I!! [■I'm mi HD 595 1837 A = Al ' — 1- ■ o '— o U ^ •— 0^ ___ -1. "■— m === ID ^ == JD _^^ m — CD 5 — ^— O / = ^ ^ ^^^ 1 — 6^ ^^ S = — "" 7 = b = == -n — t > — ( ^^ ^s ^ 4 ELSlfY CHURCH l£ASES CONSIDERED THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES CHURCH LEASES CONSIDERED. BY CHARLES HENEAGE ELSLEY, ESQ. LONDON: JAMES RIDGWAY AND SONS, PICCADILLY. 1837. CH^^SEA: printed by WILLIAM BLATCH, 23, EXETER STREET. /?37 PREFACE The following observations appeared originally in a provincial paper called the Yorkshireman, under the signature of " Peter Freeland," As the subject occu- pies the public attention very much at present, I have been induced to think, that the presenting them in their present shape would not be unacceptable to the Public. I have reason to believe that the informa- tion contained in them has not been altogether de- void of interest, and I flatter myself it has given some satisfaction. The question, it is to be hoped, will soon be before a Committee, where it will be fully con- sidered : I am in hopes, nevertheless, that v.-hatis con- tained in this little Pamphlet, particularly in the first pages of it, will tend to make the ol)ject of that B S012486 IV inquiry more easily understood. With this expec- tation, I now submit it to the indulgence of the public. I take this opportunity of expressing my grateful thanks to Mr. Newman, the Actuary of the Insurance Office in York, for his valuable assistance; and 1 am flattered by his opinion, expressed in a letter which will be found in a note, coming as it does from a gen- tleman of his talent and great practical experience. May Zlst, 1837. CHURCH LEASES CONSIDERED. I SHOULD not have thought of making the follow- ing observations public, but that I am myself a lessee of church property to a considerable amount, which my family has possessed for many years, and- that I feel an anxious interest in the question now in agitation. It is not my intention at present to enter upon the question of the expediency or propriety of abolish- ing church-rates : 1 will advert only to one part of the Chancellor of the Exchequer's plan, which is very little understood by many persons, who, never- theless, have not hesitated to give their opinions very roundly, both within the House of Commons and without. I allude to the change contemplated 6 to be introduced into tliat property, which is now held by individuals under leases granted to them by dignitaries of the church, whether bishops, deans and chapters, prebendaries, or canons. To arrive at a proper understanding of the change, I will en- deavour to explain the nature of such property, which may be designated by the general term of CHURCH LEASES. Almost all ecclesiastical bodies, which I will for the sake of brevity comprise under the general name of Dignitaries, are possessed of landed property, which has been attached to their dignities either as original endowments upon the founding thereof, or as grants of lands, once belonging to monastic in- stitutions, upon their dissolution, principally in the reign of Henry VIII., or his immediate successors; but it is not material for the present subject to enter into this inquiry ; for whether the lands came by original endowment or by subsequent grant, they are in the same situation as regards the dignitaries or lessors, and their tenants or lessees. By law, such lands cannot be alienated, demised, or let for any longer period than twenty-one years, or the longest life of any three lives, except in some parti- cular cases; they may be let for any shorter period, or they may be kept in the hands of the dignitary himself and occupied by him, as, for instance, epis- copal residences, deaneries, prebendal houses, and the like. The practice with regard to the demising or letting of church property varies with different dignitaries iiiul in diftcrcnt places: this is one of the evils of the present system, for the terms upon which it is held depend upon the conscience, and in some instances, upon the caprice of the lessor: in fact, some lessors are more liberal and disinterested than others, who drive as hard bargains as they can ; in the case of a liberal lessor the church does not o-et its due — in that of an illiberal one, the lessee is oppressed. In the case of leases for lives, the usual practice is as follows. I will suppose that an estate is held upon a lease for three lives, that is, that it has been granted, demised, or let to an individual " to hold during the lives of A, B, and C, or the life of the longest liver of them ; " so that so long as any one of them. A, R, or C, continues to live, the lessee has an indefeasible estate of freehold, called, in law French, "an estate p?/r aider vie,' being held upon the life of another person. In a lease of this description, there is generally made payable to the dignitary or les- sor a certain annual sum called " the reserved rent ;" this is a small payment not at all equal to the real annual value, in most instances almost a nominal sum. The dignitary reserves to himself all timber growing upon the estate, and the right of cutting it down, allowing to the lessee timber for necessary repairs, or what is termed " housebote, hay bote, and plouglibote; " — that is, wood for repairs of houses and buildings and for fuel, wood for hajjs or hed- ges and fences, and wood for ploughs and other instru- 8 ments of husbandry ; which, however, the lessee cannot cut down and use without the approbation of the steward or agent of the dignitary. The les- sor, also, sometimes reserves to himself the right to the game upon the estate, so that his gamekeeper shall have the sole right to kill it. Now, suppose one of these lives. A, for instance, should happen to die ; then the estate will be held upon the lives of B and C ; but it is to the interest of the lessee that he should have his term renewed ; that is, that it should again be made to depend upon the duration of three lives, or the longest liver of three; and it is also to the interest of the dignitary to put an immediate sum of money into his pocket; he may die, or be translated, oi* advanced before another opportunity offers. Thereupon the lessor and lessee begin to bargain together for a '■^renewal,'"' and the way in which this is carried on is something generally as follows; at least the following is the fair and equita- ble plan. The dignitary sends his valuer to look at the estate, in order to ascertain the annual value. Now we will assume, that the valuer makes the an- nual value to amount to £1020, a sum at which it might reasonably be expected to be let to a tenant ; and we will assume that the reserved rent is £20. — Then we have The annual value at which it might be let . . . £1020 Deduct the reserved rent ...... 