Who owns land?

Good morning from New Economy Brief. 

This morning, The Crown Estate, one of the UK's largest landowners, releases its annual report. Who owns land and how they use it is at the heart of some of the most pressing policy issues of our time. Any serious attempt to improve problems like the housing crisis, food shortages, climate change and inequality require changes to how land is used. Land ownership is a key issue which often goes underexplored. This week, we take a deep dive into the question of who actually owns land in the UK, the economic and political consequences of this, and what can be done about it.

Who owns land? The answer to this question - at least in a UK setting - has been described as “one of the most closely-guarded secrets in the thousand-year-old history of this country”. The Who Owns England? project, run by Guy Shrubsole and Anna Powell-Smith, attempts to solve this very mystery. Through the use of public maps and data released through the Freedom of Information Act, it finds that half of England is owned by less than 1% of the population. The aristocracy and gentry alone own 30%. That’s significantly more than the amount of English land owned by the public sector, homeowners, conservation charities, the Royal Family and the Church of England put together (a total of 17.4%).  After the aristocracy and gentry, corporations are the second largest landowning group, with an 18% share of English land. Oligarchs and City bankers own 17%. Crown estates and the royal family own considerably less than these groups, however their land share of 1.4% still results in increasingly large revenues for royal family members. For example, King Charles and the late Queen Elizabeth II have received total payments equivalent to more than £1 billion from the duchies of Lancaster and Cornwall. The profits made from the farmland, hotels, medieval castles, offices, shops and real estate owned by the royal family have increased substantially since the beginning of the late Queen’s reign. 

• Hidden landowners. 17% of land in England and Wales remains undeclared at the Land Registry. Someone owns it - we just don’t know who. There is a strong likelihood that the owners of this undeclared land are members of the aristocracy and gentry, meaning that their combined share of the country may in fact be far higher than 30%. Because aristocratic estates remain in families for centuries, they are not generally sold on the open market, and will not have needed to be recorded with the Land Registry. According to Anna Powell-Smith, the Land Registry has committed to comprehensive registration by 2030, though it is unclear how this will be achieved. Powell-Smith and Shrubsole propose a government requirement to make all land registered, with details of its beneficial owner, before it can receive farm subsidies. Given the amount of land used for farming, it is hoped that this would incentivise owners to register the land and help solve the mystery of England’s undeclared land.
• And why does this matter? The question of “who owns land?” matters because, as Shrubsole and Powell-Smith explain, “who owns land gets to choose how it’s used… Where we build our homes, how we grow our food, how we protect ourselves from flooding, how much space we set aside for wildlife”. As the connected crises of climate, nature and food continue, what we do with our land takes on an even greater significance. Often, important natural resources are “mismanaged” by those who own the land, argues Guy Shrubsole. Peat soil, for example, is often set fire to for grouse shooting, releasing 11 million tonnes of carbon dioxide per year. About one million acres of peat is owned by just 124 individuals and organisations. 

Politics, policies and rentierism. One of the most direct consequences of concentrated land ownership in the UK is housing. Landowners can often decide where homes are built and can earn rents from them. Home ownership should in theory allow people to achieve a degree of financial independence and security. It’s no wonder then, that the promise of home ownership plays a central role in British politics. It is often accepted (though increasingly questioned) that home owners generally vote Conservative. Meanwhile, the Labour Party says it wants to be the party of home ownership. Of course, this wasn’t always the case. Shifts in fiscal policy during the second half of the twentieth century saw the state’s involvement in housing move from the provision of social housing to the promotion and subsidisation of home ownership. While social housing still exists, provision remains 25% less than in 1979. Home ownership is promoted as the ultimate aspiration, offering security and longevity to voters. Policies like Right to Buy provide the hope of financial independence - an opportunity to have an economic stake in a political system in which state provision of security is not guaranteed. 

