Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: [v. 92, no. 2381]: November 1, 1913

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REAL ESTATE AND NEW YORK, NOVEMBER, 1, 1913 PMIllMllliillllllllBIMlIiiiM^^ .....—..■—-■-...■■..■■■-i.^.m^ 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