How G round-Rents are Rated. 
 
 Ground-rents are commonly created under “ Building 
 Agreements,” i.e agreements by which the owner of certain 
 land lets it to a builder for so many years on certain conditions. 
 The provisions of such agreements are in general to the following 
 effect: — The builder is to enter on the land, and to erect a 
 number of houses of a definite kind. So soon as the several 
 houses are finished, the land-owner is to grant, and the builder is 
 to accept, separate leases of the houses at rents amounting in all 
 to a specified sum, the builder at the same time agreeing to pay 
 all rates, taxes, and other assessments or “impositions.” Thus 
 the land-owner’s rent, or “ ground-rent,” is obtained after an 
 estimate has been made by the builder of the rates that will have 
 to be paid for the houses he is to build. In other words, the 
 whole of the present or probable amount of the rates is deducted 
 in fixing the ground-rent, and in this way the ground-rent 
 really pays the whole of the pates upon the 
 land and building’s, so that if a special pate 
 were to be levied on the ground-rent it would 
 be rated twice over. 
 
 It is now proposed by some politicians to force the owners of 
 existing ground-rents to pay rates in spite of the contracts to the 
 contrary. It is easy to show that such Special Taxation 
 of ground-rents would be unjust. When the builder 
 or first lessee of land obtains his lease from the land-owner, he 
 agrees to give a specified ground-rent, and to pay all future rates 
 and taxes. If the rates had had to be paid by the owner, the 
 builder would have agreed to pay so much more ground-rent. 
 Why, then, should Parliament be asked to transfer the liability 
 from the builder, who has already been fully compensated by a 
 proportionate reduction in the ground-rent he has to pay, to the 
 land-owner, who has already discharged his obligation by taking 
 a smaller rent for his land ? 
 
 It has been urged that a special tax should be imposed on 
 the land-owners because, since many existing leases were created, 
 the rates have largely increased. There was, for instance, an 
 increase in the pound in the rates of London between 1873-4 and 
 1883-4 of 15 per cent., but this increase was far more than 
 
counterbalanced for those who he]d leases by the improved value 
 of the property leased to them, the annual amount received by 
 the leaseholders for this <e unearned increment” being nearly 
 three times the increased amount levied for rates. 
 
 It has also been urged that some portion of the rates is 
 devoted to permanent improvements ; but by far the larger 
 pait goes in current expenditure on objects of no permanent 
 value. The proportion of the rates which is due to loans for 
 permanent improvements is generally very small. The sum 
 which, apart from leases to the contrary, might on this account 
 be charged on the land-owner would probably be no more than 
 one-thirtieth, or even one-fiftieth, of the total ; but, as has been 
 seen, the land-owner cannot fairly be asked to pay even this 
 fraction, as the building lessee has already agreed to take the 
 burden of all rates upon himself in return for the low rent at 
 which he has obtained the land. 
 
 All these facts have been proved in evidence 
 before the Select Committee of the House of 
 Commons on Town Holding’s. (See the Final Report of 
 the Committee, published in May, 1892.) 
 
 It is therefore clear that as regards existing contracts the 
 Special Taxation of ground-rents would be unjust. As regards 
 future contracts, if the land-owner were made directly liable 
 for some part of the rates, he would easily recoup himself by 
 demanding and obtaining a proportionately higher ground-rent. 
 Such a change in the law would thus confer no benefit upon the 
 tenant. Earl Compton, M.P., who was President of the 
 “ United Committee for advocating the Taxation of Ground- 
 u Rents and Values,” said, at a meeting of the London County 
 Council, on November 13th, 1891 : 
 
 If they allowed rents to be raised — and he did not see how they 
 “ coul(1 prevent it— the last state of the oeeupiep would 
 “ in probability be worse than the first. He 
 “ was perfectly convinced that, wherever they 
 placed upon the owner the payment of local 
 taxation direct, that would mean that the 
 “ owner, when the lease fell in, would add that 
 amount to his rent.” {Times, Nov. 1 4th, 1891.) 
 
 Published by The Property Protection Society, 45, Parliament Street S W 
 
 . Pnnted ^ Metchim & Son, 20, Parliament Street, S. W., and 32, Clement's Lane, E a ‘ W '