Nimbyism explained – 2

A while back – August 2013 – I posted this on my local Forum:

I had a eureka moment about this a few days ago – the rise of the NIMBY is a consequence of greater fragmentation of freeholding. It’s obvious really – if more occupiers have the legal rights of freeholders, they will use them to oppose development, and if there are fewer opportunities for large scale freeholders to redevelop areas, coherently and benefiting from economies of scale, fewer houses will be built, and in retail commercial property, High streets will be left to decline. So it’s unhelpful to blame the individual nimby, or even their organised representatives, as also it is unhelpful to blame developers for being greedier and more short-sighted than those of previous generations.

Nimbyism explained?

I still think all that is true, but in looking back just to the post war era, I realise now I was missing a much longer history.  So it was that I felt blown away seeing this recently, written in 1685, referring to an Act of parliament from 1588:

Now the reason of this was the People of England were a little before that time under the same mistake, as they are generally now, and cried out against the Builders, that the City would grow too big; and therefore in the 38 of Queen Elizabeth they made a Law to prohibit Buildings in the City of London; which though it was but a probationary Act, to continue only to the next Sessions of Parliament (which was but a short time) yet its effects were long; For it frighted the Builders, and obstructed the growth of the City; and none built for thirty years after, all King James his Reign, without his Majesties License; But for want of Houses the increase of the People went into other parts of the world; For within this space of time were those great Plantations of New England, Virginia, Mariland, and Burmudas began; and that this want of Houses was the occasion is plain; For they could not build in the Country, because of the Law against Cottages.


The author, Nicholas Barbon, is hardly a reliable witness, but the legislation is clear enough.  The extent to which it was obeyed is another matter, currently leading me down lines of thought in economic history, but given the opposition Nicholas Barbon faced when he chose to ignore the law in the redevelopment of Red Lion Square, it must have had some impact.

What was going on here? There will be an explanation in the public promotion of the virtues of rural life, sturdy independent peasantry, and seeing decay and corruption in the cities.  It’s well a established tradition going back to the ancient world.  Let’s not discount that, but maybe agglomeration economies have been there since people started settling in cities, and would soon have been followed by arguments to justify, and legal devices to enforce, the capture of those economies by powerful interests now within those cities.  Why would they not, when there will always be very good reasons for regulating the growth of cities, which nimbyism can piggy back off?

Restricting housing supply

Channel 4’s Dispatches last night (7th November, 2016)

Britain’s Homebuilding Scandal

lays the blame for restricting housing supply firmly on developers – and much of the content is also here in the Telegraph, in a piece written by the Channel 4 presenter, Liam Halligan

It’s time to get building: Sajid Javid pledges to break the housebuilding logjam

Towards the end of the Channel 4 programme Liam Halligan says he is an economist, and a believer in free markets, but nowhere does he explore how artificially restricting supply can be a sustainable strategy for house builders.  When selling properties from a large development, a developer will have some kind of temporary local monopoly, and they will indeed sell them gradually, rather than dump them all on the market at whatever price they can get.  But buyers can still shop around, and look at properties coming on the market in different areas, from different developers.  Developers will have an interest in getting their stock sold.

If there was some kind of collusion between developers, this would be something for government to investigate, and impose suitable sanctions – but there was nothing about this possibility in these reports.  Instead, it was observed that the house building market had become much more concentrated in recent years.  This is true, but it is still far less concentrated than, for example, supermarkets, and yet these are very competitive, at least in what they offer consumers.  There was some film of some small developers itching to get their hands on a large, undeveloped site, but no suggestion that development might be financially risky.  This is hardly surprising, since the assertion is that developers are, in the jargon, systematic and successful rent seekers.  Actually, development can be quite risky


and whatever those risks have been should help explain why there has been a concentration in the sector, from which a more satisfactory explanation might emerge of why developers do not build as fast as hoped.  It might work as journalism, but it is not good economics.

Elsewhere, Andrew Whitaker of the House Builders Federation was asked what the impact would be of measures to penalise his members for not building where planning permission had been given.  (I assume this would be outline, but that was not said). His answer was exactly what an economist would have anticipated should the amount of landbanking by developers be part of a normal competitive business model – it would mean a reduction of supply.  Instead, Liam Halligan asked him, menacingly, if this conclusion was actually a threat.  So much for  a belief in free market economics.

