A History of the County of Essex: Volume 5. Originally published by Victoria County History, London, 1966.
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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.