Land Costs and Opportunities of Site Development
For a new suburban district to come into existence it was necessary not only to give
the potential inhabitants the chance to earn a living and to move easily between home
and work, but also for abundant land to be available at prices that permitted the
building of houses which cost no more than those of similar quality elsewhere. The
growth of employment opportunities and transport facilities, of course, created conditions that tempted landowners and builders to try to meet the potential demand for
dwellings and, on the whole, there was little difficulty in acquiring land in south-west
Essex as soon as it was wanted for building, since legal and economic obstacles to
sales were few. Most land, while it was used for market-gardening or farming, seems
to have been let on yearly tenancies, terminable at Lady Day or Michaelmas, with the
result that it could quickly be made available for building when market conditions made
that worth while. Land wanted for building could usually be obtained freehold with
no legal encumbrances, though numerous copyholds survived in Walthamstow (fn. 1) and
copyhold property in Chingford came into the market at the end of the 19th century. (fn. 2)
Landowners appear almost invariably to have preferred to sell their freeholds rather
than develop their property by means of building leases, perhaps because many of
them had resided locally and the character of mid-19th-century development discouraged them from remaining when they found they could sell out at a profit.
By the last quarter of the 19th century the state of the local land market was such
as to encourage owners of agricultural land in much of south-west Essex to sell it to
those who wished to prepare it immediately for building, or who wished to hold it as a
speculation in the belief that builders would want it a few years later. This was so even
in the case of good market-garden land, which commanded much more than the
average agricultural rent, and even in districts beyond the area of most intense contemporary building activity. For instance, at an auction of land in Ilford in 1879 there
was no immediate prospect of the biggest lot (just under 79 acres) being diverted from
its existing arable use but it was sold for the high agricultural price of £82 7s. 8d. an
acre, though this was only 21 years' purchase on the annual rent. Nearby arable land,
however, let at similar rents but ripe for building because it adjoined the high road
to Romford, was sold in ten small lots and realized an average of £478 16s. 1d. an
acre, or 109 years' purchase. (fn. 3) Two years earlier 85½ acres of farm land on the border
of East and West Ham had been sold in two lots at £312 and £355 respectively an
acre. (fn. 4) Such prices were obviously tempting to landowners, yet they were equally
attractive to speculators and estate-developers, for they were not high enough to make
land costs a very large element in the cost of middle- and lower-middle-class houses
and they were far below the prices of building land in inner London.
People who were prepared to go to less accessible districts some years before the
tide of building reached them could obtain sites still more cheaply. In an auction at
Barkingside in 1889 potential building land fronting the principal but not very important road was sold at £80 and £65 4s. 5d. an acre, while purely agricultural land
realized £40 and £44 8s. 1d. (fn. 5) But in general, as building became active in any district,
land prices rose to something of the order of £300 to £500 an acre, which was well
within the means of a large house-owning public. In 1901 when the 145-acre Loxford
Hall estate at Ilford was offered in seven lots to private purchasers, the prices demanded
by the vendors averaged just under £387 an acre, but as they suggested development
at the fairly high density of 22 houses to the acre, land costs would be only £17 12s. 9d.
a house. (fn. 6)
Where building had gone so far that vacant land was becoming scarce or where
there was much competition for sites from industry and trade, land values went much
higher and could be a serious obstacle to good quality building. At the 1879 auction
already mentioned, land in the Tidal Basin district of West Ham was sold at £938 11s.
an acre, 187 years' purchase on the agricultural rent, (fn. 7) and similar or higher values
spread to other parts of West Ham as more and more vacant land was occupied. A
six-acre estate in Custom House Ward, sold at £100 an acre in 1875, realized £900
an acre in 1895 and, after an expenditure of £166 an acre on roads, was selling at an
average of £1,417 an acre ten years later when it had been divided into small building
plots. Fourteen acres of market-garden in Plaistow, with an agricultural value (at 30
years' purchase) of £90 an acre, were sold for £450 an acre in 1891 and after £150 an
acre had been spent on roads the selling price was £1,000 an acre around 1905. (fn. 8)
Since the main demand in the south part of West Ham was for houses with rents of
under £20 a year, (fn. 9) it was necessary, taking repairs and maintenance into account,
that the total cost of a new house should be under £200, (fn. 10) and with land prices at such
a height this could be done only by building at high densities or using poor materials
or both.
The agencies responsible for much of the building were also often too weak financially to be able to invest in good work. Many estates were bought by large companies
— the British Land Company, for instance, was very active in this district. But these
were usually no more than intermediaries which put down roads and sewers and
divided the estate into small plots to be sold at a much enhanced price or let on building
lease in order to create a ground-rent which they subsequently sold for a capital sum. (fn. 11)
The purchasers of building plots were often small men who paid the initial deposit —
normally 10 per cent. —and borrowed the rest of the capital they needed, often from
the vendor of the land, until a date, perhaps three months ahead, when they hoped to
have a house built and sold. Hundreds of tiny firms took part in this way in the building
of West Ham, especially its southern districts. They were working against time to meet
their financial commitments, the credit of most of them could not have been good and
the obligation to pay relatively large sums for land could lead only to a shortage of
capital for actual construction. (fn. 12) The land market, the financial organization of the
building industry, and the poverty of householders all acted together in such an area
as the south of West Ham to make dense and low-quality building development almost
inevitable. There was no very obvious way out of the difficulties, except perhaps by
public subsidy, but though the West Ham Corporation between 1899 and 1906 built
(at a loss) 195 double-tenement and eleven single houses, (fn. 13) house-building on a large
scale by public authorities was unthinkable before the First World War.
In most other districts, though it was often the practice to sell building land in
small plots on the instalment system, (fn. 14) the economics of the land market and the building industry were much less of a threat to good development. Land absorbed a smaller
proportion of building capital, there was less need for everyone concerned to try to
offset a possible series of bad debts by quick turnover and high profits on other transactions, and there was a reasonable chance that sound building would usually be sound
business.