Housing Finance

Press, Volume LXXVII, Issue 23264, 26 February 1941, Page 8

Housing Finance

It would be useful if the Minister for Housing, who had something to say this week about the concentration of effort in the areas where the housing shortage is greatest, would take up the question of housing finance. Since the Government’s housing programme was launched, many ihinisterial statements have been devoted to its progress, to the extent of the demand, and to the defence of the policy followed in design, cost, and rental rates. But little or nothing has been said about the financial prospects of the scheme, although such statistical evidence as is available suggests that they deserve close attention. The last report of the State Advances Corporation, for example, shows. that the State lost £2569 15s 6d, in the year 193940, in the business of letting its new houses; i.e. t those erected and occupied after March 31, 1937, Certainly this amount is small in proportion both to the revenue and expenditure figures and to the capital investment. Rents received totalled £325,317; expenditures, £327,887. The capital may be roughly estimated from the interest charge, £121,700, at about 2 per cent., as £6,000,000.' Further, this deficit in the revenue account was reached after allowing for interest, as stated, for depreciation (£48,377), for maintenance (£5a,175), for rates (£59,000), and for management and insurance charges (£40,443). But the depreciation rate, described as a “proper” one in the report, cannot be considered adequately protective at less than 1 per cent.; and although actual maintenance expenditure on new houses is naturally low, the figure set down in the account is soon likely to be exceeded. Disturbing possibilities therefore come into view at a very early stage. The housing scheme does not promise to repay the capital sunk in

it during the life of the properties. Maintenance appears to be poorly provided for. But if depreciation and maintenance rates are prudently adjusted, the revenue account, it seems, will be knocked into a horrible shape. From another'angle, the figures suggest that the State house tenants are under-rented, although it remains a major objection to the Government’s policy that it has not provided cheap houses; or, in other words, they will pay part of the true rent and the taxpayer will make up the difference. It may be noted, also, that the revenue .account includes a debit item of £ 3190 on account of “losses and vacant tenancies,” again a small item, proportionately, but one which it is disquieting to see at this stage. Comparison of the figures for the new houses with the old (i.e., houses erected before March 31, 1937) emphasises the significance of this item and of others. On the old houses, losses and. vacant tenancies account for a debit of £3546; but the capital value of the old houses, is sej, down at less than £500,000. The loss rate, therefore, is probably 10 times as high on the old houses as on the new; but the new houses will not be new for ever. Further, the depreciation and maintenance allowances on the old houses are far heavier than on the new; but the expectable result appears in the loss shown, £21,321 against a revenue of about £37,000. The Minister will do well if he takes an occasion to amplify and explain the figures in tnis report. Admittedly, they are not complete enough to justify positive conclusions; but they distinctly suggest that the housing programme is on precarious financial foundations and that they will weaken badly.