Valuation Notes - Louth Lincs 1838

1. Evidence for R1823′s Half Values

The Vestry resolutions leading to R1823 did not state any basis for the revaluation. Nevertheless it is clear that the valuations were intended to be half of the full rental values of the properties listed, so that eg a house for which the open market annual rent was £10 would appear on the list with a rateable value of £5.

The earliest and most cogent evidence for this is the decision of the Improvement Commissioners ¹ to levy rates on properties at twice the R1823 values. The Commissioners were required by sections 120 and 121 of the Local Act to levy rates on “the full annual rent or value” of properties; it is therefore evident that they believed the R1823 values to be half values.

In 1837 the report of the municipal boundary commissioners on Louth stated that the “Poor Rate Assessment is supposed to be one-half the real annual value both on Houses and on Land”. A note in the printed version of R1838, trying to explain the difference between the two rating lists, stated that the old valuation “was always considered to be of one half”. In 1834 a report by Major Wylde, an assistant poor law commissioner, stated that R1823 was “intended to represent half of the full annual value of the land and one-third of that of the houses”; but on the latter point he must have been misinformed.

2. Agricultural/Grazing Land

To examine the accuracy of values in R1823 the starting point must be open land, because this is the only category of Louth property for which a substantial comparison can be made between the values in one of the rating lists and the rents recorded as being paid at the time. After adjustment is made for the half values that it used, R1823 indicated that land belonging to the Old Corporation was worth more than the rents that were being collected. In 1826 the rents were revised after a public auction and the new rents were close to those suggested by R1823. (For a more detailed explanation of this see Corporation Land.) The conclusion must be that for agricultural and grazing land the R1823 values were realistic, not 100% accurate, but a better guide than any other.

The other advantage of agricultural land is that there are national indices of movements in value; see M E Turner et al Agricultural Rent in England 1690-1914, especially table A2.3, final column. For the periods 1822-1838 and 1838-1851 the index shows only slight movements (moving from 21.2 to 19.5 to 20.4). These figures are in shillings per acre. Average Louth rents per acre were much higher than the national averages; so what matters is not the figures but movement in the figures.

The values in R1823 were, with minor changes, reproduced as the old values in R1838 and can therefore be compared with the new values in R1838 and the new values in R1851. The results are summarised in table 1.

TABLE 1 OPEN LAND IN R1838 AND R1851
	R1838	R1851
Number of occupiers	153	158
Acreage covered	2,324	2,247
Total old value (for R1838 x 2)	5,958	5,593
Total new value	5,795	4,513
Average old value per acre	2.56	2.49
Average new value per acre	2.49	2.01
Overall change %	-2.7%	-19.3%

The comparison between the old and new values in R1838 shows no material difference. It is possible that in 1838 some allowance was made for landlords’ expenses; if so, the allowance was so small as to be unidentifiable. This was not unreasonable, since the routine maintenance (eg of hedges, fences, ditches) on agricultural land was normally the responsibility of the tenant; and the rent paid by the tenant allowed for that responsibility.

The comparison between the old and new values in R1851 shows a completely different picture. There is no evidence of any significant general fall in the value of agricultural land. Since the population of Louth was rising and the available open land was falling, because of new buildings and the construction of the railway, one might expect a small increase in the value of paddocks near to the town centre. Clearly the new values for open land in R1851 were too low.

3. Evidence from 1862 Revaluation

The view that the deduction required by the 1836 act should for open land be very small or nil was reinforced by some later evidence. A further revaluation was required by the Union Assessment Committee Act 1862, the aim of which was “securing uniform and correct valuations of parishes”. (The act was intended to achieve uniformity within each union, but not between different unions.) The basic valuation function remained at parish level but the poor law unions were required by this act to establish committees to supervise and hear appeals. Louth Union’s assessment committee settled a standard scale of deductions to convert the annual letting values of properties into RVs, as set out in table 2 below.²

TABLE 2 DEDUCTIONS APPROVED FOR LOUTH UNION IN 1862
For houses, farm buildings and cottages occupied with farms, of an estimated extent above 8 acres	5 percent upon the entire estimated gross rental.
For dwelling houses by themselves, or occupied with gardens or land under 8 acres	15 per cent on the gross estimated rental of the dwelling house and 5 per cent on the gross estimated rental of the land, if any buildings thereon.
For cottages separate from farms, according to their condition	15 to 20 per cent.
For land occupied without buildings	No deduction.

4. Other Evidence of Changes in Market Rents

National statistics about house rents in the second quarter of the nineteenth century are very limited: see particularly Gregory Clark Shelter from the Storm: Housing and the Industrial Revolution, 1550-1909 (Journal of Economic History June 2002). His indices indicate a slight rise in rents in the 1820s followed by a slight fall in the 1830s and a further fall in the 1840s that was not wholly reversed until the 1860s. Unfortunately the supporting records are thin: 590 dwellings in the whole of England in the decade 1840-49.