The most obvious factor restricting housing supply, it hardly needs saying, is the planning system, but we are were we are with this, and big developers respond by getting hold of, or putting down markers, on site which they may want to build on in due course.  However, another factor, mentioned briefly, is the large amount of land held by public bodies.  What is stopping them getting on with developing this land. teaming up with developers who are ready to break open the current restrictive practices?  Either getting development done is not quite as easy as imagined, or there is some kind of cartel stopping any developer breaking ranks in this way, or the real culprits for holding back development are in the public sector.

Interesting questions, investigation of which would have made a better report.

For more on landbanking, see this report from Savills

In summary, our analysis suggests that land with capacity for around 80,000-100,000 homes could be considered ‘unimplemented’. This is far below those figures suggested by other analysis, but may still be too high for a Government looking to increase housing delivery. As the Office of Fair Trading 2008 report showed, housebuilders’ approach to the land market is a consequence of the current system and they simply build homes at the rate they can sell them.

If Government is serious about increasing housing supply over the long term then it will need to look beyond the planning system and encourage greater activity from the full spectrum of potential housebuilders including SMEs, housing associations, local authorities, the wider construction industry, and Government.

Stuck In The Planning Pipeline

That seems pretty fair to me.

To more satisfactory discussions about housing

I had one of those unsatisfactory conversations about housing recently.  It wasn’t a big deal, and it was politely conducted, which is always a plus.  I’ll not go into some details, because it was a private conversation, and in any case those I omit are inessential.  The essence was that it would help the UK housing crisis if rental contracts were made more favourable to tenants, in a way apparently normal in Germany. Continue reading To more satisfactory discussions about housing

The Pru 100


Unlike Team Sky on the Champs Elysées, we’d not practised this for crossing the finishing line, which is why we both look a bit worried.  A week on, Annie is off travelling, and I’m catching up with my life post retirement, with a blog about the whole experience, and thanking everyone who sponsored me, on my list of things to do.  So here goes.

It was wonderful being able to do something like this with Annie – and met by Maggie at the end, who’d just come tenth in a 5k run in Hyde Park.  So, for all of us it was a great family day.

As a cycle ride, it was a bit disappointing, because a serious accident meant we were held in a bottleneck along with thousands of other cyclists, for over an hour, and the most challenging climb, Leith Hill, was cut from our route. My official time was even slower, because I had an earlier start time than Annie, and I waited for her to catch up, so my official time was 7′ 21”.  But for the sections where we were going normally, although this included parts where there was still severe congestion, our average speed was just over 16 mph.  Not too bad, I think, and as we’d both trained fairly well, neither of us had ’emptied the tank’, in the cyclists’ jargon starting to creep into my  language.

I’d also done most of the course, including Leith Hill, at a similar speed, but without closed roads, a couple of weeks before, which took rather more out of me.  On the day it was fun to be cycling without cars and lorries – hoping here that no motorist friends were too inconvenienced – and the spectators in the last few miles were lovely and encouraging.  Of the various good causes on show on the day, I think Shelter must be one of the best recognised brands.

Personally, the training was probably the most interesting part of it all.  Nearing 60, I decided to approach this more seriously than I ever took preparation for long cycle rides I did in the past.  I also joined a couple of local cycling clubs, (Anerley and Penge) and found myself getting out into the Kent, Sussex and Surrey countryside again. There’s a potential digression starting here from how often these routes took us through London’s hallowed Green Belt – but that can wait.

I hadn’t appreciated how club cycling works socially, blending relaxed sections with more competitive climbs, and places where it’s possible to go fast.  I’d no idea that my relative strength would be as a climber, but given my size, that should not be a surprise.  I also took to cycling part of the way to see my Dad most weeks, which involved riding to Marylebone, and then through various Oxfordshire villages.

The new technology is fascinating too, with GPS and a heart rate monitor allowing read outs of how much progress is being made.  It seems my completely un sporty parents had managed to endow me with some good genes as well, based on my resting heart rate. Previously I’ve always been a bit squeamish about blood and other aspects of human physiology, but I seem to have got over that. Another thing on my list of things to do is to work out how those estimates of power and energy used are made from the data inputs.  I’m also interested in how this fitness related technology percolates from elite athletes to the wider population – can it make a difference to public health?

