How to build new houses and satisfy the Nimbys at the same time

People objecting to new housing developments in their neighbourhoods are acting perfectly rationally, says Merryn Somerset Webb. But there’s an easy solution: divert some of the landowners’ profits and buy them off.


Divert profits from the landowner to local residents
(Image credit: © 2018 Bloomberg Finance LP)

A few weeks ago, Mark Littlewood of the IEA think tank wrote a piece in The Times in which he wondered how the UK might deal with the many Nimbys holding back housebuilding in the UK and by extension causing the shortage of new homes and huge prices rises in the south over the last couple of decades.

We aren't 100% convinced that the housing problem is just about Nimbys easy credit, very low interest rates, the horrible mismanaged Help to Buy scheme and the sudden surge in demand caused by mass immigration have all played their part. But his solution is still interesting.

Right now, if you get planning permission for what was agricultural land, you get rich. Simple as that. The value of land that gets change of use rises on average by 13,000% or more around Cambridge, Oxford and London (think 28,000%).

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Why, you might ask, should all that lovely value accrue mainly to the landowner (the council often gets a little cut) when it is his neighbours who will be taking the pain (building houses shouldn't be such a trial for those living near sites see my article here on modular housing but it is)?

Why not smooth troubled waters by offering some of the money to to homeowners in the area not in the form of vague promises about community projects but instead as direct cash transfers?

Right now Nimbys are surely acting rationally in objecting to development around them it will cut the market price of their own houses while putting pressure on the already inadequate services on which they depend. "A sizable and direct financial handout would radically alter their attitude." I bet it would.

We like the idea. It fits neatly with our views on, for example, wind farms (which also provide stunning windfalls to landowners). Why not, we said back in 2016 get anyone sticking up a windfarm to compensate all those complaining about the resulting inconvience and fall in the value of their houses with a direct payment in the form of a lump of cash or a 25-year annual payment.

That would surely make them keener on the whole thing than the usual system of the farm bunging some money into a community account and them leaving it in the hands of someone who might or might not be representing the community as defined by those living in the shadow of the turbines.

It also chimes with our support for the land value tax something which is designed to ensure that landowners do not benefit too much from amenities paid for by the taxpayer.

Building land in London is not worth 28,000% more than non-building land because of the landowner, but (in part at least) because of the state-funded amenities around it. So why should the landowner get all the loot?

We aren't expecting the UK tax system to go through a radical transformation any time soon (this never happens), but the fact that these ideas keep popping up rather suggests that, when it comes to land at least, some interesting thoughts about change are at least brewing.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.