The Dynamics of Urban Property Development

Jack Rose

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781135031374
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Geography
• Index: Geography

Jack Rose examines the social, economic and political forces which have shaped the towns and cities of the UK since the Industrial Revolution.

The unrestricted and largely unplanned development which followed the Industrial Revolution created unacceptable living and working conditions for which a century of legislation failed to provide a remedy. In the last fifty years of economic, political and legal changes have all affected the shape and speed of development through rent control, taxation, planning directives and other mechanisms.

The interplay of political changes and economic circumstances which produces the 'dynamics' of development is covered here from the unique standpoint of the author's long and successful career in the property industry.

This book was first published in 1985

1

Introduction

1.1 The Issues

Clearly, the most important issue is how best the development and redevelopment of the built environment should be managed, given changes both observed and predicted which include:

Population trends;

Technology of production;

Leisure and entertainment requirements resulting from increased leisure time;

Expectation of increased standards of living;

The need to replace outworn structures yet preserve historic and architecturally desirable buildings, both singly and in groups;

Attitudes to profits arising from development and the distribution between landowners, developers, financial institutions and the State in its role as tax collector.

At no time in the past has so much publicity been given to development and the debate centres on apparently conflicting needs. On the one hand there is the need for private capital to secure a competitive return on its investment. On the other there are the needs of the community (through the agency of the State) for schools, hospitals, and offices when some 60% of the country’s entire work-force is employed by a Government with a limited capacity to raise and invest public monies. It is this movement of the frontier between the private and public sector, observed over the last fifty years, that provides the basis of the dialectic — is the present mix of private and public activity the best that can be devised given the need for certain objectives that all, or most, would agree to? Or does the balance lie in the direction of either greater or less State control?

1.2 The History

Any historical study must involve a specific approach, in this case, socio-economic. H. T. Buckle in his History of Civilization in England¹, written in 1857, was the first to put forward the theory that history depended on the importance of food, soil and the general aspect of nature upon the formation of society. Adding ‘the advance of European civilization is characterized by a diminishing influence of physical laws and an increasing influence of mental laws’ and ‘the measure of civilization is the triumph of mind over external agents. ’ Ten years previously Karl Marx had formulated the ‘materialist conception of history.’ Concluding that the organization of a society is conditioned by the economic circumstances of its existence, he laid down the principle that social relationships largely depend upon the particular dominant mode of production in any specific era and, therefore, that the principles, ideas and categories which are dominant in that era are no more permanent than the relations they express but, by contrast, are historical and transitory products.²

Between Marx’s concept and that of the many historians whose treatment emphasizes the importance of kings, politicians, the landed aristocrats and the industrialists of the late eighteenth century, lies the socio-economic view of historical research taken in this study.

1.3 The Concept of Property

Land, and the buildings erected on it, differ from all other forms of property since each square foot of it is unique, immovable and visible. In an urban setting in particular, it has the ability both to attract and repel social needs.

The existence of a shop attracts the traffic not only of its customers but the suppliers of the goods sold in it. It requires the construction of roads, drainage, water, gas, electricity and a host of other modern provisions both local and national. Economically, it is an extension of the factories that manufacture the very goods sold in it, the transporting of these goods and the monetary system that enables the proprietor, the customer and the manufacturer to operate. These externalities, important as they are, can be applied to other human activity, but property, unlike a motor car for instance, once constructed has a visible permanence and a place in the social order that gives it special significance. A growing awareness of these factors is shown by the numbers of national and local preservation societies and the measures taken by central government to hold public enquiries where new development of a significant nature is projected.

Though both economists are to the political right, neither Adam Smith writing in his Inquiry into the Nature and Causes of The Wealth of Nations (1766)³ or Professor Hayek⁴ in modern times, propose that property ownership or development should be of such an individualistic nature that it should escape from the need to comply with a well-regulated social order. Metaphorically, property is a motor boat whose internal combustion engine is inadequate to prevent it from being deflected off course by the forces of wind and tide. Whereas at the time of the Industrial Revolution, the property owner sailed in the calm sea of laissez-faire, subsequent tides of discontent fanned by the winds of social reform presaged a change in weather that has not yet abated.

