Why We Have to Learn to Love the Subdivision – Again


When did anyone last hear officials and professionals talking enthusiastically about the social and economic benefits resulting from the subdivision of land to create secure, clean and tradable title?

Indeed, any planning document is likely to include a long list of potential problems caused by the subdivision, but will mention few, if any, of the benefits. Maybe it’s time to rethink this conventional planning wisdom. In Peru, during the eighties, Hernando De Soto and the Institute for Liberty and Democracy promoted land reforms that led to more than 1.2 million rural families being given titles to the land they worked. One major grant of titles to a whole village was celebrated on television. When the reporter asked a woman “Why is having title important for your family?” she replied “Having secure title means I can now go out to work.” She went on to explain that the family’s past “customary settlement” required continual occupancy and eternal vigilance. Some member of the family had to be on the property at all times, or else someone else could move in.

During a recent BBC television news bulletin on the floods in Pakistan, reporter Orla Guerin said “Many here are bound to their land and their livestock, and will live or die with them. We spotted one young boy, clinging to the top of an electricity pylon. He climbed down to collect a bag food aid, but refused to be removed from the waters.”

I suspect he was also concerned with the need to help maintain his family’s right to occupy.

City officials and urban planners in particular are always claiming that their cities are “running out of land”. Of course they are not running out of land. They are surrounded with it, as any air traveler knows, just from looking out the window.

However, they are short of land with a certificate of title that allows the landowner to develop the property for housing or anything else. One reason for this shortage lies with the costs and often onerous conditions of compliance are simply too high. The French Revolutionaries learned that when they fixed the price of bread at less than it cost to bake a loaf, the bakers simply stopped baking bread. When it costs more to gain a title than the lot can be sold for, we should not be surprised if people stop creating lots.

Suburban residential development creates many jobs and the residents who move continue to create new employment opportunities for decades. Every home owner becomes a property developer as they add rooms, sleepouts, new decks and swimming pools and upgrade their kitchens, and so on. I should have emphasized that it’s the land around the dwelling that enables so many of these projects to take place over the decades and to create so many jobs.

If Smart Growth policies force people to live in apartments, their opportunities to improve their dwellings become seriously limited.

City governments appear to overlook the economic and employment impact of rejecting large-scale developments, but the cumulative effect of a multitude of prohibitions of smaller proposals is equally serious – especially in a small economy like New Zealand or a relatively unpopulated place like Montana.

During the nineteenth century the key function of governments in the New World was to churn out titles as quickly as possible.

Surveyors served as the true frontiersmen, enabling the migrants to arrive, put down their roots, and build. The post-war suburban boom repeated this experience, supported by an equal enthusiasm for creating a property owning democracy.

Then during the 1990s, “The Age of Environmentalism” arrived and activists persuaded decision-makers in the developed world that the creation of titles enabled polluting humans to possess the Earth Mother and must be stopped, or be made as difficult as possible. These constraints on land supply created the short-term property boom, and the inevitable bust that led to the greatest financial crisis in recent history.

The developing nations and their economists continue to recognize the value of title. The works of Hernando de Soto, the Peruvian economist, emphasize that the major problem facing people in poor countries has been their lack of secure title to land, which constrains their ability to borrow significant sums of money and put down secure roots. As he says, the family with title builds a dwelling; the family that squats invests in furniture. This has led to his founding leadership of The Institute for Liberty and Democracy in Peru.

At the recent conference of international surveyors in Sydney it was quite exhilarating to hear surveyors and officials from Peru talking of targets of 150,000 new titles per year. They knew full well that titles generate wealth. Maybe it’s time for New World cities to set similar targets and share de Soto’s enthusiasm for the contribution of subdivision to ongoing liberty and the pursuit of happiness.

Bankers have long recognized that many families’ main means of saving is paying off their mortgage. Equally, many aging citizens fund their retirement by subdividing their large lots to create a nest egg for the future. Most university-indoctrinated central planners regard this as an “inappropriate” activity.

Unexpected Super Large-Lot zoning in rural areas can suddenly deprive thousands of people of a secure and active retirement. Of course the planners claim the landowners are still able to subdivide, but just have to go through an approval process. Then the same planners make sure the costs and uncertainties render the exercise prohibitive. Their environmental cost benefit analysis ignores this destruction of individual wealth – and dreams.

