STATE ADVANCES

Evening Post, Volume CIII, Issue 56, 8 March 1922, Page 6

STATE ADVANCES

COMPLAINTS OF APPLICANTS

GOVERNING- FACTOR: VALUATION.

Complaints have reached The Post from a correspondent against whaU is claimed to be the conservative attitude of the State Advances to Settlers and Workers Department. Applications have been made for loans for the purchase or erection of houses, and, in some cases, the applicants have been offered loans far below what they think is the amount which the properties warrant. Investigations of the complaints, however, do not appear to support the allegations of unfairness; the matter resolves itself into entirely one'of valuation.

Taking a specific case as a basis of discussion, it is shown that a man applied to the Department for a loan of £650 on a five-roomed house at Hataitai. The house was built in 1914, is in good repair, insured for £1J)25, and; according to the applicant, could be insured for £1200. In all, it is claimed that the ■property is .worth' £151&V-Iand £300, • building £1200, fence £18. The existing . mortgages are £775 at 6 per cent, and £200 at 8 per cent. The applicant is married, and would release the present mortgages. In reply to the application the Department has stated that it is prepared to offer a loan of £475. This, it claims, is within' a few pounds of the maximum amount allowable by the limitations of the State Advances Act, which, on such a property, is threefifths of the value of the security. The applicant, excusably enough, is puzzled to know how the !Vailuation Department, which makes the valuations on behalf of the State Advances Department, reconciles its valuation with the fact that private lenders have advanced to the vendor as much as £975 on the property. Summed up in a few words, the rtvly of the authorities is that the prices being paid nowadays for houses; or for the evectlon,of houses, are'altogether beyond real values. The valuation of the property- in question, as the loan offered "was within a few pounds of the limit,"' was apparently something between £800 and £900, whereas the applicant wis prepared to pay ■ more than this, arid there were existing mortgages for £975. That, the authorities claim, is merely, an example'of inflated prices. Incidentally, they suggeat that the second mortgage of ;£2OO was no doubt given by the original owner to the'present vendor as the latter could not find all the cash required. There is one other point made, and that is that the advances made pfrivately were at a much highe/rate than the rate charged by the State Advances , Department, which therefore is entitled to extra cover.

. It is claimed.that possibly the Variation Department is a little conservative in its estimates of value, but, having before it the difficulties created by inflated values for another section of the community, the dairy farmers, there is, it is urged, more than a little excuse iorcaution. But valuation is the governing factor,- and, as between the valuer for the party making the advance and tlie applicant for the loan, there is bound, while human nature remains what it is, to be a divergence of opinion.