LAND VALUATION

Dominion, Volume 8, Issue 2435, 14 April 1915, Page 6

LAND VALUATION

REPORT OF THE COMMISSION IW ASSESSMENT COURT NEW* CONSTITUTION SUGGESTED ALLOWANCE FOR IMPROVEMENTS SOME COMPLAINTS WELL' FOUNDED. • The report of the Valuation of Land Commission set up on November 16 last las been made available for publication. {The members of this Commission were: Mr..F.l\ Martin (chairman), Mr.;Ewen !A. S Campbell, and Mr. J. G. Rutherford. (These gentlemen were asked to report on 4 number of questions" which together involved a review of our whole valuar tion .system, and they; were also asked to' inquire into the petition of certain ratepayers in the'; Borough of Otahuhu land the South Riding of Castlepoint County , against ."alleged inequitable or excessive assessment of values. Following; is a summary of the recommendations of the Commission: — . Assessment' Courts. • That the ; Assessment Court should consist of' a •permanent president, for the iwhole Dominion, who snail be a member tof the legal-profession, and of an assessor appointed by. the Government, either for .the whole Dominion or for cach provincial district, and an-assessor ■appointed by the ratepayers of the local governing district the-roll of which has been revised, such last-mentioned appointment' to be made at a meeting of ftlte> ratepayers convened by the Mayor W chairman of the district.. In the event ■ iof the ratepayers failing to appoint the assessor, the appointment to fall to the local authority. We further recommend (that the president should be a person lother- than a Stipendiary Magistrate regularly exercising civil or. criminal juris-

That on the occasion of the revision ■of a roll at least'fourteen days' publio notice .of the"'sitting; of the Assessment 'Court .be given, and'that the notice be inserted at least'three times in the local newspaper, and'also at least three times in one other newspaper circulating in 'the district affected. Further, that it be lan instruction to the officers of the (Valuation Department to. endeavour to : lhavo the purport' of_ thg,,notice inserted 'in each of the newspaper's in the columns Sdevoted to local news., I

: That where an owner objects to a Valuation affecting the interests of any 'lother- owner, the Valuer-General shall j teend to. the latter owner a copy of the objection, and give- him, at least seven Hays' notice of the sitting of the Assessment Court.

. That it be competent for an objector to appear before the Assessment Court. by a barrister .or solicitor) or by ian agent appointed in writing :under the ihand; of; tho..objector, or of a person iholdinjg a power of attorney from the lobjector authorising him to receive the lents of tho objector's real estate, and that such agent be allowed to charge a fee for his services.

That it be enacted that a refusal by ian objector when appearing before the [Assessment Court to sell or offer his •property to the Government at the Devaluation shall not be deemed an admission by the objector of the Correctness of that valuation. Direotlons to Valuers. That where farming-land has been subdivided into building allotments in advance of the market, and continues to be-used for purely fanning purposes, it shall be valued on a farm value basis. That where the properties in a given sweet are mainly used for residential purposes, but a few properties in the street have been purchased or are used for business "purposes, the owners of properties in the street whij l ' at the time of valuation are used as residences, and for which there is no present demand for business purposes, should not be assessed at a business site value. That where a standard unimproved ivaluo of a country district is to be arrived at it be. fixed by several district [valuers acting together, with the assistance of a local valuer appointed by the ratepayers of the district and paid jby the local authority; and that in fix3ng such standard value by reference to sales of improved farms a liberal allowance be made in respect of the improvements thereon.; • That valuers of town properties should in all case's be competent to ,valuo'' buildings_ as well -as land, or should he associated with an architect lor a practical builder. That valuers of country districts should hav'e a knowledge of fanning and of the rost of improvements, and that, whether 'as regards country or town districts, the valuer selected should, where practicable, be one having a good knowledge of district. That so far as'can conveniently be done, the valuer, when revising the roll of a country - district, ■ should give individual notices to landowners of the approximate dates at.which ho proposes to visit their- properties.

Rights of Lessees. That Section. S9 of the Valuation o f land. Act, 1908/' be ' amended in the direction of making allowances to lessees in respect of the detrimental, value of any .restrictions in' the lease " which prevent the lessee from' putting, the land to tho use to which it ; is' best adapted at the date of valuation, and m respect of any onerous unfulfilled conditions to which the lessee is liable under'the- lease. - - ■ / That Section 39 should also :be amended in the direction' of making!aii allowance to the .lessor in respect of any restrictions contained in the grant under which he holds the' land, whether as to . selling or leasing, or as to the tise to which, the land may be put. That lessees be given a right to appeal to the Supreme Court on questions of valuation as well as on points Sf law. Compulsory Purohases, That Section 31 of the Valuation of Land Act, 1908, be amended by providing _ that an owner who objects to the decision of the Assessment Court shall etato the_ unimproved value at which he values his property and his value of the improvements, and that tho Government have the right to purchase the land at the owner's unimproved value, leaving tho value of the improvements to be ascertained by arbitration. That the owner of several contiguous properties shall have the right, if he so desires, to offer all of them to the Government under Section 31 in one. offer,' notwithstanding that there are several different rateable occupiers of such properties. That the Government 6hould from time to time purchase properties offered to it under Section 31. About Revaluations, That in all cases where an owner applies for a revaluation at his own cost under Section 36 of the Valuation of Land Act, 1908, the valuation should be made by a district valuer other than the valuer who made the original valuation. That the Act be amended 6o as to allow an owner to object before the Assessment Court, oven though hie valua«

