The Crown, the Church, and five aristocratic estates with a collective wealth of £22 billion still own a thousand acres of central London’s residential building land.
The wealthiest of the private landowners are the Duke of Westminster, Earl Cadogan, Viscount Portman, Baroness Howard de Walden, and the Duke of Bedford.
The “Who Owns England” blog has dug into the records — official statistics are very patchy — and reckons that the Crown, the Church, and 14 private estates own around 1,453 acres of central London, or about 600 hectares (bit.ly/land-own).
At rates of £50 to £90 million per hectare — most of that land is in central London, where land prices are highest — that is £30 to £50 billion. The landowners get hundreds of millions each year in “ground rent” (a component of rent paid to the owner of the land, not to the, usually different, owner of the building) and the certainty of an increase in their wealth without the least effort on their part. At any time they can cash in by selling a bit of their land.
Expropriating the big landowners, or a milder measure like taxing their wealth gains from land-price rises, would not solve the problem of house prices spiralling out of proportion to incomes. But it would help.
The early-19th century economist David Ricardo, whom Marx regarded highly, believed that in a capitalist society rents on land must tend to rise faster than wages or even profits, and would eventually, by squeezing those incomes, reduce capitalism to stagnation.
Actually, for reasons partly but not entirely uncovered in Marx’s critique of Ricardo on this question, something like the opposite has happened.
Land was a big part of total private wealth until late in the 19th century, but it has relatively declined over the long term to a small part today. Only not a negligible part.
Ground rents have generally been fixed for a long period, 99 years, or 999 years. Between the end of the Napoleonic Wars and World War 1, the general price level was fairly stable long-term, about 100 times the level today. Between World War One and today it has increased 100-fold; between World War Two and today, 40-fold.
Some ground rents have been so diminished by inflation that the landowners do not even bother to collect them. Landowners have sold off their land bit by bit, and most residential land is now publicly-owned.
Now landowners are trying to claw back. Many deals say that ground rents will double every twenty years, or, more recently, even every ten years. Some say that ground rents will rise in line with RPI. Ground rent is re-emerging as a significant drain.
Expropriate the landowners!