Properties which are unoccupied, whether empty buildings or uncovered land, are not generally liable to rates in England and Wales, though it appears that in Scotland unlet properties are liable in law for the owner's share of almost all the rates which are levied wholly or partly upon owners; and in the City of London unoccupied tenements are liable for one-half of the sewers rate levied by the Corporation.

We believe that it will be generally agreed that it would be fairer to the other ratepayers, if some charge were made in respect of empty properties, which, undoubtedly, receive some benefit from public expenditure, and take the place of property which would otherwise contribute to such expenditure. But, at the same time, there would be hardship if the full burden of rates were imposed in such cases. We think the equity of the case would be met by continuing the exemption of unoccupied property from the ordinary rates, and by providing that the new site value rate which we have proposed should be charged in respect of all unoccupied, as well as all occupied, property.

This procedure derives additional support from the fact that the ground rent and other fixed charges continue to be paid whether the property is occupied or not, and it would also guard against a danger to which the Town Holdings Committee drew attention - that taxation of vacant houses "would tend strongly to check the supply of houses," - since a rate in respect of the site alone would have no such effect. It would be a simple operation to levy the new rate in respect of the value of the site of empty buildings.

Unoccupied properties should be subject to the Site Value Rate.

But a far more intricate problem presents itself when we come to deal with uncovered land. For here it is no longer merely a question of occupation or non-occupation, but we have to face also the difficulty of valuation.

Uncovered land in urban and suburban districts is not to any great extent actually unoccupied; it is mostly occupied for pasture, gardens, recreation grounds, or various "accommodation" purposes. When occupied, it is rateable (subject, of course, to the limits imposed by the Public Health Act and the Agricultural Rates Act), and being rateable, it must be valued at the rent which a tenant might reasonably be expected to give. But this has been interpreted to mean the value to an occupier in its existing state, rebus sic stantibus. Thus, land used for agricultural purposes must be valued at the rent which an occupier using it for agricultural purposes would give, although if it were offered for building it might be possible to obtain a rent many times greater.

Beyond the merely fiscal aspect of this question, it is necessary also to bear in mind the allegation, frequently made, that land is withheld from building by persons who are speculating for a rise, and the suggestion that the method of taxation should be altered with a view to removing the premium now existing in favour of this practice. It cannot be disputed that land is sometimes withheld from building; but, on the whole, though it is very difficult to obtain definite and exhaustive information, we are inclined to believe that merely speculative holding-up does not occur to any great extent, or for very long periods. The cases in which speculation might appear to be the motive will often be found to be complicated by other and less simple considerations, e.g., if an estate is being developed as a high-class residential neighbourhood, the owner often prefers to wait a while for desirable tenants rather than grant leases for factories or small houses. Again, a large suburban garden is, no doubt, often preserved as a garden, when it might be cut up into building lots, as much for the sake of the amenity which it affords and in order to avoid disturbance, as on account of the increase in the value which it will command in the building market hereafter.

Uncovered land in urban districts is mostly occupied, and, therefore, already rated to some extent, but not in full, nor on its value for building.

The alleged holding-up of land.

If we take a strong case, such as that of a plot of land in a neighbourhood well provided with open spaces, and suffering from lack of house accommodation; if we assume that such a plot, being in a favourable situation, would beyond all doubt let at a considerable ground rent, that it is increasing in value because the town is spreading round it, and is being improved by large expenditure which involves heavy rates, and that the owner, reckoning on this increase, declines to allow the land to be utilised; in such a case we apprehend there would be little difference of opinion as to the propriety of imposing a moderate charge proportioned to the true value of the site. But, having said thus much, we are bound to admit that the difficulties of devising a scheme which will meet such cases without involving undesirable results in other cases are very serious.

The question first came into prominence when the Royal Commission on the Housing of the Working Classes recommended (in a majority report from which some of the most eminent members dissented) that "land available for building in the neighbourhood of our populous centres" should be "rated at, say, 4 per cent. on its selling value." 1

Such a proposal seems, for several reasons, impracticable.

Rating of uncovered land on its building value clearly desirable in some cases, but surrounded by difficulties.

Proposal of Housing

Commission in what respects defective.

1 C. 4402 of 1885, Reprint (1889), p. 69.



First, to charge the whole of the rates on a value thus arrived at would be plainly excessive. The scheme put before us by the London County Council contemplated only the imposition of a special rate of limited amount. Secondly, the attempt to rate vacant land on its capital value, without any corresponding charge on other property, was anomalous, and, as Mr. Goschen observed, certain to lead to evasion by the running up of temporary structures. But perhaps the most important defect of the proposal is the absence of any distinction between land which is actually ripe for building and land which is only ripening. To the latter class belongs much land, some of it included in urban areas, which at present is genuinely and entirely agricultural, which, in fact, nobody would take for building, but which has a selling value greater than the capitalised equivalent of the agricultural rental, because there is a prospect that some day it may be wanted for building. Such land may be rightly taxed by reference to its selling value, rather than by reference to its existing annual value, in the case of an impost like the estate duty, which treats all property alike on a capital basis. But to incorporate such a tax in our present system of rating would be anomalous and oppressive, and could not be defended on the ground that it would tend to oblige the owner to place the land in the building market, since ex hypothesi no one would be willing to lease it, however willing the owners might be to offer it.