Epsom Property Rights
I had been thinking a bit about the apparent inconsistency between David Seymour arguing against intensification in Epsom whilst simultaneously being part of the ACT party, which wants to repeal the RMA is generally against regulations. I first read about it in Russell Brown’s post The Ides of Epsom.
Apparently, Seymour reconciles these things through appealing to an argument about “property rights”
What I’m arguing is that the people of Epsom have bought into certain property rights and the character of their community …
Now, most economists would agree that it is important to have a good system of property rights,so I was intrigued by this argument. I was going to examine this issue myself, but Eric Crampton has put this to bed quite succinctly in the tweet below. As Eric points out, unless there is a covenant in place, there is no “deal” that is being broken, which is what economists would be worried by.
@LouisMMayo @actparty @frankmcrae Only if you bought into a development with a restrictive covenant barring such devt. Otherwise, no.
— Eric Crampton (@EricCrampton) August 24, 2014
Update: Eric has a much fuller discussion on his blog here
If having the covenant and thus no intensification is valuable then buying a housing without said covenant will cost you less than buying the same house with a covenant and thus is the price difference not compensation for the possibility of intensification?
Would be an interesting empirical study. Anecdotally, the new development at Hobsonville Point is quite expensive which might support that. Would be hard to control for quality of housing. Stonefields could be another example as it is closer to more established residential areas so might be easier to find controls.
Seymour is unelectable unless he says that. Why he wraps it in property rights rhetoric I don’t know, but he is correct that the bundle of rights now implicitly included in home ownership includes veto on neighbouring development. That is both the practice and the expectation, it must therefore capitalise so buyers pay for that effective right coming in. All that’s missing is legislation formalising it, but that is form not substance. You may be right on the details but Epsom homeowners will not see it that way with justification that can be measured in dollars. Not exactly in the national interest, of course, but that is not the argument.
Isn’t the form vs substance point crucial when we are talking about property rights?
Having an expectation you can make enough noise to block developments you don’t like is one thing, but you should accept that without formalization there is no guarantee you will always get your way. If people don’t discount their willingness to pay to account for the fact that there is no guarantee, aren’t they making bad decisions?
I just bought a house in West Auckland, maybe we don’t have the same implicit property rights out here, but I accepted when I bought that the future path of my neighbourhood is uncertain and largely out of my control. If bought in Hobonsville Point, I would legitimately have different expectations.
By “property rights”, I suspect Seymour really means one or both of the
following: self-interest in keeping out the ‘proles’; and/or
self-interest in preserving a cartelised housing market.
Funny
story from several years ago in Wellington: there was a minor
stoush in Khandallah’s Nicholson Rd when an architect issued a
notified consent to build infill townhouses in the area. When the
neighbours objected, he threatened to submit an alternate plan that
didn’t need notification – a bikie gang pad. The stoush was resolved
when the land was purchased
by the neighbours.