Friday 3 October 2014

Property rights and neighbourhood character

A real estate parable.

Suppose that, when we bought our house in Khandallah, the realtor told us about a particularly nice feature of our house. A few doors down lived a lovely grandmotherly type who adored young children. She was in her early 50s, independently wealthy with few time commitments, and loved nothing more than helping out with young children. We went to meet her before deciding on buying the house, and she was just as good as the realtor advertised. We bought the house entirely because she would be our neighbour. In fact, we paid a premium for our house because of it.

Over the next couple of years, we became great friends with her. Our kids referred to her as Nana. She picked them up from school every day and, 'cause she loved us just so much, she'd have dinner on the table for us when we'd get home. We'd all eat together before she'd head back to her place after the kids were to bed. Every bit was exactly as the realtor promised: an essential part of the neighbourhood's character, for us, was that she lived a few doors down. We wouldn't have bought the place if she weren't, and we came to rely on her.

Sadly, she was hit by a bus downtown one weekend and her house was then on the market.

An essential part of the neighbourhood character was that this house was occupied by a woman with these characteristics. Since we bought the house with the expectation that that character would be maintained for at least another 20 years, we consequently have a property right in who lives in that house. Only a grandmotherly type who will help us take care of our kids is allowed to buy that house; anything else would fundamentally change the character of the neighbourhood and violate the expectations we had when we bought our house in that neighbourhood.

Seems a pretty ridiculous basis for a property right, doesn't it?

So why might anybody think they have a property right in whether the neighbour a few doors down turn his property into a set of townhouses?


  1. Great post! If only the good member for Epsom understood this!

  2. I expect his reply would be that the regulatory easement granted is what sets expectations: because you know when you buy the house that you can tie your neighbour up in the courts if he wants to put up townhouses, then it's ok to have that as part of the property right. I'm wondering why you should be able to tie him up in the courts for that and not for selling to somebody you don't like. It's all pretty arbitrary.

  3. Exactly. If there were a legal document establishing such a covenant, that is totally a transferable restriction that follows the property. In the absence of such a signed document though....

  4. Isn't what the member for Epsom is spouting out a form of snobbery, which could be thought of as a form of anti-competitive practices as applied to a community?

  5. "So why might anybody think they have a property right in whether the
    neighbour a few doors down turn his property into a set of townhouses?"

    Political answer: Because it is cheap to ask, it is cheap to vote, and there are fewer defendants than complainants, and the complainants have (more) specific assets at stake.

  6. No, he's reflecting the very real concerns of his constituents. They don't want their neighbours to put up townhouses or apartments. Some of them don't like the disamenity effects; others think that property values might drop. The latter group are very likely wrong: everybody in Epsom upzoming would likely see a capital gain, but the per-smaller-section price would be lower. The former group... we need to find ways of paying them off at the margin.

  7. What about if you love speedway and bought a house in Western Springs next to the speedway so you can walk there when the speedway is on. Having the speedway is part of the character of Western Springs. Pretty much everyone living in Western Springs at the moment bought there (or inherited) after the speedway started operating.
    Now you find that the speedway can't operate at Western Springs any more. Why is your "property right" conferred by Council (to allow the speedway) less valuable than a zoning "property right"? Surely you should be able to veto the move of the speedway if neighbours can veto redevelopment?