20 Net annual value, on which therenewal tine is to be calculated £1000 9 This is the ''datum," tlic fixed point, upon which the calculations are to be constructed. Now, sup- pose the ages of the two remaining lives, B and C, to be 55 and 65 respectively, and that the lessee, of course, is desirous to put in a very good life, that is, a life of the longest probable duration, say D, then of the age of 10 years. The first consideration is, what interest the dignitary is willing the lessee should make of the money which he is to pay for the renewal fine; and we will suppose that he is wil- ling to allow him to make £5 per cent, in order to induce him to renew then, and not defer it, for fear of accidents. The calculation then proceeds thus : — Upon consulting the tables for the purchasing of es- tates, renewing of leases, &c., which have been constructed by mathematicians and algebraists, (Sir Isaac Newton among others,) upon the doctrine of chances and the probable duration of human life, and w^hich are now in everybody's hands, it is found, that at the rate of £5 per cent., a lease for the long- est liver of three lives aged, 10, 55, and 65 respect- ively, is worth 16 years' purchase, that is, 16 times the annual income; but that a lease for the longest liver of two lives, aged 55 and 65, is worth only 1 1 years' purchase. So that we have The value of the new lease to be granted for ^^''^'' ~ the lives of B, C, and D . . . 16 years' purchase. The value of the existing lease for the lives of B and C, the two survivors . . 1 1 .. .. Difference in value . o ^^-^ 10 As the net anniuil value of the estate is assumed to be £1000, the difference, being 5 years' purchase, will be £5000, and this is the sum, which under the circumstances, ought to be required for the re- newal of the lease; this is popularly called the fine. The lessee, however, may not agree to these terms ; he may think that the valuer has made the annual value too great; that it should have been only £900 instead of £1000 ; or he may fancy that he ought not to be charged so many years' purchase ; or, what is generally the case, he may be ignorant of the data upon which the fine is calculated, and may object to the gross sum. If the dignitary be very old, or translateable, or advanceable, he may proba- bly abate his demand ; he may be willing to allow the lessee to make £6 per cent. Then, by the tables ; The value of the new lease to be granted for the lives of B, C, and D . . .14;^ years' purchase. le value of the existing lease for the lives of B and C ..... 10 ,, ,, Difference in value 4^ Whicli, in money, amounts to £4,250, being a bet- ter bargain for the lessee than the former by £750. But, if the dignitary be young and healthy, and also un-translateable and un-advanceable, he will stick to his terms, and if the lessee will not agree to them, he will run his life against the remaining lives in the lease or he may grant a concurrent lease;* * A Bishop may always grant a concurrent lease under certain and ill case he should outlive them, the estate will go away entirely from the original lessee, and may be granted out to aii}^ other person, probably to the digni- tary 'sown son, relative, or connection, who withoutpay- ingany fine, may have a new lease granted to him forthree good lives, which will be worth somewhere about 18 years' purchaseat£5 per cent. For it is agreat mistake to imagine that the lessee has any legal or equitable right to compel the dignitary to renew^ the lease to him : it has been so decided in courts of law ; and in practice I could j)roduce instances of leases being allowed to run out, and the property thereby has passed from the lessee and his family into other hands : there is no such thing as a tenant right. Yet, I own, these instances are rare; for the dignitaries themselves, wdiether bisliops, deans and chapters, or prebendaries, have only a life interest: for if they should die or be removed before the lease expires, all benefit arising from that circumstance will go to the restrictions, and the effect of one is shortly as follows. In the ca?e put in the text, if the lessee cannot agree with him for a renewal, he may grant a lease dependant upon three of the best lives he can select to a relative, to a friend, or to any individual. This is called a concurrent lease, because it runs with and exists at the same time, as the original lease dependant upon the lives of B. and C. When B. and C. are both dead, then the concurrent lease comes into ope- ration, and the property is held by the new lessee under it. A con- current lease may be granted gratuitously, or for a money consider- ation, so that in the case put, if the lessee will not renew and pay the fine, still the Bishop may receive a sum of money upon granting a concurrent lease to a new lessee : it will be so much the worse for his successor, who will not have a chance of a renewal so soon. 12 successor. They, therefore, are willing to renew, because the money received upon the renewal be- longs absolutely to them for the benefit of themselves and their families. If he should not give the estate to one of his own family, he will be justly entitled to demand 18 years' purchase, or £18,000 for the granting of a new lease, or he may obtain considerably more from the original lessee, or any other individual. Sometimes it hap- pens that a lessee stands out till two of the original lives are gone ; then the terms will be, supposing that this happens after the lapse of 10 years, when the only remaining life will have attained the age of 75, and the two new lives proposed to be inserted are of the age of 10 and 25 : — The value of the new lease will be .... 