Alexandra Place rent fair and above board

This conclusion has no validity without a full examination of all the related financial facts. Without describing all the details inherent in the private lease, the critical conclusions are only assumptive at best.

I offer a few words as an experienced professional accountant.

Firstly, the element of Value Added Tax (VAT) does not accrue to the lessor’s benefit as recipients of VAT are temporary custodians of tax on behalf of the Board of Inland Revenue, which tax is remitted every two months. VAT is therefore not rental income for the lessor’s benefit.

The $600,000 a month rental represents gross rental from which, again in the absence of the lease details as to who pays what, there would be deductibles for maintenance and repairs, insurance, depreciation, interest, property taxes, maybe some huge security costs and a host of other variable expenses which could easily amount to at least a quarter of the rent if I am to be conservative.

These deductibles will bring the net rental income down from $600,000 to $450,000 before the taxman cometh and now with a new tax rate of 30 percent, the after-tax net income boils down to half the amount or $300,000 a month, or let’s say $3.6 million a year.

One can only estimate that the current property value of Alexandra Place could be close to at least $60 million if not much more and so the investment rate of return could be around six percent; might be even less.

It is an established off-the-cuff rule in real estate rental determination that rents should pay back the property investment inside ten years. Simply speaking, a ten percent rate of return is the established benchmark for quantifying reasonable rental simply.

Alexandra Place falls very short of this criteria from the little facts I see and from what is explained above.

I am not a member of the People’s National Movement as I prefer to be a professional person free from the politics but the letter has cast a very bad light on present governance as if this is a corrupt transaction and which is not justified by the above.

I have therefor submitted this response as a fair-minded citizen to try and eradicate what appears to be harsh and unfair criticism.

If there is any criticism I could venture, it is that government with all of the resources available in the last few years ought to have moved away at a faster rate from property rentals in the taxpayers’ best interest.

There is evidence that this is now being pursued in a more vigorous way.

Furthermore, the previous government ought to have occupied the premises to benefit by the sunk rental to which it was committed and save other huge rental payments.

Many times citizens, in their endeavour to see the country progress and particularly people like Huggins who apparently has a keen sense of civic righteousness for which he should be commended, are inclined to engage in newspaper letters of professional science.

It is suggested that when such people step outside their crease to relate their strong feelings that the findings should be explored firstly with the appropriate professionals to ensure, in fairness to the people at the receiving end, that the conclusions are valid in order not to mislead the public and hurt others wrongfully.

PS MORALLES Cascade