I wonder if any advanced developed country planning school has Hernando de Soto on its reading list?

Instead of encouraging the creation of titles, as history suggests we should, the Smart Growth central planners have persuaded our governments to penalise the creation of new lots by imposing highly expensive and highly regressive fines called “development contributions” – which are actually anti-development levies.

We tax cigarette smokers to discourage smoking, and we fine speedsters to discourage speeding. Should we be fining the creators of legal title if our aim is to encourage development, promote employment growth, increase savings and promote personal well-being?

Some politicians, like Maurice Williamson, New Zealand’s Minister for Building and Construction ARE determined to reduce the costs of building consents and inspections. But these are trivial compared to the costs of subdivision and land use consents.

And there is something of an international movement away from rule based management of development and a return towards broader concerns of society and the people who inhabit it.

But before any legislative reforms can be effective we need to learn to once again celebrate secure, tradable, private title. This remains one of Western Civilisation's greatest contributions to our wealth, health and general well-being.

Owen McShane is Director of the Centre for Resource Management Studies, New Zealand.

Photo by Brenda Anderson

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Large lots for sewage etc

It is fair to say that on-site treatment of sewage, and collecting and storing rainwater, makes extra demands on space and hence a rural lot will typically need to be bigger than a fully serviced urban lot.

However, many regulators used this excuse to increase minimum lot sizes way above what was necessary.
Consequently on site treatment technology was frozen. Why make a more efficient plant if you had to provide ten acres anyhow.

Then we moved towards performance standards and suddenly all manner of on-site treatment systems appeared. Instead of the old concrete tank with a long field drain we now have two chamber sytems with filters to hold back large lumps feeding a dosing unit that feeds an evapo-transpiration field.

The effluent then grows the orchards or tree planting or whatever. In one of my developments two or three houses connected their tanks to a shared field in a "park".
Some of the new motor-agitated biosystems can deal with quite large loads on a small quarter acre lot.
However, I don't like paying for the electric power and prefer gravity and bugs to do the work.
And my rainwater is on-site filtered etc so the tap water is good enough to put into my single malts – something I would never do in most cities.

Owen McShane, Kaiwaka, New Zealand.
Director, Centre for Resource Management Studies.

Owen, I hear you loud and

Owen, I hear you loud and clear. City planners and local gov't officials in the States, too, have far too much regulatory authority these days. Ensuring the safety and universal "good" of the community at large don't seem too high on the priority list. I don't however, think, they are intentionally mandating lifestyle or restricting economic opportunity; I am convinced that too many of them just don't understand the ramifications of what they regulate. When you couple that with what has clearly become the next planning fad - "community visioning and public input" - it is no surprise that getting entitlement to develop a good ole' fashioned suburban subdivision is an incredibly risky proposition when you consider the time and cost involved. Of course the 12 do-gooder citizens who show up to the General Plan "visioning" charette don't want to see the creation of thousands of additional single family lots; they already own one of the existing ones! I've found few people who would knowingly devalue their largest asset - that's why land use planning and policy decisions should not be dictated by the preferences of a few motivated citizens.

Reading your article, I couldn't help but think of the great Noah's Ark joke famous among us developers!

In the year 2008 the Lord came unto Noah and said:

‘Once again, the earth has become wicked and over-populated, and I see the end of all flesh before me. Build another Ark and save two of every living thing along with a few good humans.’

He gave Noah the CAD drawings, saying: ‘You have 6 months to build the Ark before I will start the unending rain for 40 days and 40 nights.’

Six months later, the Lord looked down and saw Noah weeping in his yard, but no Ark.

‘Noah!’ He roared, ‘I’m about to start the rain! Where is the Ark?’

‘Forgive me, Lord,’ begged Noah, ‘but things have changed. I needed Building Regulations Approval and I’ve been arguing with the Fire Brigade about the need for a sprinkler system.

My neighbours claim that I should have obtained planning permission for building the Ark in my garden because it is development of the site, even though in my view it is a temporary structure.