1 7 years' purchase The value of the existing lease now depending upon the life of D, aged 75 4f " " Difference of value 12^ Which in money, amounts to £12,250, the sum to be paid for the renewal in this case, at 5/. per cent. In any of these cases, if the lessee agrees to the terms proposed, he surrenders and gives up the ex- isting lease, whether there be two lives or one remaining in it, and upon payment of the sum agreed upon he receives a new lease, under which he enjoys the estate subject to the payment of the reserved ^rent, and to the dignitary's right of cutting down 13 timber, and taking the game when reserved, without molestation, till one of the lives drops, when the same operation is again performed. The renewal of leases for years is conducted upon the same principle. Such a lease cannot in general be granted for more than 21 years, and the usual course is to grant such leases for 21 years renewable every 7 years, by which it is provided, that at the expiration of 7 years the lessee may make a new bar- gain, and obtain a new lease, for 21 years, deter- minable as before at the end of every seven years, on payment of the fine agreed upon, and upon surren- dering the existing lease. If he cannot agree with the dignitary at that period, another opportunity is given at the end of 14 years ; of course, the terms of the renewal will then be higher. If he does not then agree at the end of the 21 years, the lease will have expired, and he will be at the mercy of the dig- nitary, who may grant a new lease to any other per- son as well as to him. So that in practice, these leases may be considered as leases for 7 years, as the lease is generally renewed every seven years. As in the case of leases for lives, the first point to be de- cided upon is the annual value. The next consider- ation is, what interest the dignitary is willing to allow the lessee to make of his money, and this in some cases, is 9/. per cent, and when so the terms are cal- culated as follows : — The value of the new lease for 21 years, at 9/. r- per cent 9^ years' purchase 14 The value of the existing lease for the remaining ] 4 years, at the same rate of interest . . 7|- Difference in value lo 2 So that the fine upon an estate of lOOOZ. per annum, would be 1500/., for which the lessee obtains an additional seven years. '^^ If the lessee is only allowed to make 11. per cent., then the renewal would be made at two years' purchase, or for 2000/., and this, I believe is more generally the case. The reason why this large rate of interest is allowed, seems to be on account of the uncertainty and unpleasantness of the tenure, the being exposed to the inconvenience of making a fresh bargain every seven years, the uncertainty of the estimate which may be made of the annual value on the next renewal, the expense and trouble of the law proceedings and fees necessarily atttendant, and the being subject to the dignitary's right of cutting down timber, killing game, and the like. The estimate of the annual value is quite arbi- trary, and very often is made, not upon a consider- ation of what the property has been worth annually for the last seven years, but of what it may be worth prospectively during the next seven years. I know this to be the case with respect to collieries. From these circumstances it is necessary that a lessee should * It is not a lease for 7 years immediate, but for 7 years after the expiration of 14 years ; a lease for 7 years immediate is worth 5 years' purchase at £9 per cent. 15 be allowed a good rate of interest to make it worth his while to renew at all ; but there is nothing to prevent a dignitary obtaining a fine of more years purchase, if he can meet with a lessee who is inclined to be satisfied with a lower rate of interest. I know it is asserted by the opponents to the Chancellor of the Exchequer's plan, that dignitaries take only li years' purchase, particiilarly in the county of Dur- ham. It may be so there, but it certainly is not so in other places ; and even if it is the case there, there is neitlier law nor equity to restrain a dignitary from demanding more and from getting it if he can. If he does not lay it on in the number of years' purchase, he will in the annual value of the property. It matters very little w^hether he takes a fine of only li years, but estimates the annual value at 1300/., or takes a fine of two years upon an estimated value of 1000/. . in the former case the fine will be £1950., and in the latter, £2000. I must again observe, that both in leases for lives and leases for years, the dignitary is not hound to renew at all. If he does not accept the terms ofTered by the lessee, or if he has a fancy for the estate for his own family, or if he has any personal dislike or ill feeling towards the lessee, and also thinks that he is likely to outlive the lives in the lease in the one case, or the unexpired term of years in the other, he will not renew, and the estate will eventually pass away from the lessee and his family. This is what all les- sees are subject to, but this case does not frequently 1() arise, as in general, the dignitary is desirous to get possession of the renewal fine ; there have, however* been instances to the contrary, as I have observed be- fore. Sometimes a large estate is included in one lease, which estate, after the granting of the lease, hasbe- come^divided among several parties by sales of portions of it, or by other means. In this case, when a re- newal is to take place, all the parties must contri- bute to the fine ; and if they cannot agree among themselves, which is not unfrequently the case, the lease may expire before the arrangement is made, and then the parties are at the mercy of the dignitary. This, I know, was the case with a large lease at Ripon; but in this case the worthy and excellent Arch- bishop of Yorkregranted the several portions of the es- tate to the original parties upon very kind and liberal terms; and I can only express a wish that all digni- taries resembled him.* I have endeavoured to give a familiar explanation of the nature of church leases, and I will now make * I myself am a lessee under his Grace, and I believe I am speak- ing the language of all his lessees, when I say that we all experience from him the greatest liberality, kindness, and courteous attention, and have reason to be satisfied with the tenure under him. But what of that ? He is only a mortal, and how can we foresee what tenns we may be subjected to under his successor. I f such successor should, at the time of his promotion, be 70 years of age, it is not unreasonable to suppose, that he will be willing to renew upon easy terms : if, however, he should be only 35 years of age, may we not imagine the case to be very different ? This again shows the uncer- tainty of this tenure. 