A natural limited resource – Mark Twain advised ‘Buy land: they’re not making it anymore’ – planning controls have made housing land scarcer. Although general rules prescribed by central government and appeals to central authority regulate the process, land supply is managed within the local political process. Development plans do not confer development rights. Each development requires specific permission, although the 2015 Conservative government announced that certain sites could be designated as having ‘planning permission in principle’.

In the 1930s, land contributed less than 5% to house costs; in the 1960s, around 10%; in the 1970s, about 20%; and in the late 1990s, about 40%. Up-to-date information on the percentage that land captures in house prices is sparse because the Coalition government cancelled the annual publication of residential land price statistics, alongside new development densities – indeed, residential land prices with planning permission statistics terminate in 2010 in the authoritative UK Housing Review (Wilcox et al, 2016, p 172). Belatedly, the Department for Communities and Local government (DCLG) produced figures on land values, applying different assumptions to those used in earlier publications. The values were based on ‘valuing the proposed development and deducting the development costs, including allowances for base build cost, developer's profit, marketing costs, fees, and finance to leave a “residual” for the site value’ (DCLG, 2015a, p 4). The average land cost was £6,017,000 per hectare in England. Assuming a density of 43 houses per hectare (the average density in 2013), the payment to the landowner would be £139,930 per house.

The Policy Exchange (2013b), using information on construction costs per dwelling and total residential property value, estimated land price contribution to total house cost at 55% in 2013. Thus, as Morton (2012, p 1) claims, ‘House prices are really about land prices. Higher house prices simply mean land with residential planning permission has increased in value, including the land crystallised in existing homes’.

In 2014, UK house prices per square metre were the second highest in the world, with London the expensive epicentre. In 2015, prices in the capital were 50% above their pre-2007 peak compared to 7% in the UK (Nationwide, 2015), with a £200,000 price gap between London and the rest of the UK.