Property Rights

Property rights can be described as the formal and informal institutions and arrangements governing access to land and resources, and the benefits arising from this access or use (Musole 2009). Understanding the ways in which markets interact with property rights can help explain the behaviour of landholders and developers in relation to bringing land to market or converting land to different uses. Like regulation, systems of property rights vary between nations.

In the USA, private property rights over land are afforded constitutional protection (Cullingworth and Caves 2014):

In the US, land has historically been viewed as a replaceable commodity that could and should be parcelled out for individual control and development; and if one person saw fit to destroy the environment of his valley in pursuit of profit, well, why not? There was always another valley over the next hill. Thus the seller’s concept of property rights in land came to include the right of the owner to earn a profit from his land, and, indeed to change the very essence of the land, if necessary, to obtain that profit. (Cullingworth 2014, p. 23)

Thus the system of planning in the USA in some ways evolved to protect the profit yielding potential of land as a commodity. By contrast, nations such as Britain and the Netherlands (with their much smaller land mass) have historically garnered strong support for preserving the innate values of the remaining countryside, by containing urban sprawl. In the Netherlands, also, much land has been created or protected for human use by considerable public reclamation and flood defence work, again reinforcing the perception of land as a scarce public resource. Arguably this has resulted in greater acceptance of planning control over private, undeveloped land.

In relation to housing, property rights are vested in different forms of housing tenure. Freehold ownership typically confers the highest level of control over the personal and economic use of a dwelling, whereas renters have access to varying degrees of housing services over time, depending on the terms of their lease or rental contract. Leaseholders may have substantial use rights but may be circumscribed in what they can ultimately do with the land. Thus in countries defined by high levels of property ownership, the planning system may also be seen as a mechanism for preserving the economic value of housing investment.

Even within jurisdictions, there can be many different legal arrangements for owning or renting land or housing, each of which are associated with various levels of control and exclusivity. Private property rights provide the greatest level of individual control over the use and benefits of land or housing; ‘communal’ rights are assigned to a group, but allow the exclusion of others; whilst ‘open access’ rights are not specifically assigned to individual or small group. Whilst many nations emphasise ownership in perpetuity, leasehold forms of land and housing tenure can offer similar use rights which may also be tradable. However, leasehold systems have also been used to enable certain common amenities to be maintained across a block or neighbourhood, at the expense of somewhat restricting individual owners’ freedoms, and have also provided a vehicle for the resolution of collective property management issues, for example, in multi-unit accommodation.

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