While the rating of site value thus concerns the public at large as an administrative reform, it is of special importance in connection with the urgent problem of providing house accommodation for the working classes. Anything which aggravates the appalling evils of overcrowding does not need to be condemned, and it seems clear to us that the present heavy rates on buildings do tend to aggravate those evils, and that the rating of site values would help to mitigate them. If more of the burden were thrown on sites, the portion left to be borne by buildings would be diminished, and this would weigh with the builder who is hesitating to embark on the erection of new structures. ... At the same time, we would not propose, and we find no justification for anything like the spoliation of a particular class. Indeed, while a site-value rate would, in our opinion, be a means of securing a somewhat larger contribution from the owners of the swollen site values of the central districts of our cities, it might prove rather advantageous to owners in the outlying districts; for if the rating of site value gives a stimulus to development, as we believe it will, a secondary effect of the reform will be to increase the demand for building sites. [Set Separate Report on Urban Rating and Site Values.]
See Chapter XII.
Sabin, 21,495, 21,562, and Vol. IV. of Min. of Ev., App.No.III., nar. 2.
Cd. 9528 of 1899, p. 118, Also
Costelloe, Vol. II. of Min. of Ev., App. No. XI., p. 321; also 20, 273-4.
(9.) The imposition of a rate on unoccupied building land in urban districts, or on land ripe for building on the outskirts (whether unoccupied or used for agricultural purposes), based upon its value for building purposes, would, it is urged, have the effect of forcing it into the market. It is argued that the value of such land is maintained and increased by the expenditure of public money, and that owners should not be permitted to keep it unoccupied, and unproductive, for speculative purposes, to the disadvantage of the other ratepayers, and also of the community, who require more houses, and should be able to obtain them as cheaply as possible.
On the other hand, in defence of the existing system, it has been urged: reversioner until he comes into possession of the reversion. During the lease the only advantage which the lessor can obtain is an improvement in his security (which is practically of little importance to him, as ground rents are usually well secured) and an increase in the selling value of his reversion. Moreover, when the reversion falls in, the property can only be re-let subject to the burden of rates. The occupier gets the advantage of any increase in value during his tenancy, and can convert it into money.
(1.) That any increase in the income, arising from a site during the term of a lease, is not enjoyed by the
Parliamentary Paper C. 9141 of 1899, p. 24, par. 83.
De Bock Porter, 22,681-3.
Moulton, 23,040-2, and Vol. IV. of Min. of Ev., App. No. X., par. 9. Costelloe, Vol. II. of Min. of Ev., App. No. XI., pars. 60-64. Harper,
1 Conferences of certain London Assessment Authorities have resolved that the maximum deductions ought not to be allowed in full where the site value exceeds one-third of the total value.
(2.) The benefit to the reversioner from the expenditure of rates is much exaggerated, and is, as a matter of fact, very small, the greater part not being spent on permanent improvements, but on current services which benefit the occupier rather than the owner.
(3.) In the case of land, unearned increment arising from the increase of population and other causes, should not be the subject of taxation more than in the case of any other class of property. But, if made the subject of taxation, it has been suggested that it should be nationalised, and not municipalised.
(4.) That the annual values of sites are already rated, and that it is not the function of the Local Authority to interfere with contracts between the parties concerned, nor with the question of incidence.
(5.) That a proposal to impose a special rate on site owners would involve their being rated twice over - that a special tax on site values would be in effect a new land tax.1
(6.) That site values are by no means the same as existing ground rents, but are divided up among freeholders and leaseholders in a very complicated way, and that no system has been, or could be, devised by which a site-value rate would be fairly apportioned among the various interests.
Sargant, Vol. IV. of Min. of Ev., App. No. 11., par.
De Bock Porter, 22,681-3, 22,807, and Vol. IV. of Min. of Ev., App. No. IX., par. 4. Price, Parliamentary Paper C. 9528 of 1899, p. 185. Mathews, 22,080.
1 Wainwright, 21,861, 21,986; Cross, 21,680; De Bock Porter, 22,786-90; Sabin, 21,480-94, and Vol. IV. of Min. of Ev., App. No. III., par. 15; Harper, 22,351-62; Mathews, Vol. IV. of Min. of Ev. App. No. VI., par 16.
(7.) That it is not practicable to make a general valuation separating the values of sites from buildings, and, further, that it would be extremely difficult, and perhaps impossible in many cases, to determine what would be the value of a site under hypothetical circumstances and conditions. And, even if it were possible, the system would be intricate and costly, and not worth the trouble and expense, and might involve much litigation.