The increase and relocation of population, the key ideas of clearly defined epochs and the effect of the legislation that ensued, take on a well defined pattern. Fiscal as well as planning control are apparent. Planning and use control followed new administrative structures and subsequently led, potentially at least, to virtual appropriation at last of profitability with the Land Commission and Community Land Act both no longer on the Statutes Book. The reaction of the private sector to these changes as well as the effect of exchange controls, excursions abroad and investment by foreigners in this country (affected both by inflation and fluctuations in interest rates) all play a part in the continuing saga of property development.

Whilst the specific issues mentioned above would seem to be the most convenient form in which to examine the pattern of forces that has resulted in the present state of the property market, the study relies to a large extent on the continuing effects, physical and moral, of the legacy that resulted from the problems created by the on-rush of the Industrial Revolution. This brought with it undisciplined urban expansion resulting in slums, disease and high mortality, especially amongst children. Those who at that time were responsible for providing both housing and places of work, failed not only in foreseeing the future (a failing that might be forgiven) but they also compounded this fault by neglecting to accommodate even the needs of their times. Those who view with hindsight do so with 20/20 vision and it remains to conjecture how observers a hundred years hence will comment on today’s five million or so housed below the present legal standards.

The second half of the nineteenth century, whilst showing some effort on the part of enlightened reformers to ameliorate conditions, dealt only with the tip of the iceberg, and the seeds were sown for new collective ideologies. Perhaps in these circumstances will be found the roots of the belief that the ownership of property in private hands had failed the nation and that through the electoral system a Government would emerge to replace private landlords with a State monopoly. Certainly from 1945 to the present time there has been legislation in planning, taxation and the landlord and tenant relationship to a degree that had never before been experienced.

It is the aim of this book to provide sufficient detail to justify the proposition that the provision of the buildings where people live, work and spend their leisure time has been for too long subject to excesses of political dogma and subject to confusion and self-contradictions because of the inter-play between public and private factions.

Commenting on proposals put before the Cabinet, D. N. Chester,⁵ who in 1945, was in the Economic Section of the Cabinet Office wrote

‘The State leaves the actual ownership of the land in private hands, but takes away the profit motive, the mainspring of private enterprise, by nationalizing the development value. If I were labelling the scheme, I would call it “bastard Tory Reform”… We feel that the scheme should either go a little further in the way of socialization or ownership. Any in-between system is likely to get the worst of both worlds.’

1.4 Early Patterns of Land Ownership

Because so much of the change in the land and property scene has resulted from the long-standing struggle between the opposing ideologies of socialism and capitalism, an examination of the history of land tenure must begin a long way back. In this book the word property, otherwise known as real estate, means immovable property, notably land and buildings. In earliest known history movable objects were the only form of property. There is no need for a particular reference to recall the history of the Indian tribes of the North American continent, living in tents which they moved from place to place as they followed the tracks of herds of wild animals over vast distances. Title over the land they covered was held or denied equally to both the buffalo and its Indian hunter.

Where primitive societies first turned to agriculture and the retention of more or less permanent farmland, then the community established ownership by right of possession. This right persists to this day in English Law as possessory title. The creation of a legal system over many centuries has (one hopes) produced a conveyancing procedure which is an improvement on the method of transferring property in olden times. This was the simple process of acquiring more land by eliminating neighbours with spear and sword. Certainly in England, and probably elsewhere, there developed a mutual protection arrangement where, either by amalgamation with adjoining communities, or through conquest, the smaller communities merged into larger ones, ruled by the physically strongest individual. This leader maintained his position through the fear of his subjects, though later he was chosen or elected on the basis of some other qualities. Thus, communities tended to grow and spread over increasing areas of land which in some cases led to the development of the idea of hereditary kings and kingdoms.

Pre-Roman history shows the division of England into numerous kingdoms where title to land was entirely possessory. This continued after the departure of the Roman legions and even later invasions from northern Europe barely altered the pattern of ownership. Perhaps the first positive change of this pattern came with the appearance in May 669 of Theodore of Tarsus⁶ (602 - 690), 7th Archbishop of Canterbury. Bede declared he was the first archbishop to whom all the Church of the Angles submitted. The Saxon Kings, themselves already converted to Christianity, permitted the creation of regional (i.e. static) bishops subject to Canterbury. Previously, bishops had been appointed but they were merely permitted to roam the country preaching wherever they could find an audience. Each bishopric was now divided into parishes, often identical to townships. The King’s representatives, the Thegns or local magnates gave, in the King’s name, lands and emoluments and permitted the collection of ecclesiastical dues from the worshippers; thus Church Law, with its ultimate threat of excommunication and consequent damnation after death was able to create the first profit sharing system — tithes.

