VALUING LAND

Wanganui Chronicle, Volume 73, Issue 370, 13 September 1930, Page 22 (Supplement)

VALUING LAND

LEGAL DECISIONS Two recent decisions, one in Sydney and the other in Melbourne, are of importance to land valuers, inasmuch as they set out definite rules which judges expect to be followed when making valuations for taxation purposes. Mr Justice Pike, in the Sydney Land and Valuation Court, set out that the Act of Parliament specifies that these valuations are to be made for the dual purpose of taxation and resumption values. A man cannot have his property valued at a low rate for taxation purposes and a higher rate fixed for resumption, should the land be required by the Government or a public authority vested with the right to resume land. The Chief Justice of Victoria (Sir William Irvine), in dealing with an appeal against a taxation assessment by the Commissioner of Taxation regarding property in Melbourne, in which the official valuation was £45,610 and that of the valuer for the owner £27,000, said he had to ascertain the capital sum the property might have been expected to realise if sold on the date wh«n the valuation was made.

There was legal argument as to whether the element of speculation should be permitted in making a valuation of land and property in a city such as Melbourne. The Chief Justice said that, in his opinion, it wag impossible to exclude speculative values in answering the question: “What price may the land be expected to realise?” When, owing to the rapid development of a district, or from other cause, it might reasonably be expected that thw land would have a capital value in the near future beyond the capitalised value of the immediate uses to which it could be profitably put, such a circumstance should be takeii into consideration by the valuer.

Counsel suggested that such a price might be in excess of that which would be paid to a prudent purchaser, but the Chief Justice said there was nothing in the Land Tax Assessment Acts to indicate that values were to bo confined to prices paid by “prudent purchasers.” He could not accept the contention that all speculation was imprudent, though he admitted there was a limit to purely speculative or gambling values. This limit, which was necessarily very indefinite, related more to the character of a particular transaction than to what might be called,, the state of the land market. An instance was quoted where the sale had been made to an impecunious purchaser who bought land and resold it, in small lots to sub-purchasers on long terms, many of whom were later unable to meet their payments. Such sales were of little significance in making a comparison of values. The circumstances of each sale had to be strictly investigated before it could be taken as being comparable with a sale in the open market.

The Chief Justice decided that “ comparability” did not depend on geographical proximity only, but/ ”on all the circumstances of the transaction alleged to be comparable, and of any particular motive that may have fcetuated vendor or purchaser.” He also stated that he had to consider in eonjunction with the figures given of comparable values what the purchaser considered he could make out of the land when put to its best economic used. In his decision the Chief Justice ae-

cepted a calculation of a gross rental of the buildings, assuming it was reasonably well let, and allowed outgoings against this of 35 per cent., and assumed that the purchaser would be satisfied with from 6 to 7 per cent, on his investments. He accordingly fixed the valuation at £29,500, as compared with £27,000 by the valuer for the taxpayer and of £45,610. by the valuer for the Taxation Department.