Ben Clements, an analyst based in London, will tonight be announced as the winner of the £50,000 IEA Breakthrough Prize.
The prize, supported by entrepreneur Richard Koch, sought to find the best and boldest entry outlining a ‘free market breakthrough’ policy to solve the UK housing crisis. It was judged by a panel including Jacob Rees-Mogg MP, Richard Koch and Mark Littlewood, Director General at the Institute of Economic Affairs.
The winning entry proposes the ‘Land Purchase Act’ – a market-based policy that centres on how swathes of public land can be made available for people to build homes according to their own choice and preference.
The essay argues that the shortage of affordable housing in the UK has been caused by strict and outdated planning laws. Government interventions to address the issues – such as Help to Buy – have, on the whole, exacerbated the problem.
The submission makes the case for releasing surplus or underused public land to help people onto the housing ladder. Such a move could deliver as many as two million new homes, the majority of which would be built in areas where there is high demand for housing.
How the Land Purchase Act would work
• The government would enter into a contract with the occupier, who will take out a mortgage to cover the cost of building the property on the land.
• The occupier would decide on the style of house to be built. Furthermore, they would be given choice over the timescale and structure in which they gradually acquire private ownership of the land. This would include options such as paying rent for the land, purchasing the land at set intervals over time, or buying the land at a discounted rate after living on it for a set period of time.
• The Land Purchase Act would also reduce the number of planning restrictions on houses built on land made available under the policy.
• To ensure the scheme is not captured by short-termist developers, certain safe-guards would be put in place. Age, employment status and whether the occupier is a recipient of government assistance related to housing could be included in the criteria.
Benefits of the policy
• It offers people a ‘hand-up’ rather than a ‘hand-out’ and puts them on a path to homeownership, rather than government dependency.
• The policy would help to expand major cities and the surrounding areas, therefore boosting productivity.
• Lowering the cost of housebuilding by removing certain restrictions would make it easier for the new occupier to be approved for mortgages, insuring their financial security.
• This policy would also free up the incomes of new occupiers, improving their welfare but also increasing consumption and boosting the wider economy.
• Targeting those who currently receive government assistance with housing would alleviate the pressure on the existing social housing stock.
Commenting on the winning submission, Jacob Rees-Mogg, MP for North East Somerset and member of the Breakthrough Prize judging panel, said:
“A free market solution to the housing shortage would reinvigorate our home owning democracy. It is the most important political challenge once Brexit is concluded.”
Richard Koch, supporter of the prize and member of judging panel, said:
“I was struck by the quality of entries and range of good ideas, which can be enormously effective but also popular.
“The winning entry can open the possibility of a massive transfer of wealth from the state to individuals, perhaps comparable to the sale of council houses and privatisation in the 1980s.”