VALUING LAND

Nelson Evening Mail, Volume LXVI, 21 February 1935, Page 4

VALUING LAND

UNSOUND SYSTEM MOOTED REHABILITATION SCHEME A suggestion that statutory recognition is to bo given to an unsound basis of valuation is contained in the Government proposals for the rehabilitation of fanners’ finuneo as outlined in the pamphlet by the Minister of Finance (says a statement by the Associated Chambers of Commerce of New Zealand). The pamphlet states that under “stay orders,” farm properties will be controlled for five years, after which a valuation will be made for the purpose of ascertaining the meantime fixation of the capital charge against the security. This valuation will generally be based on the productive capacity of the farm during the stated period.

ADJUSTING CALCULATIONS

The central committee in Wellington of financial and commercial organisations, in its recent examination of the Government’s proposals, remarked that valuations on productivity would be all that could be desired if everyone were equally competent, but that the matter was niter-locked with the question of the personal efficiency of the mortgagor, as all fanners cannot make a property equally productive. The committee could have elaborated its comment by going on to say that, while the value of land lies in its average production by an average farmer, actual production is not the only test to ho applied. Any competent valuer valuing farm land must inquire as to its actual production, but bis inquiries do not stop there. He must further inquire whether there is any factor which has resulted in the actual production being higher or lower than might he expected were the property farmed by an avrage fanner with average stock. If such factors exist, then the competent valuer will adjust bis calculations to compensate from the average. To illustrate, there are available to the committee the actual results achieved by certain groups of farmers over a period of 12 months ended 30th June last. One group of accounts are those of certain dairy farmers all occupying farms within a short distance of 'each other. Of twelve accounts examined, the best results was that of a farmer milking 90 cows, his gross receipts for the period being £1,494, or £l6 7s 6d per cow. The poorest results was that of a farmer milking 80 cows, his gross receipts being £514, or £6 8s 6d per cow.

SEEKING THE REASON

It is not necessarily equitable to base valuations of dairying land in this particular district on a gross return of either £l6 7s 6d per cow per annum or £6 8s 6d per cow per annum. Actually, the majority of the twelve farmers men. tioned show returns equal to approximately £lO 10s per cow for the period. The farmer who could show only £6 8s 6d per cow might have laboured under the handicap of having a poor herd, or his lack of success compared with his neighbours may have been due to a lack of competence on his part, or both factors may have existed. Any competent valuer would endeavour to ascertain the reason before valuing the land.. The two extreme cases were farming approximately equal areas—roughly two and one-third acres per cow. Valuations based solely on actual results would, however, show one of these farms to be worth approximately 2J,timos per acre what the other was worth. That surely cannot be equitable ? Furthermore, the adoption of such a method ns proposed would result in there being in force at the same time two distinct systems of valuing rural land—the one under discussion and the one now obtaining under the Rating Act. This question of valuation is only one of tlie numerous and serious difficulties that arise under the rehabilitation proposals of the Government. It is accompanied by objections . even more vital, which were sketched by the financial and commercial committee in its analysis of the rehabilitation proposals of- the Government.