Then the Transport Authorities demanded a bond be posted for the future costs of moving power lines and other overhead obstructions to clear the passage for the Ark’s move to the sea. I told them that the sea would be coming to us, but they would hear nothing of it.

Getting the wood was another problem. All the decent trees have Tree Preservation Orders on them and we live in a Site of Special Scientific Interest set up in order to protect the spotted owl. I tried to convince the environmentalists that I needed the wood to save the owls – but no go!

When I started gathering the animals, the RSPCA sued me. They insisted that I was confining wild animals against their will. They argued the accommodation was too restrictive, and it was cruel and inhumane to put so many animals in a confined space.

Then the Council, the Environment Agency and the Rivers Authority ruled that I couldn’t build the Ark until they’d conducted an environmental impact study on your proposed flood.

I’m still trying to resolve a complaint with the Equal Opportunities Commission on how many disabled carpenters I’m supposed to hire for my building team. The trades unions say I can’t use my sons. They insist I have to hire only accredited workers with Ark-building experience.

To make matters worse, Customs seized all my assets, claiming I’m trying to leave the country illegally with endangered species.

So, forgive me, Lord, but it would take at least 10 years for me to finish this Ark.’

Suddenly the skies cleared, the sun began to shine, and a rainbow stretched across the sky.

Noah looked up in wonder and asked, ‘You mean you’re not going to destroy the world?’

‘No,’ said the Lord. ‘The government beat me to it.’

Rural Subdivisions

A couple of issues occur with rural subdivisions depending upon what utilities are included in the development. If water supply is not included then you have to be concerned with the wells and the water supply. One could see the water table pumped down if to many wells are drilled. Second there is sewage if septic tanks are used, again a minimum spacing is needed to ensure that there is a safe environment. Note that both of these utilities cost significant money to add. A number of the supersize lot requirements revolve around this type of issue. The water issue depends upon the geology of the region, as to the quality of wells that can be drilled as well.

Land Overvalued Due to Unneccesary Costs of Development

yeah, water is a common excuse for large rural lots. Totally bogus for the most part. Its done in the township just north of my family cottage in Michigan, where water is very plentiful (40 acre lots!!). The real reason is a small group of people who think they know better then everyone else has forced it on the whole township. Land that should be a new subdivision sits on the market as a overpriced farm that nobody can afford to buy and farm on. The market for estates and play farms is just too small in that area.

But anyway,,,,

If the land isn't overpriced like it is in most places, the cost of improvements to make land ready for development could still be affordable. But the cost of improved zoned land is priced too high due to the cost of dividing (which adds nothing to the actual land).

In my area of Indiana, which has less regulation (still too much though) the cost of individual lots are too high for the average buyer. Even when the lots are made much smaller then what most buyers really want they can still be costly.

Half acre lots are the preferred size by most new home buyers in my area. Most new home lots are barely a quarter acre. These lots are priced between the high $40,000 to about &100,000. The problem is the average home price is about $150,000. $100,000 lots mean builders are building $400,000 houses. So we have too many high priced houses in a market that should be building $180,000 houses.

Could there be lots priced for this market. Yes, If the market was freed to do so, it would.
The political will just isn't there for it now. Developers are just too big and evil in the eyes of too many.

Of course they only make it that way. If they keep it the way it is, the only developers left will be the big, aggressive, mostly out of town type developers that don't know the area. Instead of local, smaller, developers that call the area home and are interested in making an area better in addition to making a profit.

Just a realtor venting!!!

Water ... and SEWER (or septic drainfields)

Rich, I am very skeptical of mandated large-lot zoning, but there's a legitimate reason in some places for that - if there are no sewers, then each lot needs a septic system and drainfield, and those do take up some land (and all of this presumes that there are soils appropriate for a drainfield).

My own home in Anne Arundel County, Maryland (near the Chesapeake Bay, which is at the end of our street) is in a neighborhood that originally had no sewers and still has no public water lines. But the county installed sewer lines (at great expense to homeowners, who were compelled to hook-up) years ago, because the septic drainfields were failing and causing legitimate environmental problems.

Curiously, this community started out as a beach development intended (by the original developers) for warm-season use by residents of the Washington and Baltimore metropolitan areas in the 1930's, but has morphed into a year-round suburban community.