PROBLEMS OF VALUATION

Sun (Christchurch), Volume I, Issue 272, 21 December 1914, Page 8

PROBLEMS OF VALUATION

COMMISSION IN CHRISTCHURCH ME C. ALLISON'S IDEAS. AN INTERESTING INTERLUDE. There was an interesting interlude at the sittings of. the Valuation Commission this morning,'when Charles Allison gave evidence. The members of the commission are Messrs T. F. Martin (solicitor, Wellington), Ewen A. Campbell (Wanganui), and J. G. Rutherford (Auckland). The secretary is Mr R. G. Thomson, of the Hansard staff. Mr Allison drew on his own personal experience and naturally referred to Sydenham • properties and valuations. Years ago he bought an acre in Colombo Street, with 220 ft frontage. It cost him £2OO or £3OO to fill up the area to the street level before putting on any buildings. The Department did not take off the unimproved value the money it cost him for filling up. He erected a number of houses, which at the time were let at 12/6 per week, but later the rent came down to 8/-. The rents were thus reduced by one-third, but the value of the land was going up. . Some years ago he sold five of the cottages, but on the remainder of the land, with 44ft frontage, there were three shops and houses. On these he had an insurance of £I2OO, but the improvements allowed by the Department were, only £525. The unimproved value was £1320, and the capital value £1845. The Act was inequitable in its operation —it did not allow anything for filling up, or for the real value of the improvements being deducted from the total value. The Chairman: You have improved the land to the full extent to which it can be improved? Mr Allison: Yes. The land was valued at £7 a foot nine years ago, and now at £3O a foot. The rents are no higher than they werenine years ago. The Chairman: You think that the basis of unimproved rating works out inequitably; that while the capital value k is not* excessive the proportion put down for unimproved value is too high, and that for buildings too low? ■ Mr Allison: That, is so. The Chairman: Can it happen that the real unimproved value and the value of the improvements, taken together, would come; to more than the selling" value?" Mr Allison: I think the mistake arises in this way. A few people buy j land at high rates, and because there are a few sales at these rates the valuers assume that there is sufficient ground to put others in the locality up to the higher rates. Mr Allison proceeded to quote the case of a speculator who had built a row of eleven shops in Sydenham. Usually, four of the shops were empty. The rent received was £6OB a year, which gave a return on £8255 at 7 per cent. The valuation was £8330. The place was overvalued. j "The value of property,' said Mr Allison, "is what it will reasonably produce, not what a few people will give for it." The Chairman: How do you think the unimproved value should be arrived at; regarding the definition in the Act? Mr Allison: I think the definition! should be altered. I The Chairman: Taking it as it stands,' how should the value be arrived at? Mr Allison: It is difficult to lay down a general rule. Values vary in different parts of the same street.

"I contend," Mr Allison continued, "that there has been no improvement in the value of land, except in tlie business part, and a few residential parts, for the past thirty years. The true value, based on what land will produce, has not increased for thirty years. The Chairman: The-selling value?, Mr Allison: The selling value and the true value are two different things. People pay high prices for land for particular purposes.. The Chairman: How would you arrive at the true value? Mr Allison: I would ascertain the rents paid for houses which were reasonably occupied, and ascertain what they were producing. If the selling prices were higher than the value I arrived at, I would put a little on to the capital value. ' The Chairman: How would you arrive at the unimproved value? Mr Allison: I would deduct the value of the buildings from the total value. The Chairman: Would not your scheme have the result of making the unimproved values different in the same street or quarter?

Mr Allison said that it would.. In the Sydenham district the total values had more than trebled during the last 20 years, and had doubled during the last nine years. Yet rents were not 10 per cent, higher than 15 years ago. "That is accounted for by the craze for bungalows," said Mr Allison. "Unless a house is a bungalow now people won't go into it. They will also give a higher rent for a new house. People buy bungalows on deferred payment, from speculative builders, and pay prices out of all proportion to the actual cost.'' , The Chairman: Do they get a fair return if they sell? Mr Allison: Only while they are new. Directly the polish goes off they don't. The Chairman: What would you do if you found the unimproved value and the value of improvements exceed the capital value of the property? Mr Allison: I would endeavour to modify the Act as far as I could. The Chairman: Would you value the property at more than the capital value? Mr Allison: No. The Chairman: How would you bring it down to the full capital value? Mr Allison: I would probably take it off the land. The intention of the Act is to allow full value for improvements. The Chairman: After getting the full capital value, you would regard the value of improvements as an exemption? Mr Allison said that he would. He complained that improvements were not sufficiently exempted. His brother had improved a property to the extent of £6OO, and was only allowed £IOO. In reply to a member of the Commission, Mr Allison said that he was not in favour of the property tax. It unduly taxed industries. The only fair test was ability to pay; to find out what a man had, and tax him accordingly. Mr Murray, of the Valuation Department, pointed out that there had been considerable additions to Sydenham during the periods covered by Mr Allison, and hundreds of thousands of pounds had been spent on buildings. OTHER CASES. The Commission heard evidence in two other cases. Thomas A. Murphy, retired Civil Servant, complained that his unimproved valuation had been raised from £4OO to £530, and gave evidence. Archibald Earshman, of Blackhills, Hurunui Riding, Waipara County, complained that he was rated at £4 caoi-

tal value, on 3337 acres, improvements £6OO, while his neighbours got a reduction of 5/-. Mr Earshman gave evidence at considerable length, pointing out that the reduction had been given by the Court to his neighbours. The valuation officer (Mr Kelly) stated that he had offered Mr Earshman the 5/- reduction before going to Court, but he declined it. The Court did not allow any reduction. The Commission then adjourned, there being ho other witnesses in attendance.