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I.—sa.

F. W. FLANAGAN.!

9

There is thus a difference of £90 between these values. The present value of the difference —£90 —for 30J years at 5 per cent, compound interest is £19 19s. 2d. Add to this the original value —£30—and you have £49 19s. 2d. : that is the Crown's interest. 42. That is £49, and the balance of the value is the tenant's interest? —Yes; £70, and any additional amount he may sell it for. 43. Hon. Mr. Masgey.] I wish to refer to this section of 4 J acres, the original value of which was £30, but the Valuer-General's value is £120, leaving the purchase price at £49 19s. 2d. What I want to get from the Valuer-General is this : that £49 19s. 2d. if invested at 5 per cent, for the remainder of the lease, would that bring the amount up to the value fixed by the ValuerGeneral's valuation?— Yes; £49 ]9s. 2d. invested at 5 per cent, compound interest for the remainder of the term of lease is the equivalent of the rental invested at 5 per cent, compound interest for the remainder of the lease plus the Crown's reversion of £120 —the Valuer-General's valuation. 44. Exactly?— Yes, practically. 45. Well, the tenant gets nothing for his interest in the lease?—No payment. 46. It is a renewable lease? —Yes. 47. Mr. Statham.] The original capital value on which the rent was based in this case was £30?— Yes. 48. The position, I take it, is this : the present value is £120?— That is so. 49. But the State, instead of getting a rent based on the £120 value, would have to be content for the next 30| years with a rent based on the original value? —Precisely. 50. Assuming that you are personally the absolute owner of the lands, and these at the present time are worth £120 an acre, but that your interest is encumbered by the leases having 30J years to run, in the transactions which have taken place would you feel that you had personally got the whole of your interest paid to you as owner of the land?—A little more than my interest. 51. Would you feel that you had got the full benefit of the increase in the value of the land up to the present time? —Yes, and £2 in addition. 52. In other words, assuming thai the lands remain at the same figure, £120, the owner of the land would be entitled to that £120 at the end of 30£ years?— Yes. 53. In the meantime, you are losing the difference between the rent on the original value and the rent you would have got if you had been leasing the land now?— Yes. 54. If the tenant, instead of converting his lease into freehold, were to transfer it to another tenant? —He would get the whole benefit of the £90 increase in the value of the land. 55. Instead of that the whole benefit is going to the State? —The State is getting its full share of the increased value and something more. It has got the better bargain. 56. It has been said that, although the State has not lost anything in these transactions, it would pay the State better to hold the lands because the value is increasing so rapidly. Have you any reason to suppose that the land will continue to increase in value at such a rate as this? —No. In a growing community one oannot tell what is going to happen in, say, ten years' time. I have known localities to start most favourably—land rose in value and then receded. One need not go further than Kaiori, a suburb of Wellington, or the Hutt as instances of this — both popular places a few years ago. 57. Do you consider that this land is just as likely to go down in value as it is to go up in value? —I could not go so far as to say so definitely. Igo so far, however, as to say that I would not take the risk of putting higher values on it in the expectation that they would be permanent. Auckland is a growing city, expanding ai a rapid rate, on what I believe to be a sound basis, speaking generally; but I know there are many land speculators and jerry-builders operating there at present. Our experience with applications made to the State Advances Department for loans has proved that values are being forced up by speculators. 58. In your opinion, then, is it a matter of pure speculation as to whether the value of land will go up any more or go down? —It is a matter of pure speculation. 59. Mr. Wittv.]'You said that the law does not allow the valuer to put on a prospective value at all? —Yes. 60. And you said that your valuers value really less on account of people requiring mortgages and also with regard to its affecting local bodies? —I did not say that the valuers valued at a figure under safe value, but that they exercised extreme care for the reason mentioned. 61. I think your words were that the Valuation Department valued at under selling-values on account of advances by way of mortgage and to local bodies? —Yes, under speculative sellingvalue. 62. You did not say " speculative " at the time? —No, but it is assumed that I am speaking of a fair selling-value as against speculative value. 63. You say that the adjoining land was offered to the Government for workers' homes. Do you know at what price it was offered? —£65 an acre. The District Valuer will be able to give evidence on that point. 64. The land adjoining has been sold for a higher price than that put on New Lynn, has it not —I mean land in the vicinity? —Yes, land in the neighbourhood of New Lynn. Hetana is some distance from New Lynn. 65. Taking the comparative prices, it has been sold at a higher value?— Yes, there are isolated instances. 66. Do you think it is right for the State to receive less than other people are receiving for the same class of land? —Certainly not, if the values are fair; but if a speculator gives, say, £300 an acre for land that we estimate is worth only £200, it does not follow that the State is securing less than the fair value of the land if we ignore the speculative value.

2—l. sa.

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