THE RENT QUESTION

Dominion, Volume 11, Issue 4, 29 September 1917, Page 8

THE RENT QUESTION

FROM THE COTTAGE-OWNER'S POINT OF VIEW NOT A "SQUARE DEAL" The following statement of the position of the ( owner of cottage-property presents the other side of the rent question. The facts and figures are voiuched for by a property owner on a small scale, and go lo show that there is a side to this question so frequently under discussion which is too often lost sight of:In the great majority of, cases, the writer states, the cottage properties are owned by working people, l and the ownership thereof represents very many years of thrift and self-denial. In fact, the cot-tage-owners are of tho same class as tho tenants, with this difference, that the one is thrifty and the other is not; or the tenant is a .tenant and not an owner from choice, knowing the poorness of the proposition of owning' houses. The law restricts owners of houses /lettable at under .£2OO per annum to pre-war rate, or alternatively 8 per cent, gross on tho property. In tho case of Wellington the pre-war Tale means that the r:nt is based on the slump which existed from 1908 up to the start of war; but for the war normal conditions were improving, .and normal-rents would have'improved. As to tho 8 per cent, basis, which is substantially the pre-war rate also, the following figures will plainly show that it is not a. "square deal":— Average house over term of yejrrs under average conditions. Land .;.. lofl House , :. : 550 .Total' £700 Income. Yearly. £ -s.-d. ,£7OO at 8 per cent .". 56 0 0 , ' Expenditure. ' • ' £s. d. Eates, half per cent, on .£7OO 3 10 .0 Insurance, JBSOO, at lis. 3 0 0 Repairs and maintenance, 1 per cent, on ,£550 5 10 0 House einptv, less of rent ...... 2 0, 0 Bad debts 2 0 0 Depreciation, house done at 35 years, '2 per cent on ,£550... 11 0 0 Legal expenses, mortgage fees, etc 2 0 0 Cost of stamps, trams, and collecting rent 10 0 G per cent, net on £700 ii 0 0 Total - '-.-. ,:..... £72 0 0 Carrying the matter to a percentage basis the.following 6hp'ivs— Income per £100. ■' •, . £B.per..cont. Expenditure. Per £100 invested. £ s.d.. Kates -...' ':.. 010 0] Insurance 0 9 0 Eepairs and maintenance 0 18 6 Empty house 0 6 0 Bad debts 0 G 0 Depreciation, 2 per cent 1 12 0 Legal expenses, mortgage fees... 0 G 0 Cost of stamps, trams, and collecting , i 0 3 0 1 10 0 6 per cent, nt-t return G 0 0 •Total, per cent. £10 10 0 , .Total, £8.- ! Deficit, £2 10s. per cent. . . ' The Government acted,in the matter last'session without, taking a particle of evidence, and oh the clamour of a member of the House who is now moving further in the matter. It is most deplorable that because a few owners, are to blame -that the/great majority are. to be ruined, because that is what will happen. Mortgagees are raising the interest on loans, and,.strange to say, the City Council has now cases, pending in the Supreme Court applying for the right to sell property on which they have loans because their demand for extra interest, in some cases half per cent, and other 1 per cent., has been refused. This appears to be wrong in political or domestic economy. Further, the cost of repairs and maintenance, a considerable amount of which ahsolutely cannot bo avoided, has risen all round 400 per cent. For 'instance, all iron from £18 per ton to £100 per ton; copper, lead, brass, even more; and yet the City Council is taking most drastic steps with owners over defective spouting and rain-pipes! Then, where painting and papering is absolutely imperative, oil that was formerly 3s. per gallon is now 10s., and white lead, formerly 30s. per cwt.,-is now about 100s. .

Yet no account is taken by the Government of these facts. It must all be borne on the S per cent.—increased interest, repairs, etc. The Government, as before complained, acted without-calling'any'evidence, and at the latest attempted-legislation on the rent question produced a report from.the Valuer-General which, as' reported, stated:—"TJiat house-building has ceased in Wellington because of the uncertainty of a 'fair' return on capital invested." , "The popular cry.of landlords fleecing tenants having no foundatioin in fact." "That standard rent, viz., 8 per cent., is quite reasonable and approximate to rent of twelve years ago, when land was just as dear,as now, and building cost 50 per cent, less to build than to-day." "The standard rent, viz.,'B per, cent., is a satisfactory return on houses."

"In New 'South Wales a Select Committee took - evidence, and reported 10 per cent, a- fair Teturn." Can ' you reconcile the above statements?

"In Sydney and Ruburbs the'bulk of the houses are brick or stone, with a lifo of fifty , years. In New Zealand the houses were built of wood, the. average life being twenty years." Note.—House in Sydney lasts 50 years and small upkeep; fair rent, 10 per cent. Hbuso in New Zealand lasts 20 years and of wood, heavy upkeep, and fcir rent, 8 per cent. How very absurd this is!

I am willing to sell the whole of my cottage property, which is s'tuafe in the city between Mein Street, Newtoivn, and Hill Street, Thorndon; to the Government at 10 per cent, on existing Government valuation and take war bonds for fho whole of the amo.unt. The matter of cottage property has not been fairly dealt with, and the owners havo not had "that square deal." If any cottage property-owner thinks that the Moratorium Act will protect him as! regards the" interest on his mortgages ho is, I am informed by my solicitor, greatly mistaken, and that the Supremo Court will allow mortgagees the ruling rate, whether it bo 6 per cent, or 9 per cent., notwithstanding the fact that the property on which tho loan rests ;s lestricted to 8 per cent, gross, which means 3.V to i per cent. net. The legal opinion, obtained in the face cf 'it demand for further interest was: "Pay it; tho moratorium, because of its amendments, is buncombe and no good lo the borrower."