Editorial: Land-banking lessons from Britain

British Communities and Local Government Secretary Sajid Javid. Photo / AFP

Editorial

A stoush over "land banking" developers is brewing in Britain - and local authorities in New Zealand may well be interested observers in the result.

The UK's Secretary of State for Communities and Local Government Sajid Javid late last week issued a warning to firms who buy land but do not build in a ploy to make more money from selling at an increased price.

Javid said the government would withdraw support for the industry unless developers reform, in what the British Telegraph's senior political correspondent Kate McCann described as "an extraordinary attack".

The British Government has already introduced reforms in a bid to free up more housing and increase its tax take, including an additional tax on second homes and buy-to-let properties.

The upper end of the British housing market has slowed this year, with homes worth more than one million pounds down by more than 15 percent compared with last year. That weakening has been attributed to changes in stamp duty rates introduced at the end of 2014, introduced to make the tax system fairer for people at the lower end of the market, according to The Times.

Annual price growth in Britain is tipped to further slow next year, to about 3.4 per cent, and Britain is facing a slowdown in the economy as household average earnings dip.

Inflation there is predicted to rise and wages slow, with real pay likely to be below 2008 levels even in 2021. Headlines about real wages have already dubbed it Britain's "dreadful decade".

Other commentators have criticised such dire predictions, saying they are overplayed and labelling them "Brexit-bashing".

What does seem clear is economies around the Western world face will face real challenges in the short to medium term. It can only be hoped that should any dire scenario play out in Britain it will not have too detrimental an impact on us, and the two countries do of course face very different challenges and trading realities, particularly in the wake of Brexit.

But the state of Britain's housing market does have some parallels in New Zealand, and Auckland in particular.

While developers in an open economy are obviously welcome to do as they please in terms of buying and selling land, Javid's threat will strike a chord with New Zealanders who are struggling to enter the housing market in this country.

It may well be that local authorities here will analyse any changes in the UK industry and consider similar tweaks to our own development laws. Many people will have sympathy for the idea of conditions being introduced to try to prevent land banking from happening.

It would be interesting to gauge public opinion here on Javid's other push last week to see more houses built.

He backed plans by Birmingham council to build on its green belt, saying he welcomed the decision to use a "small area" of green belt land.

According to the Telegraph, he said councils "should not stand in the way" of people building homes for "their children and grandchildren".

You would be hard-pressed to find anyone willing to argue against that sentiment, but the idea of building on such green spaces in this country is surely an anathema to most.

Given the stark differences in density between the major cities in that country and this, it is surely a long way off before such a proposal would be uttered, let alone considered, here.