NECKS IN A NOOSE.

Dominion, Volume 5, Issue 1262, 18 October 1911, Page 4

NECKS IN A NOOSE.

, ■ >__ —. : . DISSATISFIED LEASEHOLDERS. i ''GROANING UNDER THE HIGH ; VALUATIONS." 'AN ASSOCIATION FORMED, A number of tho business firms holding renewable leases from the City : Council and from the Harbour Board in , the city area aro dissatisfied with tho rentals which they have been required to pay when their ureas havo boon submitted recently for revaluation. These leases wero given in the first instance ' for long terms of years, and they aro ', falling in ono by ono. When a kaso falls in the area is submitted to a Board 1 . of Arbitrators for revaluation, and if j tho lessee is not satisfied ■ with tho re- | . suit ho must walk out and forfeit such I buildings as he may have erected. A meeting of those interested was held yesI terday in the Chambor of Commerco, at ' which upwards of twenty representatives j »f leaseholders wero present.

Increased Rentals. Mr. H. C. Tewsley, who presided, explained that the object of calling tho meeting together was to try te arrive at eomo method by which an alteration could bo mado in the manner of dealing with expiring leases. Revaluations had recently been made of eomo leasehold sections, as a result of which the rentals had beon increased to an extent which would be disastrous in its effect. It was felt that, leasehold ought to bo one of tho best and safest forms of tenure, especially in a city like Wellington, where such a largo proportion of tho land was reclaimed, and whero people taking up Eoctions of no valuo had created values by putting up costly buildings on the land. Now the effect of the revaluations wa3 that some of them did not know 'whether it would be possible for them 'to remain in occupation of their holdings. It was felt that tho present method of assessing values from time to timo would end in confiscation of all buildings put upon leasehold property. The basis on which rentals wero assessed for tho renewal of leases on tho whole unimproved valuo of tho laud was a wrong method, and tho object of the meeting was to try to deviso some schemo by •which those who owned leases might havo a reasonable tenure on terms that would mako it possible for a fair living to bo got out of tho holding of them. The suggestion was that a committeo bo formed to go into tho whole matter, and that Topresentations bo made to the City Council, or, failing proper redress from that quarter, to Parliament. It was also proposod that a Leaseholders' Association ehould'be formed to watch tho state of leaseholders, in order that when renewals ■wore imminent from timo to timo tho association might have them dealt with in a group, instead of piecemeal. An Example. Mr. L. 0. H. Tripp snid he had been making inquirips concerning the leases, and he thought few had realised what the effect of them really was. On tho expiry of the- period, tho leaso provided that threo valuers should bo appointed who had to decido what the annual ground. Tent was to bo without regard to the ■buildings. This sounded fair, but when tho method of calculation was inquired into, it was apparent that it might work out unfairly. In the case of recent revaluations tho : City Council had argued that tho arbitrators had first to find out tho value of tho ground, nnd then assess | the rental on a basis of five per cent on the value. This meant tho imposition of such a rental that tho tenant could not afford,to pay, and ho had simply te walk out and make tho' City Council a preeent of his buildings. A very good example had bfeen beforo' the arbitrators in tho case' of Bannatyne's building, erected 20 years ago, which had been then a.3 it was now an up-to-date building. The lease caino up,for renewal, and the corporation were prepared with witnesses to prove that Bannatyno's Corner should now, be a shop site, that it' was worth .£3OO a foot, and that tho corporation ought to got 5 per cent on that. If that liad been -allowed, what would have beon the effect? Banmatyno's would havo had to spend sevoral thousand pounds in altering the building. Where was that to come from? During the past 14 years they had been paying the full annual ground rent, and during tho next, 11 years they ■ must still pay the full: annual ground rent, If they did alter their building to make shops in it, tho three or four thousand so spent would have been fead loss This examplo ■ served to show that the present basis of valuation was wioog beyond doubt. Ono of tho.lessees \ concerned had suggested that tho* leaseholders should go to the Supreme Conrt for a decision. When tho City Council understood tho position—that the lessees might have to forfeit their improvements— » fair basis of revaluation might bo possible. . ■

