Better The Devil You Live Next To
There are plenty of things you cannot do with your own land.
Sometimes you can’t chop down a tree, plant a blackberry bush, or start a bonfire. In heritage suburbs you might not be able to knock down your house, or paint your current one any colour you like.
Regardless of where you are, you cannot add as many storeys as you like, possibly because of the shadows you would cast or the views you would block.
In urban areas you can’t have roosters as they would wake everyone up; nor can you set up a mosque and blare out a call to prayer. And after certain hours at night you can’t play loud music.
Sometimes you can’t hire out part or all of your house for short-stay accommodation, set up a brothel next to a school, set up a school next to a brothel, or develop a housing estate on land that is zoned for agriculture or conservation.
Dispute resolution would involve less of the opacity and potential corruption of bureaucracy, and more of the hard-nosed deal-making of markets.
To me, some of these restraints are reasonable and some are not. I suspect you would also judge at least some of these restraints to be reasonable – even though we might judge particular restraints differently.
Currently numerous decisions about what you can do with your land, like set up a brothel, are made by the State.
It is as if the State keeps in a vault, alongside the piece of paper showing you own your land, a separate piece of paper saying that the State owns the right to set up a brothel on that land. Only if both owners agreed can a brothel be set up.
In fact, every limitation on what you can do with your land can be thought of as a property right held by the State.
I propose that we take that imaginary situation, where pieces of paper in vaults define distinct property rights concerning what can be done with your land, and turn it into reality.
Here’s how.
If the State’s planning authority is about to reject a development application, it should make an offer to the land owner: the planning authority will rule in favour of the owner, if the owner agrees to create a restrictive covenant relating to the things the owner wants to do to the land, and to gift that covenant to the owner’s neighbours.
So instead of being banned from doing something, you would have to give the right to do that thing to your neighbours, as a tradable property right.
If the planning authority objected to your development application to add an extra storey to your house, your neighbours would end up with a property right to build that extra storey. If the planning authority objected to your development application to set up a brothel on your land that’s next to a school, the right to set up that brothel would end up being owned by the school.
I propose that we take that imaginary situation, where pieces of paper in vaults define distinct property rights concerning what can be done with your land, and turn it into reality.
The advantage of this arrangement is that the right could then be purchased from the neighbours, if an acceptable price is offered.
A banned development would instead become a potentially expensive development.
A disadvantage of this approach is that it would increase your neighbours’ incentives to complain to the planning authority about your development plans. And the planning authority might end up approving fewer development applications, sending an increasing number of potential developments into the world of deal-making over covenants.
But the advantages would exceed the disadvantages. There would remain hope after a planning authority’s objection to your development, unlike currently where such an objection kills all hope. Dispute resolution would involve less of the opacity and potential corruption of bureaucracy, and more of the hard-nosed deal-making of markets. You’d be dealing directly with your neighbours – real people with real concerns. And, on occasion, mutually beneficial deals would be done, making all parties better off.
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