ROYAL COMMISSION

Otago Daily Times, Issue 16916, 31 January 1917, Page 3

ROYAL COMMISSION

LEA SIS BY LOCAL BODIES. The Royal Commission, consisting of his Honor Mr Justice Hosking (president), Messrs C. F. Thomas, and Wm. Milne, •which ia engaged in inquiring into tho question of leases by public bodies, continued ha sitting in tho Town Hall yesterday morning. Greorgo Simpson, builder and contractor, eaid that for many years ho had represented tho Otajjo Harbour Board as valuer for rentals and buildings. His method of valuing wu3 to ascertain first tho freehold value of the piece of ground in question, ■by reference to the saleable value of adjacent land or similar land in the market. Having ascertained this, ho adopted 5 per cent, on the full freehold value as a fair percentage. Tho bulk of the Otago Harbour leases were on the 14 years basis. From tho lossoe's point of view, a 21 years' lcaso was more favourablo, but from tho lessor's point of viow 14 ypars- was better, becasue, with land appreciating in value, the landlord, after a few years, would not bo getting anything like his 5 per cent. His experience, generally speaking, was that in Dunedin the lessees appointed as their valuers competent men. _ Here, at any rate, tho system of appointing _ a valuer on each side, and a third as- umpire, had proved satisfactory. As against it ho thought arbitration would provo very expensive, and could not, at best, give more equitable results. Hβ saw no harm in making provision for appeal to a judge, but in 25 years' experience he remembered only one- case in which ho would have advised an appeal. So far as he was awaro, thero was no substantial complaint against tho method of valuing or the term of the leases. His Honor asked witness's opinion of Mr Reynolds's suggestion that tho umpire should bo one of a number of valuers who were on an official court rota. Witness said ho thought they had a sufficient safeguard hi the power to refer the matter of umpire to a judge. Reverting to actual valuing, witness added that, where there were buildings put on the land by tenants, these were given a very benevolent value, feo that full value had to be paid in case of a tenant toeing ousted. James QuailL associated in the matter of Church Board leases, said that, if valuation was accepted by both parties, auction was waived. In residential leases terms were usually agreed upon; in business leases there was usually arbitration, their method being three arbitrators, and not two valuers and an umpire. In their leases there was compulsory renewal if thero was no bid at auction, but he 'did not think this was regarded as a blot on the lease. Their leases were regarded as good security to borrow money on, judging by s the number of mortgages that went through. Their method of arriving at rental was to find the true capital value arid fix 5 per cent. When leases I were sold the vendors usually got full value for then: improvements, Geo. Clark, builder, who was present, eaid ho did not want to give evidence, but he could not agree with much that had been saidl There was feeling among , eome of the lessees. The Chairman said it had been advertised that tenante'would be. heard, but none were there. If Mr Clark would furnish tho names of tenants, the commission would have them asked to attend to-day. Mr Clark said he would do so. Alexander Bathgate gave evidence as to valuations, etc. in connection with Kempthorne, Prosser's premises in Victoria street, Wellington. In the course of his' remarks Mr Bathgate said that a purchase had been made, by the postal authorities and an inflated price paid. Mr O'Shea remarked that that was not quite correct. f His Honor: The sale was taken as a test . of the market value. You consider the rent was much too high?— Witness: Yes, much too high. Mr O'Shea: You cannot buy land in that street for £200 a foot His Honor: You wish to lodge a complaint?— Witness: Yes, that is so. His Honor: You ask for relief if it can bo granted.—Witness answered in the affirmative, and said that a 14- years' lease was too short, and a 21 years' lease much better. Charles Russell Smith (John Reid and Sons) said that in connection with leases there was no serious troubli in Dunedin, though things might not be perfect. The trouble that had arisen in ot.her places did not appear to havo arisen here. Values eeem to havo risen, but that was duo to special causes. Places in Stuart street had risen, and that was no doubt due to the ehifting of the railway station. Values had risen there 100 per cent, on the values of 20 years ago. Other places had gone the ether way—properties in Princes street south and Maclaggan street had gone back rather than forward. As to corporation leases, he thought they should be so framed as to eliminate as far as possible the element of speculation. Leases of that class should bo for 21 years, with valuation at the end of seven or 14- years, if necessary; the party calling for the valuation to pay all costs. The tenant should have the right to a renewal on tho same terms at the end of 21 years, but should not be compelled to take, a renewal. _He thought such leases were bound to give more confidence. ; Mr Lewin asked what was to be done as to improvements at the end of 21 years, if the tenant did not accept a renewal. Witness replied that in Jbis opinion no class of public bodyl should be called upon to take over improvements. He would not have tho improvements taken o'yer at any value at all._ Otherwise corporations would ... bu landed with all sorts of rotten property which they should not touch at all. The auction clause should be struck out. Arbitration —that was the appointment of two . arbitrators, an umpire, and the calling of evidence., etc., which was a cumbersome piece of machinery—should be done away with, and values should be made by three expert valuers, drawn by ballot from a body of experts licensed for'the purpose; each side to have the right to appeal against the value arrived at . In reply to Mr O'Shea, witness said a system of valuing by two official valuers, with a judge of the Supreme Court to act as president, would not be at all satisfactory. It would be too expensive, and the valuers would possess no local knowledge. James Alexander Park said he had been valuing property for 40 years, and speaking as to corporation leases, he considered that a 21 years' lease was better than 14 years, which was too short. Thero should bo an optional.valuation at the end of seven years. He thought the 21 years' lease would be of benefit to the tenant, and that the landlord would get better buildings and better tenants under it. The commission will sit again at the Town Hall at 10 a.m.. to-day, and tenants are invited to attend to place their views before the commission. • ■ ■•