The density will grow, and since individual construction companies don’t have an incentive to care about urban planning, just their own projects, you will get ugly neighborhoods and questionable infrastructure.
This is only true when construction companies are building small projects. If they’re building large projects, then insofar as people value infrastructure, and will pay extra for it, the construction companies will have an incentive to build infrastructure.
Currently construction companies have an incentive to buy large plots of land, and build nice neighborhoods with good infrastructure as they can charge more per unit. So if that’s not happening it’s because it’s too difficult to buy land.
In which case we need to increase land liquidity.
Robin Hanson likes the idea of Harberger taxes to solve this: https://www.overcomingbias.com/2017/10/for-stability-rents.html. The idea is everyone needs to declare a selling price for their property. In order not to encourage inflated selling prices making the market illiquid, you get charged property tax based on your stated price.
An alternative might be the Georgist idea of taxing land value according to its full rent. This means that holding onto land is expensive and it’s only profitable to hold onto it if you can use it more valuably than the next guy—there’s no money to be made speculating on it. This should help both increase liquidity, and reduce land prices. I enjoyed the recent book review on this at https://astralcodexten.substack.com/p/your-book-review-progress-and-poverty.
Turns out it’s the same in the UK. That’s embarrassing! However I was just as much talking about political charities which aren’t technically a political party.
I think I agree with this insofar as political charities tend to work by disseminating the strongest argument for their case, and letting the correctest side win out. I think in practice that’s not what they’re doing—it’s more about how they can use the political system to achieve their aims, at which point I think it’s back to a prisoners dilemma.
As I said, I think the thing to do is look at where the money was actually spent. If it was spent protecting a unicorn conservation area, I’m pretty certain destroying a unicorn conservation area would not be a valid charity.
However I think you make some great points! Definitely have to think about them.