The fund raising was a bit more difficult than I expected, although I realised it would never be as easy as when I worked on an investment bank trading floor. I’m not sure that I’ll do a sponsored ride again, having now learned there are many such ‘sportifs’, but I’m very pleased that both Annie & I hit our funding targets, and as well as supporting the work Shelter does directly, helped raise awareness of the housing crisis.  There’s an even longer digression possible here, starting from one of my favourite observations about housing, which is that Shelter’s foundation in the mid 1960s, and all the attention that housing got then, was also when the level of UK house building started to fall.  For whatever reasons, public concern about housing does not necessarily translate into the essential requirement of getting more homes built.  I’ve written elsewhere about why I think this didn’t happen, and will do so more, along with all the other things on my lists of things to do.

So also is meeting up with old contacts, especially those who were kind enough to sponsor me, and I’d love to talk more about this with those who are interested in housing, economics & politics.

Housing policy as if we really believed in it

The immediate trigger for this post are a series of comments I made today on a blog by the Green Party spokesperson on housing, Tom Chance, which can be found here

Building homes, not false hope, in London

In my comments I refer to “housing policy as if we really believed in it” in the context of hoping one day to make housing affordable again, in areas of high demand among people in their 20s and 30s, such as London.  I can accept other aims for housing policy, in particular the need for an environmentally sustainable housing stock, but affordability concerns me here, and is I think of greatest wider concern as well.

Because policy doesn’t look at prices

I don’t think most housing policy is made as if this aim is really believed in, because, if it was, policy would be framed in terms of making housing affordable, i.e. in terms of price, rather than in terms of how many houses need to be built.  There are occasional exceptions, such as this recent comment from Priced Out calling for zero house price inflation, but given the current level of unaffordability, this is not exactly ambitious.  Instead, the debate is cast in quantitative targets, whether:

It would make far more sense to have core policy expressed as requiring the building of enough new homes, and the infrastructure which goes with them, to cap the proportion of income for median earners at the point of household formation ending up going on housing, either as renters or buyers.  This proportion is currently around 50% in the areas of highest demand, about twice what it was 30 years ago.  Such a policy would be interpreted at the city level, assuming this, as in the case of London, to constitute an effective housing market, and might still mean quantitative directives from City Hall to lower level planning authorities, i.e. boroughs, to say that they are not managing to get enough development done, but it would have the twin advantages of the numbers being set at the city level, so more locally than by Whitehall, and requiring increased supply when prices get out of kilter.

It would be a rejection of current ‘predict and provide’ targets, based on models of rates of household formation and other factors which estimate how much housing people  will want.  It seems clear that this approach has failed over the years, but it is more of a wonder why it would ever have been thought likely to succeed; in the long run, what people want will be reflected in pricing, and a refusal to respond to such price signals amounts to telling people they should live somehow other than they wish to, for no good reason when sufficient good, sustainable homes can be built.  An insidious effect of the current system is that high demand means people squeeze into what housing there is available, and unless policy makers do look at the price signals, they can think, institutionally, that somehow or other people are finding somewhere to live, so it’s not such a problem.

and because looking at prices is too scary

The other reason for thinking housing policy makers don’t really think they will make housing more affordable is that if they did, they would be developing policy for how any housing gets built during a period in which peak unaffordability is unwound.  This will not be a good time, financially, to be a first time buyer, speculative developer or buy-to-let landlord, so if the additional housing we need is going to get built, it will have to be supported by the tax payer.

Given the decades over which the housing crisis has developed, it is hard to call this a bubble, except that bubbles can develop in very viscous liquids, and I think this is one – but we don’t know how viscous it is, or if, like glass, which is in fact a very viscous liquid, it might also be capable of fracture.

All we can say is that if housing affordability is to return, it will happen along a path somewhere on a spectrum between these two scenarios

  • Quickly – with enormous political pain from home owners in negative equity, and destabilisation of the financial systems; or
  • Slowly – with a long period in which private sector housing construction stagnates in anticipation of falling prices, and requiring the increasing supply which will drive down prices to come from the public sector.

All we have at the moment from policy makers are the macroprudential concerns of the Bank of England aimed are avoiding the risks of an adjustment happing quickly.

I will leave it there, because predicting what might happen is so speculative, but it is clear there is a problem, and a £2.3 billion fund to subsidise first time buyers, as announced in the recent spending review, is an aggravation of the problem, not part of the solution.