tion has not been altered -upon a revaluation under Section 36. The other recommendations —there are 24 in all—relate to particular localities and particular cases brought •under the notico of the Commission by evidence. Assessment Court Constitution. The Commissioners make the following observations in support of their recommendations for a change in tho constitution of the Assessment Court: "In tho courso of our investigations we found much dissatisfaction with the constitution of the Assessment Court, and mot with man)' complaints that district valuers and Assessment Courts attributed too large a- proportion of the total value <rf the properties to what is defined in the Valuation of Land Acts as the 'unimproved value' thereof. Complaints were also made that the valuers■ acting for the 'Valuation Department did not sufficiently inspect properties when valuing them. By far the gteater part of the evidence brought before us related to these three matters. "We found that many property-owners appeared to consider that the Assessment Courts were hostile t'o thein when they appeared before such Conrtß in the capacity of objectors to the valuations placed upon their properties by the Valuation Department, and statements were made at several of the places visited by us that property-owners in many cases abstained from appearing in Court in support of their objections, deeming, as it was said, suoh a course to be useless. The reason for this state of mind on the part of property-owners was said to lie in the enactment under which Assessment Courts are set up. This enactment provides that the Court shall consist of the local Magistrate as President, and a member appointed by the Govemor r in-Council, and a member appointed by the local authority of the district whoso roll has been revised, such last-mentioned member not to be a member of any local authority. The evidence convinces us that property-owners in general hold the view that the members appointed by'the Government and the local authority respectively will be subconsciously influenced in the direction of sustaining the valuations made by the Valuation. Department, since it appears to be the opinion of property-owners that it is to the interest of both the Government and the local authority to keep values high for the purpose of levying the land tax in the one case and the local rates in the other. Are the Opinions Justified?

".We have not thought it necessary to endeavour to ascertain whether there is any foundation in- fact for these opinions, because we are quite satisfied that they are very widelv held among the property-owners of the Dominion, and we are strongly of opinion that it is of the'.first degree of importance that every Court of Justice in the land should as regards the mode of its constitution be such as to command the confidence of all persons having business before it. We should add that no reflection was made by the witnesses on the personal fairness of the members of any Assessment Court. The witnesses objected to the mode of the constitution of the Courts, and considered that unconscious bias on the part of the two members must inevitably exist in the 'direction of supporting the interests of the authorities appointing them.

"The Assessment Court, constituted as suggested by us, would no doubt be in the nature of a) Board of Arbitrators, but similar Courts have for many years been constituted for awarding compensation for land taken for publio works and'for settling industrial disputes, and we believe that the mode of the constitution of these Courts is such as to command the confidence of all persons appearing before them. Further, we believe that the existing dissatisfaction on the part of property-owners with the constitution of tna Assessment" Court will be most effectually removed by giving them dircct representation on the bench. The president, in addition to deciding legal points, would hold the balance as between the two assessors appointed by the Government and the ratepayers respectively.

Value of "a Home." "Evidence las been laid before us that objectors are sometimes asked in the assessments whether tbey are prepared to sell their properties at the Department's valuation, and that an answer in the negative is taken as an admission that the valuation is fair. If this is done, we consider that the test so'applied is not a true one. The Valuation of Land Acts speaks of the sum which the property might be expected to realise if offered for sale, and not of the sum at which the owner is prepared to sell it. The property may be the objector's home, and he might well not be prepared, to sell it at oven what he considers an excessive valuation. The case is the stronger in country districts, where the owner'has sunk his all into a farm, which provides employment for himself and members of Ms family. Complaints Well Founded. "We have the honour further to report that we have taken into consideration the evidence adduced befo're us that an excessive proportion of the capital value of properties is attributed to the unimproved value thereof, with the consequence that property-owners are allowed an insufficient sum for their improvements. Land tax is payable on the unimproved value, and in some districts the local rates are also levied on that value.'"Therefore as regards land tax, and, in some cases, local rates as wejl, the-value of the improvements upon the land is in the nature of an exemption, from taxation. Taking the evidence generally, we find that comparatively few complaints "have - been made that the capital value of properties has been excessive. Indeed, we have heard": a considerable amount of evidence ,to the effect that sales havo taken place ""above the capital value's as arrived at by the Valuation Department or fixed'by the Assessment Courts. The task or dividing the capital value of properties as between the 'unimproved value' and the 'yalue of improvements,' as respectively defined in the Valuation of Land Acts, is by no means easy, and is apparently one that falls to the lot only of the Department's valuers. The Acts' do not prescribe any method 1 by which the adjustment in question is to he made, and the evidence shows that different methods are employed by different valuers. Speaking generally, we consider that the evidence as a whole shows that in a number of cases the complaint that an undue proportion of the total value of properties has beeu attributed to the 'unimproved value' has been well founded.

