THE PRESS TUESDAY, OCTOBER 24, 1978. Housing Corporation’s debtors

Press, 24 October 1978, Page 16

THE PRESS TUESDAY, OCTOBER 24, 1978. Housing Corporation’s debtors

When it lends money for the purchase of housing and rents accommodation, the Housing Corporation often tends to accept higher risks and apply somewhat different standards from those of other lending institutions or private landlords. The corporation regards itself, quite properly, as helping the country to achieve certain desirable social goals. It should not be unduly criticised for not acting exactly as other lending institutions or private landlords.

At the same time, it is clear from the amounts of overdue rent owed by tenants of the corporation and of overdue mortgage payments that the corporation has been unduly lax or. more charitablv. unduly slow in adjusting to the effects of the tight economic situation. The corporation cannot ignore entirely the commercial principles on which private institutions or individuals lend money for housing or rent accommodation

The reductions in effective personal incomes which many New Zealanders have suffered in the last year or two made a situation, which may in the past have been just tolerable, quite unacceptable by the beginning of this year. By then more than 8 per cent of the corporation’s mortgage accounts were in arrears and more than 8 per cent of the corporation’s tenants owed rent. The total sum in each case was in excess of SI million Although it may have been a little slow off the mark, the corporation has. to its credit, made efforts this year to improve the situation. It has been successful to the point that the amount of rent owing by tenants has been reduced by about one-third. The corporation has also this year been tightening its control over the regular payment of sums owing on mortgage accounts and has been beginning summons actions earlier than it has in the past. In line with its social responsibilities, however, the corporation makes allowances for special cases

and gives every opportunity, before it takes punitive action, for voluntary cooperation with plans to reduce amounts owing or to maintain regular payments. No good purpose is served by evicting tenants or foreclosing on mortgages because families or individuals are in temporary difficulties which they can be expected eventually to surmount. To this extent, the corporation can be permitted not to pursue rent owing or mortgage payments in arrears with the strictness of other lenders or landlords.

Equally, however, it needs to be kept in mind that most of those who rent accommodation or borrow money for housing from the State enjoy advantages in the terms of the mortgages or in the amount of rent over those who borrow or rent from the private sector. The corporation’s mortgagors and tenants have, to this extent, less excuse than those who borrow or rent in the private sector for falling behind in their obligations. They certainly should not be permitted to regard the corporation as a lax banker whose demands can be ignored or put behind the demands of other creditors. By far the greater number of the corporation’s clients are, of course, free from any such attitude.

Few reasonable taxpayers begrudge those who need them the loans on favourable terms or rents that are lower than the market rate. Both are to some extent a brake on the market for others. But taxpayers have every right to expect that the benefits—for which they ultimately shoulder the bill—will end there.

In fairness to the. great majority of the corporation’s mortgagors and tenants, it must be remembered that even at the worst, earlier this year, more than 90 per cent of them had excellent payment records. They are probably' as anxious as all other taxpayers to see the delinquent minority obliged to pay what is owing.