(To York Councillors 4th April 2025)

Dear Councillor,

The rich are getting richer and they buy our houses.

Economist Gary Stevenson notes that as the rich buy houses, their prices rise so the young can no longer afford to be home owners. He argues that the rich have become too rich and have bough up much of the housing stock – a tax on wealth is needed to stop this trend.

Stevenson points to the time after WW2 when marginal tax rates were very high. This made it difficult for the rich to accumulate too much wealth. At this time the working class could own homes.

In the 1970s, Economist Arthur Laffer pointed out that, if a tax rate became too high, people would stop buying things that are taxed so tax revenue would fall as tax rates rose. This observation encouraged the governments of Regan and Thatcher – and many others – to cut tax rates.

However, Laffer, Regan and Thatcher missed or ignored one important consequence of removing high tax rates: Increased wealth for the rich enables them to buy assets, in particular houses. Their demand for property to invest in increased the price of housing. This increase meant the working class and the young were gradually sqieezed out of the market. Now even the middle classes find it difficult to own their own homes.

We must find ways of stopping the rich getting too rich.

Planning permission and the cost of housing

In 2022 I wrote:

In York, an area of agricultural land big enough for a house has a value of less than £700. This increases to around £200,000 when planning permission is given to locate a house on the plot.

This was an addition to an article I wrote in 2018, Planning gain in the York Local Plan. This article estimated the increase in value of land where developments were planned. This increase I calculated was more that £2billion. This increase is the change in value of the land before and after planning permission is granted..

The land owners need not actually build. They could sell their land on as very expensive building land having previously owned (mostly) agricultural land worth a small fraction of the value of their land when it becomes building land.

A reminer to Labour Councillors. In 2021 Labour’s General Committee pasted a resolution including ..

We, therefore, ask the York Labour Group to ask the Council to publish … estimates of the expected planning gain for the housing sites outlined in the York Local Plan.

I have not recently looked at the ownership of the land for the biggest housing development in the Local Plan, the so-called Langwith Garden Village but granting it planning permission is likely to gift planning gain of hundreds of millions of pounds to people who are already rich. Will they buy more assets with their increased wealth squeezing the working and middle classes from the market? Where else can they put their gains?

Perhaps I’ve simplified Gary Stevenson’s message too much. Do look at his YouTube Channel, Gary’s Economics, especially Why Labour is crushing your living standards.

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Postscript: An Inconvenient Truth

At the beginning of York Council’s Budget meeting on 27th February 2025 the Lord Mayor was obliged to read out: “You will all be aware that York’s target for net-zero is 2030“. All York councillors and officials must know that this target has absolutely no chance of being achieved. For it to be acheved all York citizens must stop flying, driving and eating beef and lamb before 2030. There is no sign that the Council or previous councils have had any intention of bringing this about.

The Council isn’t even trying to monitor the emissions of York residents, some of whom have enormous emissions In addition, the local plan outlines developments where residents will emit many tonnes of carbon emissions a year. According to the plan, some of these developments, where residents have climate destroying emissions, will still be being built in 2030.

The current situation is that most of this housing will be obliged by York’s current planning policies to have one or two car parking spaces per dwelling. According to the House of Commons Sience and Technology Committee that makes significant decarbonisation impossible.

York Council is either dishonest or delusional.

Best wishes

Geoff Beacon