REAL   ESTATE







AND







NEW YORK, NOVEMBER, 1, 1913





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4

I       THE ENGLISH LAND TAXES IN OPERATION       I





Values Have Declined and Real Estate Transactions Have Decreased From
£13,000,000 a Year to £9,000,000—An Interesting Economic  Experiment.





By ELISHA SNIFFIN, Secretary of the Real Estate Board of New York.





■■■■■iill





WHEN the real estate record of 1913
comes to be written there is no
doubt that the unanimous opinion will
be that the year has been a strenuous
one in England. As was the case with
its predecessor, dullness and depression
were its leading characteristics. This
was the inevitable sequel of the Finance
Act of 1909-1910, a bill which placed
upon the statutes what are generally
known as the Land Taxes.

Before this revolutionary measure was
enacted comparative immunity from
land taxation had been enjoyed, a state
of things reflected in the gross totals of
business done.

Thus, if we take a typical year at ran¬
dom, say 1898, the year before the South
African war, the aggregate realizations
registered at the Estate Exchange
amounted to £13,363.358. .\t the close
of 1909, when the famous budget and
land taxes were introduced, the figures
were £6.344,215, a shrinkage of about
seven millions sterling. From that period
the sum of the transactions have gradu¬
ally increased, until they reached last
year £9,089,543.

For the first eight months of the pres¬
ent year the published statements show
that dealings have amounted to £6.203,-
896, the figures for the like period of 1912
being  £6,960,986.

Now, to the uninitiated perhaps, it
may seem that the market is gradually
regaining its normal condition. A little
reflection, however, will soon dispel this
misapprehension.

The New Land Taxes.

Let us glance at the nature of the new
land taxes. What are they and what do
they comprise. They comprise the In¬
crement Value duty, the Reversion duty
and Undeveloped Land tax, all duties be¬
ing a first charge upon the property and
recoverable under penalties.

Increment Value is a duty of £1 for
every £5 of increased site value that
may have taken place in the value of the
bare land. It is payable on the transfer
of the land or any interest therein, or on
the granting of a lease for a term ex¬
ceeding fourteen years, or on the death
of an owner, or period'cally every fifteen
years in the case of a body corporate or
unincorporate. Purely agricultural land
is exempted, and small houses in the oc¬
cupation of owners of a rental value not
exceeding £40, agricultural land not ex¬
ceeding fifty acres and £75 in capital
value, separate leasehold tenements and
flats. Crown lands and land occupied by
rating authorities, charitable and statu-
torv companies.

Reversion duty is levied on the value
of the benefit accruin.g to the lessor on
determination of a lease, and is fixed at
£1   for  every   £10  in  value  of  benefit.







ELISHA  S.NIFFIN.
Secretary  Real   Estate   Board.

-Agricultural land is again free and leases
not beyond twenty-one years in dur¬
ation.

Undeveloped Land duty is fixed at the
rate of J/Sd. per annum for every £20
of the site value of undeveloped land.
-\11 land where the site value does not
exceed £50 per acre, public parks and
gardens, woodlands and other places
where the public are allowed access are
exempted under the act, while land kept
free from buildings in pursuance of some
scheme of development, and other minor
instances, escape taxation, as also does
agricultural land held under apreement
before the .\c\., and similar land occu¬
pied and cultivated by an owner where
the total land owned does not exceed
£500.

The Mineral Rights duty of one shill¬
ing in the £ is not a land tax, but rather
an income tax, and the amount collected,
£1,234.483, should be deleted from a
general  analysis.

To secure these taxes a valuation de¬
partment has been established which at
the outset sent out about eleven million
forms demanding information to enable
it to value properties.

Revenue   from  Land  Taxation.

It will be apparent that an enormous
cost immediately devolved upon prop¬
erty owners, who were already payins? an
income tax. generously mainta'ned for
the past ten years by a paternal govern¬
ment at a war rate of 1 shilling 2 pence
in the £. The Valuation Department
has cost up to March of this year £1,-
393.000. In return for this expenditure
the land taxes have realized £223.430.
The cost to owners in supplying informa¬





tion under professional advice has been
estimated at over half a million, and the
decrease in sales of London and subur¬
ban properties at something like £3,-
000,000,

For instance, in July last the trans¬
actions ofhcialy registered at the Estate
Exchange were almost £1,000,000 less
than in the same month last year. That
decrease was, without doubt, attributable
to the generally prevailing uncertainty
and irritation in connection with the
land taxes. Freehold ground rents,
licensed houses and the usual type of
brick and mortar investments have be¬
come almost a drug, capital value hav¬
ing fallen 20 per cent, to 30 per cent.
Land Hunger.

The fact that agricultural land was not
to be taxed had the efifect of forcing
some of the most magnificant residential
estates on a dull market, and of course
it is in this direction that the deal¬
ings have been S'gnificant. County Coun¬
cils and other public bodies have powers
vested in them under the Small Holdings
Act to acquire suitable areas with the
hope of satisfying the so-called "land
hunger." They have taken advantage of
this legislation, but the high prices paid -
for farins by these bodies have had the
efifect of materially raising the heretofore
moderate rentals.

The wet blanket will hardly be lifted
from the market, for the Chancellor of
the Exchequer has promised to renew
the "land campaign" with the autumn
session. There can be no doubt about
the dullness of the realty market
throughout the British Isles, and from
the best information obtainable, it seems
likely to continue.

David Lloyd-George. Chancellor of the
Exchequer, has undertaken to free Brit¬
ish land from landlordism and get the
people back on it. He disclaimed any
desire to attack landlords as a class, but
believes that the land system of Great
Britain is a failure. He says the agricul¬
tural laborers of the British Isles re¬
ceive lower pay and work lon.ger hours
than any other, and 90 per cent, of the
farm laborers in England do not Tve as
well as those in the poorhouse. He thinks
the issue is between the great power of
the landlord and the prosperity of the
laboring classes. He advocates that the
great game preserves in the British Is'es
should be reduced bv two-thirds; that
the best labor should be drawn to this
land by giving them a better wage,
shorter working hours and the proper
kind of homes to live in. He believe? in
encouraging the farm laborer, so that he
= may ultimately own a small farm and be¬
come a land owner, instead of paying out
approximately the same amount of
money to some one else in the way of