If it wasn’t for the Nimbies inbetween

More evidence that capitalism wouldn’t be so bad if it wasn’t for the Nimbies inbetween.

This graph from Matthew Rognlie’s paper disaggregating Piketty’s overall story of increasing returns to capital is well known (although not as well known as it should be …)

Deciphering the fall and rise in the net capital share

But today I saw this analysis of the impact of ‘closed access cities and states’ in the US

Housing, A Series: Part 77 – Housing is defining politics and the repercussions are dreadful

Kevin Erdman writes

It is frequently noted that American politics have become more angry and more bifurcated.  The housing supply problem has its fingers in many of our problems, and I believe it includes this.  Bear with me here.  This might become a long post, but I think the implications may be surprising.

so I’ll leave it there, but please do follow the link.

As for the title – it’s an obscure reference to the old Music Hall song which somehow seems relevant, but I’m not exactly sure how …

Downsizing in situ (©)

Earlier this week I was delighted to hear this phrase used for exactly what I meant when I came up with it in a post on my local Forum, June 30 2013.  It was in a response on a thread which had become predictable bad tempered, (and now in a part of the Forum which requires registration) since it had started with my expression of sympathy for Lewisham Mayor Steve Bullock with his plans to redevelop a large prefab estate.

Here’s my subsequent post

Tim, if you feel so strongly that people should give up their homes, why don’t you start the ball rolling yourself? Maybe if you gave your home away, or sold it and moved to a small flat, a couple of young families could move in. What you’re advocating is social engineering and it should be voluntary. Please don’t confuse it with socialism. It’s the socialism of Stalin and his ilk.

What I might one day want to do is to ‘downsize in situ’ (©). It’s what a near neighbour did when his elderly mother died a few years ago. Having previously divided the former family house into two flats, and had her live downstairs, now he has tenants on the ground floor. I think this is a very sensible way to proceed, and means that family and neighbourhood links are maintained. However, such conversions are inevitably opposed by the usual suspects.

Possible solutions
• Housing suitable for family occupation should be retained not subdivided into units not suitable for families.

I think the social engineers round here are those who insist on houses being retained for families, as they imagine them, while the use of ‘voluntary’ by those who want to control what people do with their own homes suggests that the word means them having their way, not anyone else.

© Original coinage, as far as I’m aware. Happy for anyone else to use it …

Since housing is, economically, a luxury good, why not tax it more?

An exchange in comments on a recent blog by Jolyon Maugham about the difficulties of structuring a sin tax


reminded me of a posting I made in June 2014 on my local forum, but which is now only visible to registered users.  Jolyon’s blog showed the normal regressive pattern for indirect taxes of the two UK taxes most usually considered as being on sin

taking his numbers from an ONS spreadsheet.

As someone who can be quite moralistic about burning fossil fuels, and imagining that richer people might spend more on them in proportion to their income, I wondered whether the pattern would be different.  In fact it isn’t –  ‘Duty on hydrocarbon oils & Vehicle Excise Duty’ behaves by income quintile much like alcohol duties, but raising about twice as much.

So let’s drop the moralising, and ask what are luxury goods in the sense that

demand increases more than proportionally as income rises, and is a contrast to a “necessity good”, for which demand increases proportionally less than income

Source Wikipedia

That ONS spreadsheet has a detailed breakdown of income by quintiles, but nothing about expenditure, other than forms of expenditure with special taxes, such as alcohol.  It would be interesting to see such a cross-sectional study, but my local Forum posting I referred to commented on a longitudinal study for the US

written up in The Atlantic

How America Spends Money: 100 Years in the Life of the Family Budget

At the time I wrote

… this chart shows food as a necessity, and entertainment as a luxury – which is what you’d expect. Spending on healthcare as a proportion of income has increased a bit with the explosion of prosperity of the last 100 years, so counts as a luxury on this definition too – but that will be mainly just expenditure in the last few years of life, Overwhelmingly, however, it’s housing which has become the major apparently luxury expenditure item. Partly this will be because much spending on housing really is luxury, as economists understand it – if most of us have a bit more money, we probably will spend it on making our houses nicer. Even so, it feels too much to me, and I suspect reflects the unnecessary expense of housing as people have moved to cities where excessive constraints have been put on the expansion of the housing supply, so pushing up prices.

but in the context of tax policy, if there have to be indirect taxes, only those on property taxes can be significant and progressive.