INTEREST & RENT

Dominion, Volume 25, Issue 166, 9 April 1932, Page 12

INTEREST & RENT

Reduction of 20 Per Cent. FOUR-YEAR TERM Right of Appeal Provided VARIATION OF CONTRACTS A reduction of 20 per cent, in interest rates payable bj mortgagors and in rents as from April 1, 1932, is stipulated in Part 3 of ihe National Expenditure Adjustment Bill, which was .read a first time in tile House of Representatives last evening. It is specifically set out that the provisions of the section shall bind the Crown. Ji* In a preliminary interpretation a mortgage is defined as any deed, memorandum of mortgage, instrument or agreement whereby security for the payment of moneys or for the performance of any contract is granted over land or chattels or any interest therein. It includes any instrument of security granted over or in respect of any policy for securing life insurance, endowment, or annuity, and also any agreement for the sale or purchase of land, or any customary hire-purchase agreement. An agreement for the sale and purchase of laud shall be deemed to be a mortgage of such land, and a customary hire-purchase agreement in respect of any chattel shall be deemed to be a mortgage of such chattel. The Governor-Gen-eral is given power by Order-ni-Counci to exclude from the operation of the Bill any specified class or classes of mortSa '’ e Subject to file provisions of the Bill, rates of interest payable under mortgages of property in the Dominion and rents payable in respect of land or any interest in land, payable under contracts in force at the passing of the Bill, shall be reduced by a standard rate of 20 per cent, anil the rates as so reduced shall not be increased, except by leave of a competent court, before April 1, 1935. Where the interest or rent reducible in accordance with this part of the Bill is payable in terms of a contract in force on January 1, 1930 (whether or not sueh contract is in writing and whether or not it has been varied by the parties since that date), the reduction prescribed shall be a reduction of the rate in force at that date, ami in all other cases it shall *be a reduction of the rate prescribed by the contract under which it is payable. Variation of Contracts. If the contract has been varied by the parties since its commencement there shall be a reduction of the rate originally prescribed. These provisions apply to reductions where, by any contract, provision is made for the payment of a penal rate of interest or rent, or for a reduced rate of interest or rent in consideration of prompt payment or any other, consideration. If in the case of a customary hire-pur-chase 1 agreement or in any other case where the rate of interest is not specified, the parties may either come to an agreement between themselves concerning what shall be deemed interest and what principal, or they may apply to a ruling from a magistrate. The net rate of interest payable tinder any mortgage of chattels shall not be reduced below 6| per cent., and the net rate of interest under any other mortgage shall not be reduced below 5 per cent. Where a mortgage comprises both chattels and land or other property, an apportionment of the moneys secured shall, if necessary, be made by agreement between the parties concerned, or by a magistrate on an application being made by cither party. The rent payable in respect of any premises shall not in any case be reduced so that the net annual rent, after the reduction of any rebate to which the tenant may be entitled, and of any rates, insurance, or the cost of maintenance and repairs, paid in respect of the premises by the person entitled to receive the rent, is less than 5 per cent, of the capital value, in the case of land used mainly or substantially for farming purposes, or less than 7 per cent, of the capital value in nny other case. In the event of dispute. the capital value shall be fixed by the Supreme Court where the gross rent exceeds £2lO per year, and otherwise by a magistrate. Appeal to a Court. The right of appeal to a court is given to a mortgagee or landlord, or anyone receiving interest or rent. The appeal, may. be made on the grounds that the* rate of interest or rent is fair, taking into consideration the nature of the security on the premises, that adequate concessions have already been granted to the mortgagor or tenant, and that the reduction of interest or rent would cause undue hardship. The court may make such order ns it thinks just and equitable, taking into consideration the economic position of New Zealand, as well as the conditions of the parties. The appeal must be taken to the Supreme Court, where the total amount payable in interest or rent exceeds £2lO. The powers of the court under the Mortgagors’ Relief Acts are not affected by the new Bill. RATES OF INTEREST Maximum on Deposits POWER TO MAKE ORDER The maximum rates of interest on deposits payable by savings banks, building. and investment societies, and trading companies, are to be regulated, according to special provisions in the National Expenditure Adjustment Bill which was introduced in the House of Representatives last evening. It is prescribed Unit the maximum nites of interest paid b.v the trustees of any savings bank on deposits may be fixed b.v Ordenin-Coiincil up to the end of March, 1935. An Order-in-Council may fix different nites with respect to different classes of deposits, or according to the amount of any deposit. Any order may apply to future deposits or to existing deposits. Similar provisions apply to the fixing of maximum rates of interest on deposits with any building society, or the nites paid b.v an investment society, being a company, society, or association, formed for the purpose, of investing borrowed moneys anil not being a trading company. In future the annual statement of building societies’ accounts, which must be made according to the present law,, must include a statement showing the rate or the several rates of interest payable on deposits held b.v the society, and the total amount in respect of which each such rate is payable. The tinfd section of the Bill denis with trading companies, and the GovernorGeneral may, by Order-in-Council, also fix the maximum rates of interest payable by them on deposits held. The provisions in this respect are similar to those covering savings banks anil building or investment societies. Any order may relate to any specified trading company, or to nil such companies. Trailing companies accepting deposits must prepare quarterly statements giving particulars of the amounts borrowed and tlie rates of interest paid on deposits. Tiie first statement shall be prepared on July 1 of this year, and a copy of nil statements must be transmitted to the Minister of Finance. A penalty of £lOO is provided for breach of this requirement, or for the falsification of the returns This part of the Bill shall not apply to any bank carrying on business under the Bunking Act, 1908, the Post Office Savings Bank, any savings bank, or any local authority or public body.