17 some observations about the Chancellor of the Exche- quer's plan, which it is absurd to attempt to reason upon, unless persons understand the nature of the kind of property, upon which it will operate, I will, therefore, now endeavour to state what I conceive will be the effect of the plan about to be in- troduced with regard to them by the Chancellor of the Exchequer, premising that I only form my opi- nion from the printed report of the right hon. gentle- man's speech, and that I have not seen the outline even of the bill. In few words, I conceive it to be as follows : — The fee simple or freehold of inheritance, in other words, the possession for ever of an estate now held under a church lease for lives or for years, is to be estimated at twenty-five years' purchase, which is at £4 per cent. ; for if an estate is worth £1000 per annum, and I give twenty-five years' purchase, or £25,000 for it, as the interest of that sum at £4 per cent, is exactly £1000., I make £4 percent, of my money so laid out. The interest which the lessee has in the lease, whether that be dependant upon a life or lives, or for an unexpired term of years, is also to be esti- mated at £4 per cent., according to the tables which I mentioned before. The value of the lessee's interest is to be deducted from the value of the fee-simple, and the lessee will have to pay the difference, which it is only fair and right he should : it is in fact, nothing more than an exchange of an uncertain term for a perpetuity, and the person gaining the perpe- 18 tuity must pay the difference in value. But, in truth, he is not to be called upon to pay that sum, but only the in'erest of it ; for when it is ascertained, the interest of it at £4 per cent, is to be payable out of the estate, in the nature of a rent-charge. An ex- ample will make this plain : we will assume, as before, that there is an estate of the clear annual value of £1000, and that the lives in the lease upon which it depends are aged 20, 35, and45 years res- pectively ; the value of such a lease, at £4 per cent, is 19"393 years' purchase; or, in this case, £19,393. Then we have The value of the fee-simple, at twenty five years' purchase, £ which is at £4 per cent . . 25,000 The value of the lease, also at £4 per cent 19,393 The difference to be charged upon the estate at £4 per cent. 5,607 The interest of this sum at £4 per cent is £224 5s.6d. which is to be a perpetual charge upon the estate, fluctuating, however, with the price of corn. For this annual payment the lessee will have an estate of freehold of inheritance, entirely at his own disposal, which he may lease, or sell, or mortgage to whomso- ever he pleases, subject to the rent charge ; he will be free from all apprehension of having to bargain for renewals from time to time, and from all the trouble, anxiety, and expense attendant thereon : he will no jonger be liable to be called upon to raise the money for the renewal, when it may be very inconvenient for him to do so. He will likewise be rid of the dig- nitary's valuer, solicitor, steward, bailiff", woodcutter 19 and gamekeeper ; he may plant a tree and water it, with the certain hope that he and his son and his son's son may sit in the shade thereof; he may drain, cul- tivate and improve his fields, without fear of the dignitary's valuer making him pay twice over for his improvement, by an increased fine at the next renew- al ; in short, what seemed to be his own will then be his own ; he may say, v/ith the old ballad, — " I am monarch of all I survey, My i-ight there is none to dispute." I will observe further, that there is an apprehen- sion on the part of some lessees that the Commission- ers may fix too high an annual value ; for in this in- stance, as in cases of renewal, the annual value is the first thing to be ascertained, and upon it when as- certained, as a "datum" all calculations are to be constructed. But I really think that such an appre- hension is groundless, at least I hope so. The out- cry against Ecclesiastics used to be that they were ra- pacious; but since this plan has been projected, the very persons who made the outcry now assert, that they (the ecclesiastics) are the most amiable and in- dulgent beings upon earth. I believe the outcry was un- just ; there might be instances of rapacity on their part, but it was not universal. Nevertheless there was not and there is not anything to prevent a dignitary from driving as hard a bargain as any commissioner ; and as to the measure being imperative, as far as I understand the Chancellor's plan, the alternative will be to let the lease run out, which the dignitary has c 20 now the power of doing, without tlie lessee being able to prevent it. I will also add, that if the valuer should lay on a high annual value, the lessee's own interest in the lease will be valued in his favourby the same measure. Besides, 25 years' purchase for a fee-simple gives very advantageous terms ; it is worth at least 28 years' purchase, more likely worth 30 years', or it would soon be so from a better state of cultivation and management, additional buildings, and various improvements in towns as well as in the country. The payment of the rent-charge, after all, will be no great hardship, for I believe that at the present time all prudent lessees insure the lives in their leases, that is, they make a bargain with a life-insurance office, that upon payment of a certain annual sum called the "premium," a certain sum, supposed to be sufficient to meet the fine upon the renewal occasioned by the death of the party insured, shall be received from the insurance office, upon that event taking place. The amount of the premium, of course, depends upon the age of the life insured ; so that, in fact, most lessees are now paying a rent-charge or yearly-rent, not indeed to the lessor, but to the insurance office ; if they do not use this precaution, they will be very much inconvenienced when a life drops, if not absolutely beggared, where they have lived up to the full extent of their income without thinking of making such a provision; leasehold property has been the ruin of many a man for this reason. 