(8.) That any procedure which would amount to rating on the basis of capital or selling value, instead of annual value, would be a new departure in the system of rating, and, if applied to the case of sites, should be applied to all rateable property.
(9.) That lessees, including building lessees, take existing rates, and, as far as possible, future rates, into consideration when making their bargains.
(10.) That investment in ground rents is very popular among poorer classes of investors, trustees, and others, who are content with a comparatively low rate of interest to secure a certain fixed income, and that it is undesirable to do away with such a class of investment.1
(11.) That Assessment Committees fairly understand the present system of valuation, and that the levying of rates on capital values would be a subversion of the system which now exists, and would need a completely new process and very different machinery.
(12.) That direct rating of owners ought to involve direct representation of owners on the Spending Authorities.2
(13.) That, in any event, it would be unjust to impose a rate in respect of ground rents under leases for 999 years, or of perpetual rentcharges.1
See Chapter XII.
Cross, Mathews, Lord Farrer, Parliamentary Paper C. 9528 of 1899, p. 81, 82. See Chapter XI.
See Chapter XIII.
Lord Farrer, Parliamentary Paper C. 9528 of 1899, p. 81.
Cannan, ibid, p. 171. De Bock Porter, Vol. IV. of Min. of Ev., App. No. IX., par. 17.
1 Mathews, 22,083-5, and Vol. IV. of Min. of Ev., App. No. VI., par. 14 (3); Vigers, 19,631; Cross, Vol. IV. of Min. of Ev., App. No. IV., par. 14; Wainwright, 21,949, 21,955, 21,918, 21,961, and Vol. IV. of Min. of Ev., App. No. V., par. 5; Sargant, 23,230, 23,177-9, 23,344-52; Parliamentary Paper C. 9528 of 1899, p. 216.
2 Sidgwick, Parliamentary Paper C. 9528 of 1899, p. 107; Sargant, 23,228; F. W. Hunt, 22,585; Moulton, 23,139a; Costelloe, 19,932-3.
(14.) In reply to (8) on p. 14, that it is already possible for Local Authorities to make equitable deductions for the purpose of ascertaining rateable value, the matter being entirely in their hands; that, at all events, where the property is held on a repairing lease, no difficulty whatever should arise; that the separation of the value of the site and structure of a building would not necessarily secure better results if the Local Authorities still continued remiss in their action; and that the great expense entailed by the valuation would not secure adequate results.
With regard to the rating of unoccupied building land in urban districts, and land ripe for building on the outskirts (whether unoccupied or occupied for agricultural purposes) it is urged that (1.) It would not be fair to rate a property producing no income, and, if rated on the basis of capital value, it would be contrary to the existing principles of rating.
(2.) Unoccupied building land obtains no immediate benefit from the expenditure of rates.
(3.) Land on the outskirts of urban districts used for agricultural purposes, should be assessed on the basis of its value to the occupier in its existing state, rebus sic stantibus.
(4.) It is most difficult, if not impossible in many cases, to distinguish between land "ripe" and "ripening" for building.
(5.) To compel owners to put land on the market, before the neighbourhood was sufficiently developed, might lead to the erection of an inferior class of houses, the ratepayers being ultimately the losers.
Cross, Vol. IV. of Min.of Ev., App. No. IV., par. 12. Wainw right, 21,956-60, 22,009-12, and Vol. IV. of Min. of Ev., App. No. V., par. 14. Mathews, Vol. IV. of Min. of Ev., App. No. VI., pars. 24-27. F. W. Hunt, 22,551-5, and Vol. IV. of Min. of Ev., App. No. VIII., par. 25. De Bock Porter, Vol. IV. of Min. of Ev., App. No. IX., par. 14. H. A. Hunt, 21,102. Rickman, 21,249-53.
1 De Bock Porter, 22,676-8, and Vol. IV. of Min. of Ev., App. No. IX., par. 3; Wainwright, Vol. IV. of Min. of Ev., App. No. V., par. 4 : Sargant, 23,173-4, 23,357-9.
(6.) It would be onerous to owners, and against public policy, to rate, as building land, gardens attached to houses in towns.
(7.) A rate proportioned to site value will not necessarily fall wholly upon the ground owner, and, so far as it may fall on the building owner, it will act as a check upon building, especially at the outskirts of urban areas.1
(8.) Building on the outskirts of urban districts might also be retarded because (a) Owners would not lay out land for building by making roads, etc., because such a proceeding would place beyond doubt the distinction between land "ripe" and "ripening" for building. They would be reluctant to speculate in this way, rendering themselves liable to pay rates, until they had actually found a builder to take the land.
(b) Builders would hesitate to build houses until they had the definite prospect of tenants, for fear of having to pay rates on empty houses.