in the dispossession of all landowners by the state. Housing and civic reformers in USA and Britain looked for inspiration to Germany for a successful model of public intervention in land supply through town planning schemes. The spread of town planning to cover all development land, however, created another dimension to the betterment problem. By allocating land uses, and determining what changes in use would be permitted, the state directly intervened in land markets through planning, raising some values and freezing others at existing use. The provision of public facilities contributed to the inflation of private land values, but the state still had to pay landowners market value for land allocated for necessary uses, such as schools, parks, and low-cost housing. Landowners argued in return that the state also diminished values by restricting land uses or siting undesirable development. If the state collected the betterment it creates, should it not also compensate for “worsenment”?

There are three possible approaches to the problem of capturing and equitably distributing betterment before it is pocketed by property interests (Cox, 1984). The first is a fiscal-only approach in which tax is levied on the value of land. Famously proposed by Henry George, a land value tax would involve an annual levy on the incremental increase in use value or in the optimal value of land. This levy would encourage landowners to develop their land to its highest and best use and create disincentives to speculate in capital gains or withdraw land from supply (Ryan-Collins, 2021). The disadvantage of this approach is that the state is forced to buy land for public services at their market value and compete in potential bidding wars for desirable sites. The task of annual site value rating also carries its own practical problems. The second approach combines fiscal strategies with regulation to collect betterment on the improvement of land through a development charge or levy. This enables the state to fund public interest goals but limits the collection of value to that created by a change of land use. The third, fiscal-interventionist approach may combine a land tax with public ownership or grant a monopoly to the state over development land supply, providing statutory powers to purchase land at existing use value for lease-back to private contractors, so recouping betterment through continued ownership of the improved land.

Andrew Cox (1984: 200) argues that the most effective strategy for the collection of betterment is the fiscal-interventionist approach. In Singapore and Hong Kong, the majority of land is owned by the state and leased to private developers in competitive auctions, ensuring the uplift in land values is captured for the public benefit and land can be allocated at cost for public interest goals. Receipts from betterment provide half of all the public revenue in these East Asian city states (Haila, 2016). In South Korea, almost half of all residential land development is controlled by a state-owned company that assembles land for new settlements and captures betterment by buying at use value and selling at exchange value (Ryan-Collins, 2021). In Germany, municipal planning authorities assemble land for development, allocating betterment to fund the necessary public infrastructure before dividing the remainder with developers. The British planning system has consistently failed to establish effective instruments for the community capture of betterment and what Peter Ambrose (1986: 9) calls “the long retreat” of British planning from its public interest goals began with the political decision in 1947 not to grant planning authorities an interventionist role in land supply. The statutory planning system in Britain was devised by a series of Whitehall committees in the early 1940s, meeting at the height of the London Blitz, and involving key figures from the wider planning movement in envisioning a better society while bombs fell about their heads. The report published by the Uthwatt Committee on Betterment was an “unmistakably social democratic document” that recommended gradual land nationalisation (Cox, 1984: 36). It proposed that municipal authorities would compulsorily purchase land at existing use value, according to the needs identified in a democratic land use plan, allocate land cheaply for low-cost council housing and public services, and lease the rest to private developers at market value, collecting betterment in the process. These powers of land purchase and leaseback would be supplemented by a 75 per cent levy on the increase in value of privately developed land and mitigated by limited compensation to landowners. An independent national commission responsible to a Minister for National Development, would coordinate land supply for economic and physical planning with the aim of guaranteeing “to all the essentials of a decent and secure life at every level, irrespective of the amount of money earned,” as Thomas Humphrey Marshall (1950: 82) put it in Citizenship and Social Class. Town planning, through the allocation of land and land value for the provision of public housing, public goods, and public services, was to enrich the life of the community, reduce individual risk and insecurity and bring about equality of status in a vision of social citizenship for all. It would, in this situated ideal, foster a social commons, in which the uses of home and community and the landed property on which they were built, would be made available largely outside of the circuits of monetary exchange and distributed according to need, irrespective of ability to pay. The goal was, to quote Manuel Castells (1983: 319): “To obtain for the residents a city organised around its use value, as against the notion of urban living and services as a commodity, the logic of exchange value”.