21 With regard to leases for years, the principle of the commutation of them into estates of fee simple is just the same ; the fee simple is to be valued at 25 years' purchase, and the unexpired term in the lease at £4 per cent., and the difference is to be charged upon the estate. I will observe that, where a fine is payable every seven years, it is not correct to inquire what sum the lessee must lay by every year to meet the fine (even if he could foretell what fine the dig- nitary would be pleased to exact,) but it must be remembered, that a fine is always paid in the first in- stance before the renewal is granted, so that it should be considered what annuity for seven years that sum would purchase, if so laid out, instead of being laid out in renewing the lease. I shall resume this sub- ject further on. The Chancellor of the Exchequer professes that he will raise a surplus sum of £250,000 per annum, after paying to the dignitaries the annual average amountoftheir fines. Atfirstviewitdoesnotappearvery easy to comprehend how this is to be done without in- juring the lessees, and indeed it is the most difficult part of the subject. I will endeavour, however, to ex- plain it, and to make it intelligible, but it will re- quire some little attention. Let us first consider it in this light : suppose none of ths lessees were to agree to his plan, and that all existing leases were to be allowed to expire by efflux of time ; then the reversion, by is which meant the fee simple or per- petuity, the commencement of which is deferred till 22 after their expiration, will fall into the hands of the Government to dispose of. Let us now suppose that the Government should offer the reversion of all the leasehold property for sale at this present moment, and let us consider what sum it ought reasonably to receive for it. The Chancellor assumes that the an- nual value or rental amounts to £1,323,000, and he also assumes that the average unexpired duration of all leases, both for lives and years, taking one with another, some being shorter and others longer, is twenty four years. He assumes these two data from actual calculations which have been made, and which I will not enter into at present. Now a fee simple or perpetuity to produce £4 per cent to a purchaser is worth 25 years purchase, a? I have explained above ; so that if immediate possession could be had of the leasehold property of England, the fee simple of the estates would at that rate be worth twenty-five times £1,323,000 or £33,075,00. But the obtaining possession is to be deferred for a certain time on account of the existing leases, and it is assumed that we may calculate upon its being deferred for twenty-four years. Now, upon consulting the tables, I find that, at £4 per cent., £1 payable at the end of twenty-four years is worth only 75.10c?.; that is, if a person was about to purchase £1, which is not to be paid till after the expiration of twenty- four years, he ought only to give 7s. 10^. for it at the pre- sent time. It is obvious that he ought not to give £1 now to receive £1 in twenty-four year/ time, as he 23 will lose all the interest of his money in the mean time. The tables shew that 75. 10c?. is the sum which he ought to give, and which in decimal parts of a pound, is represented by .390. So that we have this question of the rule of three. As £1 deferred for 24 years : .390 : : £33.075,000 deferred for 24 years : the present value of the reversion. and by multiplying the third term by the second, we find the result to be £12,899,250, or in round num- bers, 12,900,000 ; which is the present value of the leasehold property in England, the delivery of which to the purchasers is deferred for twenty-four years. The interest of this sum is £516,000 at 4 per cent., so that the reversion of the leasehold property to come into effect at the end of twenty four years, is at the present moment worth £516,000 per annum. Now it is ascertained that the average annual amount of fines is £261,000 : by taking this last sum from £516,000, we have £255,000 remaining as an available surplus for the Chancellor ; indeed £5000 more than he pro- fesses to raise. Let us now consider this subject in another light : let us suppose that all lessees agree to the Chancel- lor's plan, that is, that they all commute their lease- hold property into fee simple or perpetuity, by pay- ing, or having charged upon their estates, the dif- ference between the value of the fee-simple and their present leasehold interests, all at £4 per cent. Now, as before, the annual value of all leasehold property is £1,323,000, and supposing the average duration 24 of existing leases to be twenty four years, we must ascertain how many years' purchase a term of twen- ty-four years is worth at £4 per cent. Upon consult- ing the tables, I find that it is worth 15^ years' pur- chase, which, expressed in decimals, is 15.247 ; but the value of the fee simple is twenty-five years' purchase, so that by taking the former sum from the latter, we have 9.753 years' purchase for the difference to be paid by lessees, or to be charged upon leasehold pro- perty. We must therefore multiply £1,323,000 by 9.753, and we shall have the result, £12,903,219, let us say, £12,900,000, for the difference in money, which is to be charged upon the estates at £4 per cent, which interest amounts as before to the annual sum of £516,000; deduct fines to the amount of £261,000 and we have a surplus income of £255,000. I have shown that in the case of the commutation of a lease held for three lives, respectively aged 20, 35, and 45, for a fee-simple, the annual charge upon an estate of £1000 per annum would be £225 5s. 6d. and deducting this sum from the rent, there is left a clear income of £775 145. 