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VALUATIONT OF niOPERTY. Book IV.

We now subjoin some
ol>servations on tlie va'iialioii of house propertij, which claim the
architectural student's
attention. Inwood's Tables
for
the Pvrchasiity
of
Eslules, 6,-c. have
lung l)ee.i in general use ;
they are founded on tlie elaborate Tal)les by Baily and Smart.
A
seiies are given liereafti.r. W. D. Biden, Riilfs, Fonnu/ce, and Tables
for
the I'ahiatioit
of
Estates. <:., with iiis smaller work, Fruclicul Rues forValuers, 1862, are useful, and have
furnished the outline for the following remarks.
It is generally considered that the value of a freehold house ranges, according to situa-
tion, style, condition, &c., from 10 to 20 years' purciiase. It naturally follows that pur-
chasers, and some valuators indeed, imagine that house property, as a rule, pays from 5 to
10 per cent, interest on the purcliase-money. Tliis is a great error, as many have ex-
perienced who have endeavoured to realise and to expend yearly 8 per cent, on the cost of
iiouse pro[)erty. The valuation should be made at 5 per cent, (if the purchaser will l)e
content witli that interest); and tlie ])reseiit value of o// the costs, charges, and losses inci-
dent to house property should be fairly stated and deducted in the valuation, and then the
purchaser will not be deluded with the idea that he is to net a very large interest, which
may be spent unconcernedly. Such is the expectation of many of those who are induced to
join Building Societies, and who buy, what appears to them, a bargain, as they will be
receiving for years double or treble the amount of interest obtainable from the funda. A
change of tenants, or other cause, soon shows the diS'erence. Where, however, the buyer
liimself occupies the house, whether freehold or kaseliold, he may make a very advanta-
geous investment of his money. In the latter case, that is, of a leasehold, he must bear in
mind the result of the occupation of the premises, namely, dilapidations, for which he will
I)e called strictly to account by his landlord at the expiration of his term of lease.
Compare the following valuations, made in two ways, of a freehold house, which will
last for about 80 years, the tenants paying the rates amounting to about l per annum. One
valuator may make out his calculations thus
:

Gross rent received hy the landlord -

. -
Deduct Insurance - "j

Land Tax
-
J-
when paid by him

Sewers Rate
J

General repairs, 10 per cent.

Collection, &c. -
s. d. s. (1.
C3
"1
10
1 2 fi
15 9
6 6
4 14 6
14 8
iT~
9
48
(In a leasehold valuation, the ground rent would also have to be deducted
)
To pay 8 per cent., at years' purchase (Fourth Table)
12^
Presumed value of the property, according to this rough valuation
.Another valuator will make out his calculations as follows
:

Gross rent
---.---
Annual deductions, as before
....
Net rent
.......
But property is usually subject to various depreciating con-
tingencies, which must be provided against by an annual
reserve according to the class of building, thus:

Deduct for losses by bad tenants, s.iy 1 year's rent in 6

And, for extra repairs and expenses contingent upon such
frequent changes, say an equal sum
...
Deduct a sum for rebuilding (say about 630),
which, put by
each year in the funds at 3 per cent, compound interest,
will produce that amount at tlie end of the life of the
house, say 80 vears, i.e., 1 per annum for 80 years (Third
Table)
-
'
- - -
=
32l-3o3
007 O 8
= 10 10
10 10
2
612726
Clear income from the property
- - -
If the purchaser elects to have 5 per cent, for his speculation, the amount
to be paid for the property will be -
The value of the ground in these calculations is included in the rental ; when of some
Importance, it must be valued upon its own merits, as shewn in the previous p;)ge.
23
25 11 3
512