The London County Council Scheme is that a separate valuation of the site of every hereditament should be made; and that, besides the rates imposed as at present upon the occupier in respect of the rateable value of the whole hereditament, a special rate, limited in amount by Parliament, should be levied in respect of site values upon all persons, whether ground landlord, building lessee or occupier deriving a revenue, or use equivalent to revenue, from the value of a site. This rate is to be collected in the first place from the occupier, and he is to be allowed to deduct from his rent as much of the rate as is levied in respect of the payment he makes to his landlord for site value. This process is repeated in the case of other interests up to the freeholder.

It does not appear from the late Mr. Costelloe's evidence how, among all the rents actually paid, those paid in respect of site value are to be distinguished from those paid in respect of building value. This deficiency is met by the proposal made by Mr. Harper, the Principal Statistical Officer of the London County Council, but the latter was not put forward officially on behalf of the Council.

Mr. Costelloe stated that the main object of the scheme is to obtain a new source of revenue, in order to relieve the occupier from increased rates, though it may also secure some transference of the present rates.

He said: "The scheme is intended to create a fund which shall be kept separate from existing rates. It is intended to relieve the local budget in such a way that the pressing demands for great Metropolitan improvements, and other increments of expense, can be duly met without increasing the burden on the occupying ratepayers at all. Such a fund should also have the effect of relieving the existing ratepayers from some part, at all events, of the unfair burdens laid upon them by the growing increments of recent years."

R.L.V. D


19.935-41 ;




20,188, and

Vol. II. of Min. of Ev.,

App. XL, par.






Costelloe, 20,128, 20,140, 20,351.

Harper, 22,342-8, 22.359-61. Costelloe, 19.930-1, and Vol. II. of Min. of Ev., App. No. XL, par. 55.

He expressed the opinion that if the constant pressure to increase the burden were taken off the occupying ratepayer, and if it were possible also to relieve him of a reasonable amount of the recent increase from which he has suffered within the last few years, he would be practically content with rating site values for the purpose of contributing towards increase of expenditure on new services. The following resolutions of the London County Council, which were supported by Mr. Costelloe, shortly explain the policy advocated by the majority of the Council with regard to the rating of site values: (a.) That it is advisable that a new source of revenue should be obtained by means of some direct charge upon owners of site values. (b.) That this charge be termed "owners' tax." (c.) That all persons deriving a revenue, or use equivalent to revenue, from the value of a site, be liable to pay such charge. (d.) That the site value of every property be assessed and entered in the valuation list. (e.) That the site value be the annual rent which at the time of valuation might reasonably be obtained for the land as a cleared site if let for building by an owner in fee, subject to equitable reduction in exceptional cases in which the full site value thus defined is not being enjoyed or obtained by any person or persons. (/.) That, in view of the fact that considerable expenditure has been incurred from public funds, which has largely contributed to the increase of site value, the Royal Commission be asked to recommend that such owners' tax commence at the rate of 6d. in the per annum, and rise gradually to such sum as Parliament may determine, and that any increase of burden or expenditure for new services should be equitably shared between the present rate on occupiers, and the proposed owners' tax. (g.) That any existing or future contract or agreement by which an owner purports to exempt himself from the owner's tax, or to cause it to be paid by any other person in his stead be invalid. With reference to these Resolutions, Mr. Costelloe informed the Royal Commission on Local Taxation that: "The Council has reserved itself from making any recommendations, or from instructing me to make any suggestions on its behalf, as to a detailed scheme."

Costelloe, 20,039.

Costelloe, Vol. II. of Min. of Ev., App. No. XI., par. 25.

Mr. Costelloe defined site value "as being the annual equivalent of the capital value which the site in question would fetch at Tokenhouse Yard, if for any reason the premises upon it were cleared away, as, for example, if they had been burnt to the ground. ... It is intended to represent the value of that parcel of ground considered as a site, and without regard to the structures which happen in fact to have been placed upon it. These structures may, or may not, be the ones most suitable to utilise the advantages of the site. But, apart from that consideration, these structures themselves represent the capital which has been expended upon it by some one in the ordinary course of business, and in consideration of a business return."

