Corporation Leaseholds.
One of the most important enquiries in which I engaged was into our system of fines on renewals of the leases of the property belonging to the Corporation.
The Corporation owns a very large estate within the city. The first important purchase was made by the Corporation in 1674, when a lease for 1,000 years was obtained from Sir Caryl Molyneux, of the Liverpool Heath, which bounded the then town of Liverpool on its eastern side. This land had been sold on seventy-five years' leases, and as the leases ran out the lessees had the option of renewal on the payment of a fine; and in order to encourage the frequent renewal of these leases the fines during the first twenty years of a lease were made very light. It has been the practice of the Corporation to use the fines received as income in the year in which they are received. The fines received in the fifty years, 1835 to 1885, amounted to £1,762,000. This system of finance is radically wrong. The fines ought to be invested in annuities, and if this had been done these fines would now have returned an income of £66,000 per annum, and would have gone on increasing.
The committee, of which I was the chairman, held a prolonged enquiry, and examined many experts and actuaries, and our report is to-day the standard authority on the leasehold question. Our conclusions and recommendations are as sound to-day as they were then, but unfortunately the Council declined to accept or adopt them, and we still pursue the economically bad system of spending in the first year the fine which should be spread over the term of the lease.
When I retired from the Library, Museum, and Arts Committee in 1908, I was invited to take the chair of the Estate Committee, and found myself again face to face with the leasehold question. The revenue of the Corporation from fines on renewal of leases had fallen off to so alarming an extent that something had to be done to stop the shrinkage in revenue and restore the capital value of the estate. We had for so long used the fines as income that the position was a difficult one, and one only to be surmounted by a self-denying policy of accumulating a large portion of the assured income from fines for at least twenty-five years and encouraging leaseholders to extend their leases from seventy-five to ninety-nine years.