Evening Post.

Evening Post, Volume LXXXV, Issue 51, 1 March 1913, Page 4

Evening Post.

SATURDAY, MARCH 1, 1913. THE CITY LEASES ■»■■ <**> ■ ■' We do not think that the citizens of Wellington have any occasion to ( be alarmed by tho prophecy that the corporation leaseholds are going to create "a municipal desert in the heart of the town," or by the attiafcing suggestion proceeding from a quarter which is supposed to be Liberal that the alleged action of the Government in "converting the agricultural leaseholds of the country into freeholds at 1 per cent, advance on the original value" affords any quid ance in the matter. Wild talk of this kind is well calculated to defeat its own ends. Mr. Massey has much to answer for, but not quite so much as is her© represented, and whatever he has done with regard to the conversion of the "eternal" leaseholds has not the remotest bearing upon tho problem whiqh is at, present exercising the minds of the citj's tenante. Tho City Council and tho citizens would be foolish indeed if they allowed themselves to be stampeded by alarmist prophecies or the impoesibl* analogies from irrelevant and miscoa eeived precedent*. -What is needed on both sidee is a calm and close attention to tho essentials of a problem which is rot without difficulty, but is assuredly not insoluble. On the immediate question raised by the fixing of the rent under a particular lease the interests of the city and of the tenant are necessarily in conflict; but the city and its tenante are equally concerned to have the whole matter placed upon a stable and equitable basis, and determined by fixed pnd eaeily intelligible principles. Tho city cannot profit in tho long run by rente or other conditions which may be highly renvunorativo for the present, b\it, by producing a feeling of soreness and insecurity, must ultimately tend to tho depreciation of its property. A "fair deal" is what will best serve the interests of both parties. When the conditions of tha leases are Wing overhauled, it is to be hoped that some simpler basis of valuation will be provided than that which now prevails. "In ascertaining such new rental." says tho present renewal clause, "the valuers shall not take into consideration, the value of any building or improvement Ihfii existing upon the said demised premises.- but they .-shall value the full and improved ground rental of the said premises that ought to be payable during tho said term." The decision of the Court of Appeal is that a valuer acting under this clause has no right to look at the freehold value of the land apart from the buildings and fix the '■•■>nt ot a certain pcccn'iago of Unit \tilue. tli.s duty Id 1o "asCOVUIII vital <1 lUudcilt k's,;,n° . jjfttuld. glva Jo*, the giuumi uu!< of. the ■

land for the term on the conditions as to renewal and other terms mentioned in the lease." Like the "reasonable man"' of tlm old philosophers, the "prudent lessee" is to bo made the standard ; and this decision must, of course, bo accepted as final with regard to the present leases. But when the terms are foping revised, it should surely be possible lo secure some attention to the reasonable requirements of the othef party to the transaction. Is it just or businessliUe to make tho prudent lessee the sole standard ancl omit sll consideration of the prudent landlord? When Mr. Skcrrett expounds his vipw of the moaning of the -judgment of the Court of Avpeal, he starts with the assumption that a prudent man— meaning thereby a prudent lessee— "would expect to get, say, 6 per cent, for his money, after allowing for rent, rates, taxes, fire and. earthquake insurance, depreciation, repair and maintenance, sinking fund, cost of working lift, and cost of a certain amount of heating and lighting; also allowance for probable period when building or part thereof unlct, and for commission on collection of Vents." •H ere again we avo quite prepared to accept the interpretation as 'final, at any rate for the purpose of the present argument. But we should like to put a question to the adviser of the Wellington Leaseholders' Association from the opposite point of view. Has he ever heard of a prudent landlord who treated the reservation for his tenant of a fixed minimum of profit as one of the constants of the problem and was prepared to accept for his own remuneration whatever his tenant could afford to pay after this minimum had been provided for? Has Mr. Skerrett ever heard of a landlord who allowed his tenant's outlay upon insurance, depreciation, repairs, cost of working lift, and cost of heating and lighting to enter into the calculations upon which the ground rent is based? Has Mr. SkerreU ever advised a landlord to take a rent of 2 or 3 per cent, upon the value of his property because it would othenvise v be impossible to guarantee to the tenant that minimum of 6 per cent, without which no prudent man would take a lease for business purposes? No; Mr. Skcrrett's reputation for prudence forbids us to entertain such a suspicion. He would say to his landlord client, "The property is yours, and you are , entitled ta put your own interests first in determining the disposal of it. Consideration of the tenant's budget will lead you into a labyrinth of calculations which are entirely outside of your province or concern. As a prudent landlord stick out for your own 4 or 5 per Cent, and let the tenant adjust his own calculations accordingly, and take the property or leave it." Ifc is thus, surely, that a prudent lawyer would advise anct a prudent landlord would act, nor should the fact that in this case all the legal opinions published have been those of counsel for the lessees, advising on a particular clause in their leases, allow us to forget that when the clause is revised the landlord's interests cannot bo regarded as the one residuary and negligible factor. The revision, when it comes, must be complete and ab initio.