Mr. F. Townscnd pointed out that lessees had been raying rates all the wnilo on the gradually increasing valuations. This was a good excuse- for tho V'ty Council insisting on the payment of increased rents when tho time ■ for assessment oamo round.• ■ His own firm had originally paid rent on a basis of ,£3O per foot for their-property in Harris of l 3a fc fo;T nOWpayiaSOnabasis "This Harassment." „ M f' & £• Milcs said that thero was 00 < d ™% 'u at were groan]™ ?h nd f OT^ the high ™ luati °ns- Uβ presZel that vhe corporation wera out to get all the money tfiey could, and the file-firing system under which lessees were picked out one by ono gavo-the corporation an enormous.advantage. -Unless the leaseholders joined, this harassment would ? l aae - £ 0 was not P«pared to say wnat was tho proper basis of assessment but the system of taking an enormous ground value, and assessing tho rent at tne high rate ot 5 per cent, on the value was absolutely wrong, and perpetrated an injustice on tho lessees. His turn would not come again for 11 years, but he had Lcen through the mill, and ho knew what it felt like. If tho corporation did not tako a reasonable view'of tho position, thero would bo in the city ramehacklo buildings on every hand. Who was going to put up buildings when ho knew ho ran tho risk of being rackjrente4 at the end of the time? Most Impossible. Mr. E. H. Dean said ho had been approached by the Hunter Street lessees to act for them in a recont arbitration. Had ho known tho naturo of tho leases he would have declined the brief. AVhen ho set to work ho found thero was absolutely nothing to set foot upon, nothin" upon which to work. The trouble was to find where one could start—what argument, one could use/ The leases seemed to him to bo tho most impossible from a tenant's point of view. When tho arbitration camo on ho found that tho corporation had only ono question to ask —"what do you consider tho freehold value'of N this allotment?" , After this claim was made for rental at' tho rate of five , , per cent, per annum for the full U years. He bad showed tho fallacy of this basis. Ho had pointed out that 1 per cent, had previously boon taken as a proper basis for such a calculation, and also that taking the full freehold value was grossly unfair, because tho freeholds were not for sale. No man would dream of paying 5 per cont. on the value of a freehold which could not be bought, and for a leaso which would last only It years. It wns clear to him that the lessees, in accepting leases in this form—leasea renewable every 14 years at a rental fixed by arbitration—and throwing up their right to valuation of improvements, coupled with public competition for tho leases, had out thoir necks into a noose which would strangle them in the end. It was his opinion that from the city's point of view as well ns from the leaaoho! dors', the lessees had the right to demand that, in addition to the assessment of renlal by arbitration, there should b» restored to them tho right to claim valuation for their improvements,' Coupled with this right they should have a further right to insist that, in the event of the rental assessed by arbitration being too high, the leases should bo submitted to public competition.. Then - if i, ' tenant still refused to fecu.ro the lease the city should pay him tho value of his improvements, if this was not done, no man would, spend a single shilling on leasehold premises, ami they would go down, down to ruin. .. If..this, happened .a jnan

would be ablo so to write down his promisee at tlio end of tho time ho would be a'Ho to snap his fingers at tho corporation, and say: "In tho future, the freehold for mo ovory time.' , A Bad Bargain. Mr. W. .Tack agreed that a bad barRain had been made by those who took up tho leases. In spito of that fact, tho city had aJso interests, and tho interests of the city und those of the leaseholders wero somewhat intertwined. Mr. I'. R. Siugood thought it iniquitous thiit a losses -forced to walk out of his building should lose the valuo of it. These leases would keen business people out of Wellington. Who would conio to Wellington to take ui> new leases on Uio'camo terms, and wbai'- financial institution was going to advance iiionoy on buildings put up on these sections? The scheme would cripple tha city. Air. James Dyer moved that a Leaseholders' Association Iμ formed, and that the following subcommittee bo appointed to draw up rules and to report to a subsequent meeting:—Messrs. 11. C. Tewsley A. H. Miles. L. 0. IT. Tripp, F. Townrend, S. Kirkcaldio, F. Ilaybattlo, and J. Dyer. Tho motion was carried. Beforo tho meetiji? closed Mr. Tewsloy pointed out that the Harbour Board would presently have largo areas to offer, and that if they wero to bo offered on similar conditions, no ono would touch them. This would affect Wellington disastrously, and those • concerns which might make the city greater by having their headquarters here would bo kept away. Tho trade and business of the city mnst be seriously hampered if the lecal bodies followed a short^sishtod policy in seeking to extract the last fraction, from the leaseholders.