• But… The irony of home ownership politics is that, without significant structural intervention in the housing market on both demand and supply-sides (which would require a huge shift in the fiscal consensus towards much higher government spending), the home ownership dream becomes less and less accessible the more it is promoted. Instead of directly providing affordable housing, governments increasingly intervene on the demand side, “supporting would-be homeowners to buy in the private market”, hoping (in vain) that the private sector will pick up the supply-side slack and get building. But, as economist Josh Ryan-Collins explains, this leads to a “damaging feedback cycle” between finance and housing. Instead of promoting security and independence for ordinary people, the market becomes increasingly inaccessible and profitable only for a small number of landowners and property owners. As the role of banks shifts towards mortgage lending rather than capital investment, “credit creation for the purchase of existing property and land increases property prices without stimulating investment or wages”. As a result, household spending shrinks and debt rises. In turn, the demand for mortgage debt rises too, “generating a positive feedback cycle where increasing mortgage credit effectively creates its own supply”, says Ryan-Collins. Houses become more unaffordable, and land more concentrated in the hands of a few. 
• Rentierism and the leasehold system. The vicious cycle of the financial system and housing contributes to what is often referred to as ‘rentier capitalism’. This describes the system in which concentrated property ownership allows owners to extract increasingly high rents. Those paying the rents are then prevented from gaining wealth of their own due to extortionate property prices and the fact that large portions of their disposable income is spent on paying such rents. Though this often affects those literally paying rent, i.e. in the private rented sector, archaic laws mean that even homeowners can be on the sharp end of such rent extraction. The “feudal” leasehold system (Michael Goves’ words, not ours) is yet another thorn in the side of politicians who want to be able to promote home ownership as a means to achieving security. However, the Government announced that it is scrapping plans to abolish the leasehold system in England just last month. 

‍So what do we do about it? 

• Making homes available. Building more affordable homes is of course one solution that would redistribute property ownership to some degree. However, policies that more generally shift the balance of power away from landlords could have a similar effect. Rent regulations, stronger renters rights and high taxes on second homes are all policies which may lead to many more houses ending up on the market without new ones even being built. 
• Taxation. One proposal which attempts to address rentierism incrementally is that of a land value tax. The FT’s Martin Wolf has described the policy as “economically efficient and morally just”. The idea is that it is unjust for landowners or homeowners to increase their wealth (or potential wealth) because their assets have become more valuable through no effort on their own part. Someone living in a house for several decades may see the value of it increase massively having made zero renovations because a train station has been built nearby, for example. Without attempts to redistribute this “unearned” wealth, land ownership and the potential to earn economic rents becomes further consolidated. Economist John Muellbauer has proposed a Green Land Value Tax in which those eligible to pay the tax would receive discounts for making green developments to their homes. Campaigns like Fairer Share also propose replacing council tax with a proportional property tax in which property owners would pay a simple flat rate of 0.48% on the value of properties. Fairer Share’s interactive map demonstrates how this would redistribute wealth from the South East to the rest of the UK. 
• Community ownership. Taxing those who benefit from land ownership is one method. Another is to find a more equitable distribution of land in the first place. A transition towards community ownership, for example via Community Land Trusts and a Community Right to Buy, has been proposed by both left and right in recent years. In 2003, Scotland introduced a Community Right to Buy in which communities are given first refusal when local land goes up for sale. Campaigners argue that this should be replicated elsewhere in the UK. 
• Compulsory Purchase Orders. One of the most direct ways to redistribute land is not only to allow communities the right to purchase land when it is voluntarily up for sale, but to actively pursue it. Compulsory Purchase orders would grant public authorities the power to require land that has been left vacant or derelict for a defined period to be sold at public auction, offering community groups the right of first refusal. Just last month, the Labour Party announced that it would introduce a new law which would give ​​local development authorities in England the power to buy up land via compulsory purchase orders at a fraction of its potential cost if they want to build on it.

‍Now what? The political incentive to offer security feels increasingly important. Recent geopolitical events have turned the issue of renewable energy into one of economic security. The cost of living crisis too has shone a light on just how many of us are financially insecure. The Labour Party clearly sees the need to appeal to the nation’s desire for security with its new language of ‘Securonomics’. Of course, there are plenty of examples of where security can be offered without the promise of home ownership. In theory, social housing and social security can provide this. But no matter what kind of homes people live in, who owns land will always be politically significant. The concentration of land ownership has implications for what we eat, our natural environment, our climate and whether more homes can even be built in the first place. Inequality in land ownership sits at the intersection of so many challenges we face. We have set out above how policies do exist to shift away from the current imbalance, whether the political will to do so exists is another question.