With the coming of William at the beginning of the eleventh century, virtually the whole of the land was conveyed to him by conquest and he, in turn, parcelled out his estate, giving large tracts to those of his followers who were later recorded in the Domesday Book as freeholders of their lands. Their tenure was secure as long as they gave fealty to the King and this was the ‘simple fee’ they paid for the grant. As late as the eighteenth century, deeds of conveyance often described land as being held in ‘fee simple.’ In their turn the Norman adventure knights turned land owners and were free to dispose of the whole or part of their estates, either by parting with the freeholds or granting lesser interests, which became known as leaseholds, copyholds and a variety of other holdings.

The pattern of land ownership was straightforward in that the freeholds were vested in the King’s person, his knights and the Established Church. The populace lived on the land as serfs in varying degrees of thraldom, and were allowed to remain in their huts at the whim of their immediate lord or his representative on payment of military service or a proportion of their production. These grim conditions were, of course, lightened by the gradual erosion of feudal rights. Serfdom over the ensuing centuries gave place to small freeholdings and leaseholdings as the heirs to the landlords dissipated their inheritances, and gradually there came into existence the larger property owning community.

The gradual wresting of absolute monarchial power by the barons from King John, the formation of a Parliament and the institution of Common and Statute Law all played their part in promoting the interests of the individual’s right to own property with no other threat to his tenure other than its appropriation should he commit a treasonable act.

1.5 The Effect of the Industrial Revolution

Whilst agriculture and animal husbandry were the principal bases of the economy for the period before the eighteenth century and the beginnings of the Industrial Revolution, it was not surprising that there appeared in every decade individuals, who, with greater business acumen or by political means or even by close association with the fount of honours and privilege, the Crown, acquired large tracts of land and property. When the Industrial Revolution did come, it was often on these estates that were found the mineral wealth, the town extensions, the factory sites, and the lands through which canals and railways had to pass. Thus as the economy industrialized, fortunes were made not only in manufacturing but also in realizing the value of the mineral rights and the development value in land.

1.6 Philosophy, Economics and Politics

In examining the events dating from the Industrial Revolution, it is enlightening to examine what attitudes have been taken by leading thinkers of earlier epochs. Almost all the most celebrated philosophers have commented on the part that the ownership of land plays in society and their views may be shown to have particular significance in the development of modern thought and the subsequent legislation. Among the earliest, the influence of Plato and his pupil Aristotle can be seen in the present day philosophies of the two main parties. Since the political parties have extensively expressed their opposing views on property in the form of actual legislation, it is important to trace their origins.

In Plato’s Republic⁷ he recommends that landed property be distributed in equal proportions among all citizens of a state. This proposition was actually earlier proposed by Phaleas of Chalcedon, to whom Plato refers. In the Laws⁸ he holds that accumulation should extend to no more than five times the amount owned by any other citizen. Aristotle’s Politics⁹, in his chapter on Phaleas, refers to Solon who ‘introduced laws restricting the amount of land which an individual might possess. ’ Other laws forbade the sale of property. No Locian could sell his property unless he could show beyond all shadow of a doubt that he had suffered some grave misfortune. Original allotments of land had to be kept intact.

Hippodamus, the first town-planner, albeit regarded as an eccentric, wrote of a city which he had in mind was to consist of ‘10,000 souls divided into three classes – one of artisans, one of farmers and a third of professional soldiers for defence.’ He advocated dividing the land similarly into three parts — sacred, public and private. ‘The first of these was to maintain the established worship of gods, the second to support the military, while the third was to be the property of the agricultural class.’¹⁰

Plato proposed ‘thorough going communism’: no private property beyon...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Dedication
• Contents
• Preface
• Acknowledgements
• 1. Introduction
• 2. From the Industrial Revolution to World War I
• 3. Wars and Peace
• 4. The Economics of Property Transactions after 1945
• 5. Post-war Legislation
• 6. Conclusions
• Index