Suburban Areas. "One ground of complaint under this head has to do with the valuation of lands situate in or near boroughs, and that have been subdivided into allotments for building purposes or are in proximity to lands that have been so subdivided, but where land has been subdivided in advance of the market for building allotments. It sometimes happens that a few only of the allotments are sold, and the rest of the land continues to he used for purely agricultural or pastoral purposes. Tn such cases owners have complained that the land has been valued somewhere near the prices that Tiave been obtained for the' new lots that have been sold. We think that in these cases the valuer should take into consideration the state of the market for building lots as existing at the time the valuation is made, and that land which then is used for purely farming purposes should not be valued on any other than a farm value basis, unless there is sufficient existing demand for building lots_ in the vicinity thereof to warrant a higher valuation. Under other head* bur* of this report we ska 11 resuecU

fully recommend that revaluations be made of certain properties as regards which wo are of opinion that considerable doubt exists upon the evidence as to whether the unimproved value has not been over-stated. Town Problems, "Closely allied to t'ke foregoing case is that of streets in towns the properties in which are mainly used for residential purposes, but in which a few properties have been purchased or are used for business purposes. Here, too, we consider that the demand at flie time of valuation for business places ia such a_ street should be taken into consideration, and that an owner should not have his residential property assessed as a business site value unless it has really acquired that value. But where the demand shows that a property has acquired a business site value, but the owner prefers to use it for residential purposes, it should be assessed by reference to the values of properties in the locality that have been purchased or are used for business purposes. The ascertaining of the unimproved value of properties situate in strictly town areas docs not, as a. rule, present much difficulty, seeing that in such areas land is found to have a more or less fixed value per foot fronts a " 6 ' ®ud the buildings thereon can readily be valued. _ But in farming districts the ascertaining of the unim?m Vei L va ' ,le °f l nllt l presents a more difficult problem, especially in areas in which land has been reclaimed from Rwamps or tho soil has been improved by liming cr manuring." Improvements Under-valued. Generally the Commissioners consider that the method of assessment of the value of improvements and of unimproved value laid down by the ValuerGeneral is a sound and just one. "But," they say, "in the cases that have come before us, and in which we doubt whether the unimproved value has not been fixed- at too high an amount, we consider that the valuers have not, in arriving at their standard values, allowed a sufficient sum in respect of improvements. This may be partly accounted for by valuers taking a number of sales of typical farms, £iid deducting from the purchase money their own valuation of the improvements on those farms, making the valuation too low. It can readily be seen that if the standard unimproved value of land in a di6triot iB fixed too high the whole district, will be over-valued-; and,' further ; that 6ince the unimproved >alue of any given property and the value of the improvements thereon must not exceed the capital value of the whole property, the value of the improvements gets cut down to a sum that, added to the unimproved value (found by reference to the standard value), will make up the capital value. We think that this explains some of the complaints that owners have not been allowed a sufficient sum for their improvements."

Olstrlot Valuers,

_ "In addition' to the instructions given by the Valuer-General in his memorandum, we have the honour • to recommend that the standard unimproved value of land in country areas be fixed by several district valuers acting together, with the assistance of a local valuer, appointed by the ratepayers of the district and paid by the local authority. We make the latter part of this recommendation particularly in view of the valuation of improvements, since the cost of fencing, ploughing, and other such works varies much in different localities. We may here add that several of the witnesses suggested that a local valuer should accompany the district valuer when making his valuation, antl that the same person should also sit on' the bench as the ratepayers' assessor. We consider that the local valuer should be a person other than the ratepayers'' assessor, since the_ Court would not be constituted on judicial lineß if a person acted both as valuer and judge, and, as above mentioned, we think it necessary for the local valuer to assist the district valuer, only in valuing typical properties for the purpose of arriving at the standard unimproved value of land in a district, We think that in fixing the standard unimproved value of a district, or part of a district, a liberal allowance should bo made for the improvements on, the typical farms that are taken, so as to ensure that the unimproved value of the district shall not be placed too, high. In the valuation of town properties we considor that the valuer should always be competent to value buildings as well as land, or should be associated with an architect or practical builder. We beg further to recommend that the valuer appointed to value a country district should have a knowledge of farming and of the cost of improvements, and that, whether as regards country property or town districts, the valuer selected should, where practicable, be one having a good knowledge of the district,