6d. Now, as this latter sum is the interest at £4 per cent, upon £19,393, the value of the lessees leasehold interest, he has no rea- son to complain, for he gets a freehold investment fthe lease being turned into a freehold) which pays him £4 per cent ; this is an investment which any- body would be glad to make ; money is often laid out in an investment in land which does not produce more than £3 per cent., in some instances only £22 per 25 cent. It must not be lost sight of, that he onl}? gives twenty-five years' purchase, or £25,000, for that which he may certainly get £28,000, or perhaps £30,000, or more, for, — a clear gain of £3000, £5000, or upwards ; and also that he has no annual premium to pay to the insurance office ; besides being exempt from the inconveniences and annoyances mentioned before. With respect to leases for years, the terms do not appear to be so advantageous at first sight, more par- ticularly in a money point of view. Let us, however, consider how the case stands a little more minutely; let us again imagine an estate of the clear annual value of lOOOZ., of which seven years of the lease for twenty-one years are expired, and that the lessee is about to obtain a new lease for twenty-one years, upon surrendering the existing term of fourteen years. We will put this renewal in the most favour able light, and assume that the dignitary is willing to accept as a renewal fine H years' rental, which is 1500/. ; I think we may also assume that the various expenses attending the renewal may amount to 100/., making a total of 1600/*. Upon payment of this * This may be taken too high : there is certainly some expense attending a renewal, besides trouble, anxiety, uncertainty, and very often much difficulty in raising the money, particularly in the case of lessees of limited income : there is the lessee's own solicitor and valuer to be paid, unless he transacts the business himself, when there is the loss of his time and other inconveniences. In the case alluded to before, the skins of parchment, which contained the 26 sum, the lessee obtains an extension of his term for seven years, at the end of which period he reason- ably i?xpects to be allowed to renew again upon the same terms : observe, he has only an expectation that such will be the case ; he has no power to enforce it. Now, the sum of 1600/., if it were laid out in the purchase of an annuity for seven years, at 41. per cent., instead of being laid out in renewing the lease for seven years, would buy one of the annual value of 266/. lis. 3c?., say 266/. ; so that the payment of the renewal fine may be considered as an annual charge upon the estate to that amount. Conse- quently, the lessee receives annually from the estate 1000/. mimis 266/., that is, 734/. But U years' rental is much below the amount of the fines usually taken. If two years' purchase be required, the fine and expenses will be about 2100/., which would pur- cliase an annuity of 350/. nearly ; consequently, in this case, the lessee only clears 650/. from his estate. If the fine be taken at 2i years' purchase, the sum will be upwards of 2600/., which would purchase an annuity of 433/. nearly ; consequently, he will then only clear 567/. Now, let us consider the operation of the Chancellor of the Exchequer's plan, and that the lessee adopts it immediately after renewing : then, as I explained before — colliery lease would have carpeted a moderate sized parlour : and if any body fancies that such a carpet is made for nothing, he knov s very little of the mysteries of conveyancing. 27 The fee simple, valued at twenty-five years' purchase, or £4 per cent. £25.00^ The term for twenty-one years, also at £4 per cent, is worth 14.029 Difference in value . . £10,971 And the interest of this last-mentioned sum, namcl}', 439/. nearly, will be the charge upon the estate for ever. But where only 1^ years' purchase has been taken for the fine, there is already a charge of 2661., as I explained above ; the additional charge, there- fore, will be the difference between these two sums, or 173/. In this case, certainly, in a money point of view, the lessee will have his annual income dimi- nished by 173/. ; he will only have a clear income of 562/., instead of 734/. If two years' purchase has been taken for the fine, as in that case the charge amounts to 350/., he will only be worse by 89/. in the 1000/. ; if 2\ years' purchase has been taken, he will only be worse by 61. But even in the worst case, if the lessee chooses to sell his property, when turned into a fee simple upon the Chancellor's plan, whatever he can get for it beyond 25 years' purchase will be a clear absolute gain to him^ >* * In my original letter I made the following statement: — " Let us, however, consider the worst case a little further in a money point of view: the perpetuity of 173/. at 4/. per cent, is worth or equal to the principal sum of 4,325/., that is, that perpetual charge of 173/. 28 But whatever a lessee for years may lose in money, he will gain in comfort ; he will have an estate of is redeemable and would cease upon paying down that sum. The Chancellor charges twenty-five years' purchase for the fee simple, or 25,000/., but we all know that a fee simple is worth much more than twenty-five years' purchase, more probably thirty years', or 30,000/. so that the lessee would gain 5000/., against which we must set the value of the perpetuity of the new charge, namely, 4325/., and the balance, or 675/., will be a clear gain to the lessee. If, however, the fee simple should prove only worth 28,000/., the balance will be against the lessee, and he will be a loser to the amount of 1325/. ; this is the very worst case that can be put, for if he has to pay two years' purchase upon the renewal, and the fee simple produces only 28,000/., by the same method of calculation he will be found to be a gainer of 765/. ; if 2\ years' purchase, he will be found to be a gainer of 2850/. !" This I own to be incorrect : I was led into the error by the diffi- culty I had in bringing myself to believe the terms would be so advantageous to the lessees. My error, however, was corrected by Mr. Newman of York, the Actuary, in the following letter. To the EDITOR of the YORKSHIREMAN. Sir, — I have been highly pleased with some letters which I have perused in your paper, respecting the case of Church Leases. These letters appear to have been written with the laudable desire of elu- cidating a somewhat complicated matter, and so far as I am able to judge, have certainly thrown considerable light upon it. There is one portion, however, of the last letter in your paper of this day, which is not so clear as all the other parts. By the statements there given, it appears that the lessee of the estate of 1 ,000/. a year, would, in the worst case, be minus a sum of 173/. per annum, by acceding to the Chancellor of the Exche- quer's proposed plan. This is no doubt perfectly true, but it must be borne in mind that 29 freehold instead of one of leaseliold. Tliis is an ad- vantage which he will gain over a lessor for lives, for it is the price which he pays for the possession, and power to dispose of a fee simple