RATING METHODS.

Evening Star, Issue 22366, 16 June 1936, Page 10

RATING METHODS.

TO TUB EDITOR. Sir, —“ Ignoramus ” cannot he blamed if he thinks that the rateable value in this city can be depended upon to enable one to calculate the market ■or selling value of property. The capital value should, in my opinion, be the ideal basis for the calculation of rates, but under the Act as at present constituted, the City Council is entitled to asses? a property for rating purposes on the basis of the rent it is producing or might produce. One can readily perceive that the City Council is in the position of being able to levy a tax on income by way of rent. The following example will illustrate my point;— A small property, leasehold. South Dunedin, produces 25s weekly by way of rent. It is a wooden house of five rooms, with all conveniences. Its market ■value to-day is probably £450 at the outside. Pates levied for the current year are £l2 17s; surely a staggering sum for a property of this value. Yet, on the basis of the gross income no objection can be made to this harsh assessment. This high charge for rates would probably make the property unsaleable. I mentioned “gross.” income for the reason that the local rating authority takes no heed of all the outlay in maintenance, wh'ich alone makes the house produce the rent, nor does it take any heed of losses from tenants who forget that mortgage interest and upkeep must be met by the owner. This property, if occupied by an owner, might be assessed in the vicinity of £6. I can mention three other more valuable and more saleable properties in the vicinity where the rates are not over £7. The capital value system' of rating is all right if rates were based on capital value and not on gross annual rental, as the council has the right to do—and does. There should be some concerted move to take up this question of rateable value, and until that is done, anomalies will continue and ability to pay based on actual value will receive no consideration. In the last sentence of your footnote, sir, you state: “ The latter figure (meaning the rateable value) is determined by deducting 25 per cent, from rental value, plus a small allowance which is generally made by the valuation department.” I have always undertood that this figure is arrived at by deducting 25 per cent, from the rental value, and where the small allowance comes in I have failed to notice from some hundreds of rating assessments which have passed through my hands on behalf of various clients.,—l am, etc.. Fair Rates. June 16. TO THE EDITOR, Sir, —Under the heading of ‘ Property Values ’ you state that there are two methods of assessing the rates in this town on property, but you do not mention that weird and wonderful method of assessing the rateable value by assumed rentals that was put into practice a few years ago and apparently is still in operation. I bought a property in town about 10 years ago, and the rates were then assessed on the capital value, as stated by you; but shortly afterwards my, rateable value was increased by £4 and when I inquired the reason why at the Town Hall, I was informed that the increase was due to rating my property on the rental the assessor considered the house would let at _in comparison to similar houses which were rented to tenants in the immediate neighbourhood, and this after I explained that I occupied the house with my family. When the last reduction of rates came in I was reduced to my original lateable value of 10 years ago in spite of the fall in prices that has occurred in property in the last 10 years.—l am, etc., , Ratepayer. June 15.