Upon the question as to how far it is possible to satisfactorily make a separate valuation of a site, apart from the building standing upon it, a good many contradictory opinions were expressed to the Royal Commission on Local Taxation.
The proposal involves a departure from the existing system of making a valuation of the property upon the basis of its annual value under existing conditions. The suggestion is that the site should be valued according to what, in the opinion of a valuer, it would be worth to anyone in the position to utilise it in the best possible way. That is to say, the value is to be based on possibilities, and not so closely on actual results.
Now, it is not denied, and indeed it is obvious, that a valuer can put a value upon a site under the conditions referred to. In most cases in which neither the hereditament in question, nor any other closely resembling it, is in fact let at a rack-rent, the authorised procedure is to ascertain, as well as may be, first the value of the site, and then that of the structure, and to add the two together. This class of property includes many institutions of a public or semi-public kind, such as Board Schools, Clubs, Hospitals, Halls, Railway Stations, also Banks and Factories, etc., etc. But the main questions raised are, whether such valuations are really satisfactory, and whether they would be so if generally adopted; whether the valuations, which would involve separate estimates of each site, and also considerations of covenants and easements, etc., would not take too long and be too costly: and whether the system would lead to friction and litigation.
The late Lord Farrer, who questioned the accuracy of the results, said: "Valuers will, no doubt, put a valuation on anything, whether they know anything about it or not; but the question is what real basis have they for their valuation. The only ultimate basis of a valuer's knowledge is his experience of actual market values; and as the land and the houses upon it are sold and let together, no such basis can exist for a separate value of the two things."
Lord Farrer Parliamentary Paper, C. 9528 of 1899, p. 82.
The opinions expressed by valuers of standing were very contradictory on the question as to whether a satisfactory valuation could be made of sites apart from the buildings erected on them. Mr. Harper, the Principal Statistical Officer to the London County Council, expressed a very decided opinion that it was a matter of simplicity involving but little expense. The evidence of Sir John Barton, Commissioner of Valuation for Ireland, generally supports this view. On the other hand, valuers of repute thought that the difficulties of departing from the principle of rating on annual value, and substituting a valuation on a basis more akin to an estimate of capital or selling value, were very great, and would lead to a great divergence of opinion.
For instance, suppose a valuer was valuing a house in a street where the sites had gone up in value, and where the buildings were not suitable to the improved neighbourhood, that particular site would not be worth nearly so much to build upon if the other houses remained standing. He must assume that the other buildings either will, or will not, be shortly demolished; and the value which he puts upon any particular site will be very different according as he makes one assumption or the other. He will be bound to make enquiry, but, should no definite information be obtained, the opinions of different valuers might greatly vary, and the result be a matter of speculation. For instance, one valuer might consider that a particular site, if cleared, would be valuable for the purpose of residential flats, another for shops, another for a theatre, considerations which do not arise under the present system of rating on the annual value of hereditaments as at present used. It is, moreover, to be observed that it would always be to the interest of the valuers representing the Local Authority to make the valuations as high as possible. It has also been pointed out that in placing a value on sites on the basis of a hypothetical rather than an actual use, valuers might over estimate the demand for particular kinds of buildings. In these circumstances Mr. Sargant suggests that there might be a glut in the market which would prevent the same rent being realised.
This point was put to Mr. Costelloe, but he thought the matter was one which could be fairly dealt with by the valuer. He thought that a valuer would put a higher value on a single site in Bond Street than he would if valuing the whole street.
The evidence of Mr. Harper was to the effect that a separate valuation of sites in the Metropolis was practicable, and that, though it would naturally involve some trouble and expense on the first occasion, neither would be excessive, and that subsequently the valuation could be conducted comparatively easily and cheaply. He said : "For myself, if I had to value London, I would much prefer to value it in sites than in hereditaments; I could do it more quickly, more cheaply, and, I believe, more accurately - that is to say, I could obtain greater uniformity." ...I know of no district in the County of London where I could not put my finger on evidence that would enable me to form a very reliable opinion as to the value of any particular site, cleared or uncleared." ..."I could value a site worth 5,000/. very possibly in less than five minutes, and when I am covering a district, and taking site after site after having got my mind well saturated with the trend of values in the district, I can value a number of sites in a very short time." . . . "On the line of the proposed new street from the Strand to Holborn, the first time I went over that property for the purpose of making an estimate of the cost of acquiring the property required for the street, it took me between four and five days; but the last time I revised my figures, I was able to do it almost within a day - I only had to go on the second morning for a couple of hours."