estate, and that, if the estate xcere sold, he would no longer have it to pay, therefore, his account wduld stand thus . If he sold this estate, as there supposed, for thirty years' pur- chase, the produce would be , £30,000 But the annual rent-charge, due to the Government for changing the tenure, is £439 a year, which, if redeemed by the proprietor, would cost him £10,971 £19.029 Leaving a nett surplus of £1 9,000 to go into the pocket of the late proprietor and vendor. Now, his previous interest in the estate ha- ving only been worth £14,000, he must clear the difference of £5,000 by the transaction, supposing him to sell it, which is much more than your correspondent's statement made it. It appears, therefore, at all events, that if the proprietor can sell the estate at any thing above 25 years' purchase, he must clear a considerable sum by acceding to the Chancellor's terms. But supposing him to continue to hold the estate, and comparing his situation before and after the exchange of tenure, as your correspondent does, it must be admitted that he will be worse off, in a money point of view, by £173 per annum. It does not appear to me, that this annual liability equals or counter- balances the advantages which he otherwise obtains, particularly by the power of realising a profit whenever he can sell the estate for more than 25 years' purchase, as above shown. It must also be borne in mind, that this is taking the worst view of the case ; and that, in the majority of instances, the exchange is greatly more fa- vourable to the lessee. In all other respects, I quite agree with your correspondent , and I trust you will give these few lines inser- tion, to point out the error into which he has fallen. I am, Sir, Your very obedient servant, W. L. NEWMAN, Actuary. Insurance Office, St. Helen's Square, York. 20th May, 1837. 30 the latter has already an estate of freehold pur auter vie, which confers a right of voting at elections and other advantages, and which descends to the heir-at- law as special occupant ; the former has a mere chattel interest, which is considered as personal pro- perty, which goes to the executor or personal repre- sentatives, and which is liable to the debts of the lessee. In addition to this, he will be relieved from uncertainty and anxiety as to the amount of the sum of money which he will have to provide for the next renewal ; for even if the dignitary invariably takes 1|) or 2, or 2\ years' purchase or annual rental (which, by the bye, he is not bound to do invariably), still the lessee cannot foretell upon what annual rental or value the years' purchase will be assessed. I know that in the case of mines which have not been worked, or only partially worked, and have produced comparatively no income for the seven years' pre- ceding, the dignitary fixes the annual value at the average annual sum they may be supposed to produce during the next seven years, if worked ; and if the lessee will not pay the fine upon that calculation, the dignitary will not renew*. The lessee for years also * A case came under my notice, where a renewal of a lease of collieries was in agitation, and where the fine was to be estimated at If years' purchase. The party enquired of his colliery viewer, what the amount of the fine might be expected to be, and he was informed, that the viewer understood that the practice was to esti- mate the yeai's' purchase upon the average rental or income of the preceding seven years, and, that consequently the tine would amount 31 gains all other privileges and immunities, equally with the lessee for lives, which I endeavoured to ex- plain a in former letter. I am aware that lessees for years are alarmed, lest a proper distinction should not be made in the num- ber of years' purchase of the fee simple of land, and that of buildings. This, however, is as much or more the business of the valuer in estimating the annual value, as of the calculator in fixino^ the value in years' purchase. We all know that the value of the perpetuity of buildings from their very nature, is not equal to that of land ; for the former are liable to constant dilapidations; they grow worse every year, they require constant repair, and at the end of a certain lapse of time, may become utterly ruinous and worthless, while the latter remains constant. The plan pursued in estimating the annual value of different kinds of property in the West Riding of to a sum, which he mentioned. Upon the party's applying to the Agent of the dignitary to his surprise, — the fine was set at double the sum mentioned by the viewer, and the explanation given was, that it was assessed upon the average rental of what the collieiy might probably produce for the succeeding seven years. I only mention this to shew the uncertainty of the terms of renewal. But perhaps there ought to be an express regulation for mmes and coUeries, and this can only be determined upon after a sober and dispassionate discussion in a Committee : this shews the absolute necessity of such a proceeding. Wliat can the majority of mankind know about certain-rents and ten-tale-rents : — about bolls of round coals and bolls of small coals : — about overleadings and shortwork- ings ; — about a Bishop's in-stroke and out-stroke, without an inves- tigation ? 32 Yorkshire, which valuation was intended to continue to be acted upon for some years for regulating- the county rate, and where, consequently, it would not have been fair to have estimated buildings as well as land at the rack rent, was to deduct one fifth or 20. per cent, from the present rental of buildings ; from cottage property in the great towns 33. per cent, was deducted, or about one-third. If, therefore, the Chancellor intends to estimate the fee simple of land at twenty-five years' purchase, it will only be fair to estimate the fee simple or perpetuity of buildings generally at twenty years' purchase, and that of cottages, or other inferior property, subject to frequent repairs, to standing empty, and to not having any rent paid, (called frequently " leakage,'') at only 16 3 years' purchase. So that in the case of 1000/. per annum from buildings, — The value of the fee simple at 20 years' purchase will be £20,000 The value of an existing lease for 21 years at £4 per cent. as before 14,029 Difference in value . . 