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part with his proiicrty, the G per cent, rate of the table is generally used, by wliicli the
buyer makes too little interest on tiie )ierisliai)le part of tl e jiropcrty. Few would be in-
clii'ied to invest money in S'jcii property at so low a rate, for a rent which every year, from
wear and tear, becomes less valuable. Individuals imderstanding the subject would
scarcely be found to purchase, unless tl.ey could make at least 8 per cent, for tliis ))art of
the capital. In the cases above mentioned, twenty-five years' purchase, that is, 4 per cent.,
is the usual price at which the ground rent is taken.
Having thus prepared the student, we will present an example of a valuation
on the i)rinciples named. Tiius, suppose a building and the ground on which it stands to
be together worth 15(3/. per annum, and that its durability is sucii that a purchaser may
count on receiving that rent during a term of fifty years. We will suppose the house to
stand upon a plot of ground
feet in frontage and 60 feet in depth
that the size of the
house is 24 feet by 40 feet, and tiiat to build a similar one would cost 1,440/., which, at a
r.ate of 7 per cent, upon the expenditure, would produce a building rent of 100/. I6s. per
Now the total rent being
The rent arising fiom the building itself
The value of the mere ground must be
We therefore here have the imperishable part, viz the ground, of the
value of 49/. 4s. per annum, wiiich, giving the purchaser 4 per cent,
interest for his money, is twenty-five years' purcliase for the fee- simple
by the Fourth Talde, that is
- - - - -
An annuity (from the building) of
16s., to continue for fifty years,
is, by the Fourth Table at 5 per cent., worth
'256 years' purchase,
that is
The value of tlie old materials at the end of the term, if taken to be
pulled down and sold for 150/., will be that sum at the end of fifty
years to be received at the present time, discounting at 4 per cent,
from the Second Table -1407
x 150
- - -
= 21 2
s. d.
100 16
49 4
Total value of the freehold -
- .
309I 2 11
49/. 4s,
In the above valuation the ground estimated by its frontage would be ^V^

= 4I. per
foot, and ground is usually let by the foot when demised for building. In the chief parts o
great cities ground is now usually sold and let at per foot superficial.
The next case of valuation is that of a beneficial lease, in which the rent paid by the
lessee is less than the actual value of tiie premises. The difference between tiiem, there-
fore, is an annuity for the term of the lease, which is so much benefit to the lessee, and is
estimated by the Fourtli Table ; thus

Suppose the actual value of given premises be

- .
. _
Ilent reserved by tiie lessor
Beneficial annuity belonging to the lessee - . - _ -
If the term of the lease be twenty one years, such is the length of the annuity, and the
question stands as under

An annuity for twenty-one years, discounting at 5 per cent., is by the Fourth Table worth
12'8211 years' purchase, wiiich multiplied by 50/.
641/. l.f.
It is to be observed that the annuities must be clear after the deduction of all outgoings
which may be necessary to keep it unencumbered.
Let us take another case.
A man takes a lease of ground at 10/. per annum, and lays out
1 ,000/. on a sixty-one years'
lease, interest being 3 per cent. How much must l.e receive as rent to replace the princi-
pal at the end of the term ?
1000/. at 3 per cent.
30/. + 10/. ground rent =40/. improved rent.
1/. per annum for sixty-one years at 3 per cent, will amount to 169/. (See Third Table.)
=51. 9s. = the sum to be laid out yearly.
And 30/. -1-5/. 9s. =35/. 9s., or 3*59, is the rate of interest to secure or replace the princi-
pal at the end of the term without consideration of repairs, loss of tenants, insurance, &c.