Sargant, Vol. IV. of Min. of Ev., App. No. XI., par. 3 (a). Wainwright, 21,981-4.

Mathews, 22,190, and Vol. IV. of Min. of Ev., App. No. VI., par. 12.

Harper, 22,263-6, and Vol. IV. of Min. of Ev., App. No, VII., par. 1(a). Cross, 21,774-83.

Mathews, Vol. IV. of Min. of Ev., App. No. V., par. 4.

Mathews,

22,029,

22,049

In the meantime, however, the building lessee would have let the premises at a rent calculated to secure him, in addition to the ground rent, a profit on his capital outlay, having due regard to the question of repairs, insurance, interest and sinking fund, the tenant agreeing to pay all the usual rates and taxes. The term of this lease is frequently much shorter than that of the lease of the site. At the end of the term, the building lessee, or immediate landlord, would grant a new lease to the sitting tenant, or to a new one at an increased rental if the neighbourhood has improved, or he might charge a premium. In such a case the building lessee would put in his pocket the profit on the increased value of the site, and, if his tenant again sub-let during the term, and obtained a premium or an increased rental, he would do the same. But the building lessee may create improved ground rents and sell them separately; he may sell the property itself, subject to improved ground rents which he retains for himself; or he may elect to take his profit, not by creating and selling improved ground rents, but by obtaining a larger price when selling the leasehold subject to a comparatively low ground rent.

There may, of course, be a series of sub-lessees who have parted with their leasehold interests, except for the reversion of a few days, by obtaining a lump sum down, or who have secured improved ground rents during the continuance of the term, larger in amount than those reserved under their own leases. The last sub-lessee, namely, the occupying tenant, would have the present benefit of any increase in the value of the site.

De Bock Porter, Vol. IV. of Min. of Ev., App. No. IX., par. 6.

Mr. Sargant gives the following illustration of the development of land under the 99 years, or London leasehold system: "Let us assume that A., a landowner, agrees to grant

99 years leases to B., an intermediary, of a building estate of 20 acres at a rent of 25ι. per acre, or 500ι. in all; and that five houses per acre, or 100 houses in all, are to be built upon the estate. And further, let us assume that B., after making the roads and sewers and developing the estate generally, is enabled to let off the estate to the actual builders C, D., E., F., in small portions and for the residue of the term of 99 years (less one day) at rents which, after allowing for the portions of land occupied by roads, amount to 60/. per acre, or 1,200ι. in all. On the working out of the contracts by the erection of the houses, and assuming that the ground rents are evenly distributed over all the houses, B. will become entitled to take up 100 separate leases, each of one house, for 99 years at a ground rent of 5ι., and will be bound to grant to C, D., E., F.,

100 separate leases of the same houses for terms of 99 years less one day, and at a rent of 12ι. for each house. The beneficial interest which B. will therefore acquire in return for his expenditure and risk will consist of 100 separate net annual rents of 12ι. - 5ι., or 7ι. - lasting for a term of 99 years and no longer. These terminable annuities are currently known as 'leasehold ground rents,' or ' improved leasehold ground rents,' the word ' leasehold' denoting that B.'s reversionary interest is of a terminable or leasehold character, and the word ' improved ' denoting that the rents are not derived from the original value of the land, but are due to the improvement in the value of the land which has been caused by the expenditure and superintendence of B. The leasehold reversion to which the rent of B. (the intermediary) is incident is, as a rule, only a nominal term or reversion of a day or two."

Sargant on Urban Rating, p. 16.

Mr. Sargant then points out that B., in order to recoup himself for his expenditure, may realise the capital value of his improved ground rents in the following ways: - (i.) He may sell to a purchaser the improved leasehold ground rents - that is, the right to receive out of each house a net rent of 7l. for a period of 99 years. (2.) He may sell to the landowner for a lump sum the right to let a house direct to the builder C, at the rent of 12l., which C. has agreed to pay, instead of letting it to him, B., at a rent of 5/. (3.) While allowing the landowner to let to C. direct at 12l., he may stipulate that this extra rent shall not be paid for in cash, but shall be taken into account against the total rent of 500l. which B. has to provide for the landowner; the result being that in case, say, the first 40 houses were so let by the landowner, A., to the builders, C., D., and E., at a total ground rent of 480l., the intermediary would be entitled to leases of the sites of the remaining 60 houses (which he has himself agreed to lease to F., G. at rents of 12l. each) at an aggregate rental of 20l.; of which, perhaps, 1l. would be apportioned on each of the first 20 of these houses, while the others would be taken by B. at a nominal rent of a peppercorn. B. would thus in this, the third case, while making no direct profit on the first 40 houses built, become entitled to improved leasehold ground rents of 11l. on each of the next 20 houses and of 12l. on each of the last 40 houses, which he may dispose of in any method he pleases. Mr. Sargant shows that the general practice is to secure the total ground rent payable to the landowner, or the bulk of it, as early as possible on the houses first built; and thus to leave only small or nominal ground rents on the sites of the houses last built, which are called "remainder plots," and to which the intermediary looks to secure his profit.