6,071 The interest of which, at Al. per cent, or 243Z., will be the charge upon the estate : but, as I explained before, there is already a charge upon it, at li years' fine, of 266/., which the lessee will be relieved from, so that, in fact, he will be a gainer of 23/. annually. I think I need not pursue this subject any further : a proper allowance can, and will, no doubt, be made, either in estimating the annual value, or in the num- ber of years' purchase : indeed it is an affair of every 33 day's practice with house-agents and valuers, so that there can be little difficulty in making an equitable adjustment. The subject of mines will also require a particular consideration ; but even with regard to them, the difficulty will arise in determining the annual value ; for when that is ascertained, the rest will be a simple matter of calculation by the tables. It will, in fact, be a lottery or speculation : some mines may turn out well, some may turn out ill ; but after all, it will only be the same speculation as that of purchasing freehold mines. In making the foregoing calculations, I have as- sumed that the lessee has a 21 years' term ; of course if he has a shorter term, it will be of so much less value, and consequently the difference, the interest of which is to be charged upon tlie land, will be so much greater. For instance, if the lessee has 18 years unexpired, then — The value of the perpetuity as before .... £25,000 The value of an 18 years' term at £4 per cent. . . 12,559 Difference in value . . £12,341 The interest of which, at 41. per cent., is 493/. 125., which will be the charge upon the estate. So again, if there be only six years unexpired, it will be found that the annual charge will be 688/. I fear 1 may have entered unnecessarily into these details, but I wish to lay the case as simply as possible before per- sons not conversant with this species of property. 34 i have heard it asserted, that in tlie county of Durliam, persons have given as much as 18 yeers' purchase for an unexpired term of 17 years: now, by the tables, they ought only to have given, to make 3/. per cent, of their money, 13i years' purchase — and to make 41. per cent, of their money, 12^ years' purchase. In the first place, I do not believe the assertion* ; but, in the second place, if such an in- stance really has occurred, the purchaser must have speculated upon some latent quality in the property which could induce him to give such an enormous price ; as, for instance, that the valuer had been de- * Since the above was written, I have had conversation with gen- tlemen connected with the County of Durham, and from their repre- sentations it appears certainly, that as much as 20, 22, and even 25 years purchase has been given, and is given for a term of 1 9, 20, or 21 years: this is much beyond what the tables lead us to estimate the value at. But these are all cases arising in the County of Dur- ham, which is differently situated from other counties; it is the county of minerals ; what is under ground is much more valuable than the surface. It is a place of great trade and speculation, and all the cases, which have come under my notice, are those which have arisen from peculiar local circumstances; in many instances no land is to be had for any purpose but leasehold land; all this wiU be en- quired into and duly considered in the Committee, and perhaps it will be found necessary to make a special legislative pro- vision for the mining and other property in that County connected with mines; but that does not alter the general principle. I think it must be obvious, that a person making such purchases, would rather have bought freehold, if he could; and that if leaseholds under such circumstances fetch so many years' purchase, a freehold under the same circumstances would fetch 35 or 40 years' purchase, which the Chancellor offers by his plan for 25 years' purchase. 35 ceived in the annual value, or that there was some- thing extraordinarily productive in it, or that there was immense capability of improvement, so as to make it a probably profitable investment ; or lastly, the purchaser cannot have acted with common pru- dence ; he cannot have been sufficiently awake to his own interest, and, if so, I can only say to him in the words of the old legal maxim, — " Vigilantibus non dormientibus leges inserviunt." which may be freely translated, " We can't make laws for silly fellows." Under every consideration of the case, it appears to me, upon the best attention I have been able to bestow upon the subject, that the Chancellor's plan Mill be sufficiently advantageous to lessees to induce them to accept it, and I am only surprised that any of them should be opposed to the measure ; they may have to pay for making the change, but it is evident that they will not have to pay too dearly for the advantages which will ensue. It is easy to understand why the ecclesiastics are hostile to it; they have made a return of the supposed annual amount of their fines, and they may be afraid of being taken at theirword, and that the amount returned, and nomore, will be paid to them ; whereas, in fact, the real amount may be much greater. If it is so, and if the average interest at which renewals are made is assumed to be only 61. per cent., instead of 71., on which lat- ter assumption the calculation of the annual value or rental is made, the result may be the same as to the 36 annual value ; but the difference between the actual value of the fines, and the return made by them, will go a long way towards making up the surplus, which I have shewn the Government has a right to expect. To make this plainer ; they have returned the ave- rage annual amount of their fines at 260,000/., and upon that datum, and assuming interest to be at 71. per cent., it has been deduced that the annual rentals, of church property is 1,300,000Z. ; but if, in fact, the average annual amount of fines should be 330,000Z. and average interest at 61. per cent, (which I believe more likely to be the case the same rental will be ob- tained. In this case, if the ecclesiastics are to be taken at their word, and are only to receive 260,000/., it is clear the remainder, that is, 70,000/. per annum, will go towards making the Chancellor's surplus. THE END. CHELSEA: PRINTED BY WILLIAM BLATCH, 23, EXETER STREET, SLOANE STREET. t lilllllillilillilllllliillil AA 000 576 750 4 PLE^E DO NOT REMOVE THIS BOOK CARD ^ ^l«RARY(9/^ ^ .D r z c rn — '•L' 1