XN000022-1972-05-10 — Page 19

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Wednesday, May 10, 1972

That a moderate rent of this order of size was reserved, rather

less than half the market rent, is patent from an examination of the Gazette

notices advertising auctions of Crown land. Unfortunately this very important

fact was not placed before our Courts here nor before the Privy Council

in the case that went on appeal there. On the contrary, their Lordships

were told that since 1850 only nominal Crown rents, or Zone Crown rents had

been reserved. In the circumstances it was understandable that the Courts

came to the conclusions they did. It was even more understandable because

the Crown Lessee had submitted an argument that the reassessed Crown rent

should be the Zone Crown rent, a nominal rent.

Renewal

He suggested that, generally, Crown renta on renewal ought to be

about 40% of the full market rent.

"It may be that, to make allowance for the difficulty of assessing

what the market value of a piece of land is and for fluctuations in market

value with the forces of supply and demand, it would be fairer to use a

range of 25% to 55% rather than a flat 40%," he said.

For converting the capital value into annual payments, Mr. Cheung

said 5% interest rate was as much as Government ought to use.

He suggested that for Crown leases renewable for 75 years, the

annual payments of Crown rent should be not more than 1.89% of the capital

value in a normal market; about 1% in an overheated market; and about

2% in a depressed market.

In other words, on a piece of land valued, without buildings, in a

normal market at $100,000, the reassessed Crown rent should be about $1,900

per annum. The Crown at present reassesses it at $4,900 per annum. That is

$3,000 too much.

/When