CITY LEASES.

Dominion, Volume 6, Issue 1698, 14 March 1913, Page 8

CITY LEASES.

THE MAYOR DEFENDS THEM. SAYS FREEHOLDS ARE NOT PREJUDICED. ' The Mayor (Mr. I). M'Laren) has made a statement in reply to certain arguments advanced by Mr. J. E. Fitzgerald and Mr. R. Fletcher in the city leaseholds controversy, and published in U'hf. Dominion on Wednesday morning. "[ think," said Mr. M'Larcu, "that Mr. Fitzgerald somewhat avoids tlie direct issue that I previously put. For instance, it is quite true, as lie. says, that the freeholder secures the enhanced or speculative increase in the value of his property, but in actual operation that enhanced value is very often not realised until the property is parted with by sale or exchange. The accruing, therefore, of this increment in value would not relieve the freeholder from tho rate of interest he was paying on any mortgage held over his property and in ease of those in business who were tenants of a freeholder it is most likely that Hie enhancement of tho value would only add a greater burden to tlie rental they would have to pay. It has also to be considered that the freeholder may buy in at a time wheji values arc comparatively high, and in such case tho burden either of rent or of interest on mortgage is one that continues.

"Mr. Fletcher appears to admit, the validity of the point I raised when lie says it might be true that if tho leases were varied and made more accessible, freeholds would slightly decline in value just as now they had to appreciate. My contention is that if the leases are made more accessible, by reducing rental values before the-pbinpctitive'vnliie, then freeholds would;, very • materially dccline. If tho rental/were assessed on a basis of 4 per /cent' on value, as is suggested, tlie.-owner of tho lease would nave a considerable advantage in'business over freehold competitors, who would nave to pay probably G per cent, for mortgages, and also over tenants of such freehold property. It is being* assumed that there is only one form of corporation lease—that, commonly known as the Glasgow lease—in. force in the. citv, whereas there are two, one providing for the valuation of the land alone, and one providing for.district valuations of the laud and of the improvements 'In the latter leases there is also a provision that on relinquishment of the lease the buildings are to be put up to auction, and they had to be' paid for by the incoming tenant.' So that the cry that is raised that there is no recognition of compensation for improvements is not quite as well grounded as is being made-out." "llr. Fitzgerald raises something new in the suggestion that a uniform ' plan should be adopted in the method of valuing, but it seems to me that this is a matter which one side in any arbitration question should' deal with, and it would be, I think, rather injurious to interfere with.thc freedom of those who are adjudicating in making valuations or acting as arbitrators. Tlie laying down of'principles for the direction of arbitrators would probably secure a mechanical form of equity, which might be very much at variance with a true application of economic.principles in dealing with such a variable matter as ground rents in a city where values generally are so variable and so varied in separate districts."