House building rates may be taken as indirect evidence of rent levels, since builders were unlikely to be attracted to a falling market; but many other factors (eg the availability of credit) were involved. In Louth the rating lists provide considerable evidence of new building in the period 1823-1851. This suggests a buoyant market.

More direct evidence was given in 1860 by William Flint, the relieving officer for the Louth area. He had been deputed by the Louth Guardians to give evidence to a House of Commons committee: Report of Select Committee of House of Commons on Irremovable Poor 1860.

I know houses that have cost a very considerable sum to rear them, that were letting for £16 a year, and now let for £9…. [T]here are some kinds of house property the value of which has really been reduced….The better class of house property. New houses have been built in better situations; new streets formed; and older property, formerly considered a good investment, is now depreciated in value.

On the other hand Flint also said that new four room cottages in Louth were let at £5 to £6 or occasionally £4 10s and had proved to be a profitable investment.³ His evidence did not support the view that there had been a decline in rents across the board. Flint’s evidence was in fairly general terms, but more precise evidence about the actual rents charged for identifiable properties is almost entirely absent.

A possible indicator of declining rents is vacancy levels. Table 3 shows vacancy levels for dwellings (including buildings in mixed residential and commercial use) in the three rating lists.

TABLE 3 VACANCY LEVELS FOR DWELLINGS
	R1823 new RV	R1838 new RV	R1851 old RV
Total dwellings	1,343	1,810	2,374
Total “empty”	25	99	144
Vacancy %	1.9%	5.9%	6.1%
Total dwellings rated* over £6	424	623	726
Total “empty” over £6	6	33	17
Vacancy % over £6	1.4%	5.3%	2.3%
*The half values in R1823 have been doubled. To facilitate comparability the old values in R1851 have been used.

The figures in table 3 suggest that vacancy levels in 1851 were similar to those in 1838 and that in both years vacancies were higher for “small tenements” than for other houses. What Flint was describing might be regarded as the natural life cycle of a nineteenth century house. The house begins life commanding a good rent from a tenant who pays promptly; new houses elsewhere make it relatively less attractive and a spiral of decline begins; rents decline and consequently the owner spends less on maintenance; good tenants are hard to find; eventually the owner has to accept bad tenants and the house risks becoming a slum. In Louth this spiral of decline seems to have culminated in the late nineteenth and early twentieth centuries, when there were many instances of the sale of groups of cottages at very low prices; for example a sale in 1913 included four cottages and a shop in Little Lane sold for £270 and “two houses and six cottages” in Lee Street sold for £390.

5. Comparisons with Income Tax

The validity of the large 1851 reduction depended on the allowance made for landlords’ expenses. Here there may be some useful assistance from national statistics. Income tax, a war-time emergency measure abolished after Waterloo, was re-introduced in 1842. Income was taxed under five schedules. Schedule A dealt with income derived, or deemed to be derived, in rent from land and buildings. (Owner-occupiers were deemed to have received the income that a tenant would have paid.) It was charged on gross income; allowances for expenditure on repairs and other expenses were not introduced until 1894.

Thus it was possible to compare the gross values used for income tax with the net values used for rating. Such a comparison was made in the Census Summary Report for 1851 Table V p 91 and showed that for England and Wales the gross value assessed for income tax was £94.8m and the net value assessed for rates was £67.7m. For Lincolnshire the figures were £3.0m and £2.2m respectively. A comparison would suggest that the deductions for landlords’ expenses averaged 25–30%. However this would be too simplistic. The gross values for income tax purposes were assessed separately from the gross values for rating purposes, were normally higher and were considered to be more reliable.⁴

The later opinion of the Poor Law Board was that “…in England the assessment made by the overseers is well known to be worthless, for any purpose of comparison. It is greatly, but not uniformly, below the actual rental”.⁵

Discussions about income tax sometimes gave indications relevant to the rates. To take first an illustrious example: in 1853 Gladstone, in his first budget speech after becoming Chancellor of the Exchequer, dealt with the possibility of allowing landlords’ expenses to reduce the income tax payable and suggested that for houses the deductions would be 16%; however his conclusion was that no reduction should be made, because income tax was low, would be reduced further and would be abolished completely within seven years. ⁶

In 1861 a Select Committee on Income and Property Tax considered, but eventually rejected, a proposal to make an income tax allowance for landlords’ expenses. In the course of their deliberations they considered expert evidence from several surveyors on the size of the allowance that might be made. Particular weight seems to have been attached to the evidence of Charles Lee, who worked in the London area ⁷ and who suggested that for houses a fair deduction for income tax purposes would be 15% from the gross annual value; he said that this level of deduction was the normal one used for rating purposes and had been approved in cases determined by the courts. Other surveyors put the deduction at a slightly higher percentage and the committee settled for one sixth. Lee suggested that for farms the deduction should be smaller, typically 6% or slightly more if the farm buildings were unusually extensive in relation to the acreage.