INTEREST AND RENTS

Evening Star, Issue 21073, 9 April 1932, Page 10

INTEREST AND RENTS

STANDARD REDUCTION 20% IMPORTANT LIMITS IMPOSED " The standard reduction of rates of interest and rent shall bo 20 per cent, thereof, calculated as hereinafter provided,” states clause 00 of the National Expenditure Adjustment Bill. The section applies to interest or rent contracts, whether written or not, which were in force on January 1, 1930, and subsequently. The reduction applies to penal rates, where prescribed, and the Act is to bind the Crown. The reduced rates operate as from April 1, 1932, till April 1, 1935. LIMITATION PROVISIONS. As hire purchase agreements are included, there is provision for deciding which proportion of payment is interest, an appeal to a stipendiary magistrate being prescribed, if necessary. The Act is not to operate in respect to these agreements in such a way as to reduce interest below per cent, per annum, while in respect of any other mortgage the net rate of interest shall not be reduced below 5 per cent. There is also an important limitation in respect to rent ieduction. The clause provides “ the rent payable in respect of any premises shall not in any case be reduced so that the net annual rent, after deduction of any rebate to which the tenant may be entitled, and of any rates, insurance, or cost of maintenance and repairs paid by persons entitled to receive the rent, shall be 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

any other case.” Provision is made for reference to the Supreme Court in cases of dispute where the gross rental exceeds £2lO annually, or to a magistrate in other cases. RIGHTS OF APPEAL. Mortgagees or landlords are given special right of appeal against the operation of the Act by proceeding in the Supreme Court where the amount involved exceeds £2lO, or to a magistrate in other cases. The ground of appeal may be: (1) That the rate interest or rent is fair, taking into consideration the nature of the security or the premises; (2) that adequate concessions have already been granted to the mortgagor or tenant, either voluntarily or under the Mortgagor’s Relief Act; (3) that the reduction of rates of interest or rents would be a cause of undue hardship to the person entitled to receive such interest or rent, The court is empowered to take into consideration the economic position of New Zealand as well as the conditions of the parties. Mortgagors’ rights under the Mortgagors’ Relief Act are not affected.