The owners of a site value are described as "all those who derive a rental value out of it," and Mr. Costelloe said that, " It is not merely the owner of the freehold reversion - who has in many cases only a small ground rent, and whose ultimate interest, valuable as it is, may be postponed for many years - who is to be charged under the Council's scheme. He will have to pay his share, which can be handed back to him by appropriate machinery. But, if it should be true that some of the intermediate leaseholders, or even the occupying tenant himself, are in fact receiving a rent, or a use equivalent to rent, which is applicable not to building value, but to the site value, it is these persons who are intended to bear in like manner some equitable share of the owner's rate."

In reply to the question by the Royal Commission, "Do you propose to rate under this owner's tax a part of the site value, which, while it is in somebody's hands, is not producing at the moment to that person a revenue ? " Mr. Costelloe replied: "Yes, if it is producing what I call a use equivalent to a revenue, if it is producing to him wealth, whether in the form of an annual rent, or in the form of a realisable capital sum, then I think that is an element of the wealth of the community which is a very proper subject for taxation."

Costelloe, 19,952.

Costelloe, 20,422, and Vol. II. of Min. of Ev., App. No.XI., par. 56.

Costelloe, Vol. II. of Min. of Ev., App.No.XI. par. 58.

Costelloe, 20,423.

Mr. Costelloe informed the Commission that he had not made up his mind about rating the mortgagee, though, broadly speaking, he said that he thought that the basis of Schedule A (Income Tax), which includes the mortgagee, "is a very convenient basis to start from, and that, with a few modifications, would lead one a long way."

Mr. Harper proposed a detailed scheme to the Commission for carrying out the principles suggested by Mr. Costelloe.

The latter, however, gave evidence at the request of, and on behalf of, the London County Council, whereas Mr. Harper, although an official of that body, gave evidence in his personal capacity.

The following definition of site value, Mr. Harper says, would be in the great bulk of cases a sufficient guide to an expert surveyor: "The full amount which would be obtainable by way of rent on a building lease in the usual form for a term of not less than 99 years, if the site of the tenement were let as a cleared site by the owner in fee, without any fine or restriction other than the usual building covenants."

Mr. Harper maintains that in ordinary cases the difference between an expert estimate of the annual value of the site, and the true rateable value of the whole hereditament, would fairly represent the structural value. But he admits that site value plus building value is not necessarily equal to rateable value, and that, in many cases, the addition to the annual site value of a percentage on the cost of building would produce a sum differing from the rateable value of the premises as a whole. This is mainly because buildings do not always utilise their sites in the best way, or to the full extent, and, therefore, the full capacity of such sites is not developed by the buildings erected upon them.

Costelloe, 20,048-52.

Harper, 22,342-52

Harper, Vol. IV. of Min. of Ev., App. No. VII., par. I.

Costelloe, 20,187.

Harper, 22,215.

But Mr. Harper thinks that in 80 per cent. of the cases of the properties for assessment purposes in London, the structural value could, at any rate, be roughly obtained by subtracting its site value from rateable value, leaving 20 per cent. to come under the category of sites which cannot be fully used.

Mr. Harper's plan for providing that the site value rate shall fall exclusively on owners of site value is, shortly, as follows: - A site value demand note is to be sent to the occupier, stating, among other particulars, the value of the site, and the amount of rate in the due.

Rules for deduction from rent are thus stated :

Harper, 22,323-4.

Harper, Vol. IV. of Min. of Ev., App. No. VII., p. 156.

Rateable value ..............


Site value ......................




"1. If the rent you pay is a ground rent, or in respect of land only, deduct xd. in the upon the amount of such rent.

2. If the rent you pay includes buildings or other property besides land, subtract the balance C from the amount of such rent, and deduct xd. in the upon the remainder.

3. If the rent you pay is not a ground rent, you are entitled to deduct in any case upon the amount of ground rent paid by any superior landlord.

4. But you are not entitled to deduct a larger sum than you have actually paid or allowed."

Mr. Harper was asked if under such a system the owner would not be rated twice over in respect of site value with the new and old rate combined, and he replied "of course he would bear a charge which now reaches him very unequally under the rateable value basis, and he would also bear a new charge."

Harper, 22,349-52.

Q. "But which reaches him, at all events, to some extent? - A. It does reach him to some extent."

Q. "And to that extent you would tax him twice over? - A. To that extent he would be taxed twice over if this system were adopted."