AN EXTRA BURDEN

Evening Post, Volume CXXII, Issue 68, 17 September 1936, Page 5

AN EXTRA BURDEN

PERSONAL COVENANT

GOVERNMENT'S AIM

Brief reference to the personal covenant as it affects mortgages was made in the House of Representatives yesterday by the Minister of Finance (the Hon. W. Nash), when the Mortgagors and Lessees Rehabilitation Bill was in Committee.

In reply to criticism, the Minister explained that when a man had no assets the personal covenant would go; but if he had a position bringing in, say, £500 or £1000 a year it would be unfair to free him from his personal obligations. The mortgagee might not be as well off as the man to whom (he money was lent. At the same time it was the object of the Government to make adjustments as final as possible. ' Earning capacity was not an asset, but the Government desired to bring earning capacity into the field —"If I can find a way," he added.

The Minister pointed to the danger of the Court' of Review interpreting the spirit as well as the letter of the law. ' For instance, a man receiving £5 a week.might be mulcted by the Court in perhaps a payment of 10s a week. He did not want that to happen. The earnings were too low. He gave instances of men receiving small wages who had liabilities under the personal covenant averaging £300 on account of acquiring properties worth at the time of purchase £1000, but which owing to falling values had in each case dropped to a value of . approximately £700. Mr. H. G. Dickie (National, Patea): Properties wili> go up.

The Minister: They will not go up; we will watch that.

The Minister said that relief workers were concerned in some of the property transactions and instead of owing the mortgagee today £900 or £1000,-their debt was £1100 or £1200, anS he wanted, to see those men relieved of that extra liability: It would take them a lifetime to make up the difference at small payments per week owing to their failure to pay on account of the depression.