Land Sales Act In Conflict With Facts

Greymouth Evening Star, 8 October 1948, Page 2

Land Sales Act In Conflict With Facts

[SPECIAL TO STAB] WELLINGTON, This Day. The chief business of the Real Estate Institute of New Zealand in conference last year was consideration of the operation of the Land Sales Act and the preparation of a case to place before the Minister of Lands (Mr Skinner) for reconsideration of the Act, in the light of changed circumstances. Again, this year’s conference will discuss the same major question. There is no suggestion of abolishing control over sales,, nor of radically altering the existing machinery for approval of transactions, states the institute’s journal. It is, however, urged that the basis of valuing properties should be overhauled to bring them more into line with the values of other goods and services, and especially into line with the present value of money. On the basis of the values of the £l, then and now, it is estimated that the buyer of a property for £ 1400- in 1942 would have to obtain it for £2OOO today, merely to have returned to him his actual money value.

Costs Will Remain High

The speculator is not supported, but it is contended that the suggestions put forward by the institute would not make it any more possible for speculation than at present. These are for a revision of the basis of valuation, the lowering, of the interest rate for capitalisation of farm income; and the granting of a subsidy to returned servicemen buying or building houses or buying other property. By these means, it is claimed, anomalies would be removed and much of the hardship would be obviated, without losing the antiinflationary object of the Act, at least in relation to other costs, prices, and values.

Doubt was expressed whether new buildings will be erected at 1942 costs for many years, if ever. The present position could not be allowed to continue indefinitely. The Act itself provided that it would expire five years from the termination of the war, which suggested the belief that things would by that time settle down to more or less normal pre-war conditions, and that the need for the Act would automatically disappear. Unfortunately costs had not returned to pre-war, or even 1942, levels, but had increased steadily. It had therefore become necessary to readjust ideas.

Removal Stage by Stage It was suggested by the president of the institute (Mr R. S. Newcomb) to the Minister that, as with the gradual withdrawal of subsidies on essential foods, so also the restriction to 1942 /bUjl'ding values might be gradually eased.

Thus, properties of certain minimum or maximum values could be taken off the 1942 building value list. Or various types of property according to use—factories, shops, office buildings, flats, houses, etc. —could be gradually exempted. Buildings on the suggested exemption list could then be sold on the basis of present-day replacement cost, less depreciation, but the consent of the Land Sales Committee could be made necessary to see that no excessive increases in price were charged. Summing, up the position created by the operation of the Act, Mr Newcomb wrote to the Minister: “The subsidies on a great many necessary articles have been discontinued, and higher prices agreed to for those products. May we remind you that in the case of pre-1942 buildings the vendor is in effect subsidising the purchaser to the extent of 33 1-5 per cent, of the value of the buildings. Out of our whole economy

he is the only individual who is required to do this. All other subsidies were borne by the State.” Elsewhere in his representations, Mr Newcomb commented that vendors feel that to sell at the pegged valuation is to make a bad bargain, with the result that few will sell except under some form of compulsion. “Thus the very Act which was primarily designed to aid the rehabilitation of servicemen is now having the opposite effect, as it is . well-nigh impossible for them or anyone else to buy property.” “Buyers’ Market Impossible” In his reply by letter to the Institute the Minister has stated that in order to keep the Act and its performance in true perspective it should be remembered that four years have passed since it was enacted, and that at the time of its passing the Government was legislating for not only one or two but a long period of years. Commenting upon the suggestion that higher prices for farms and houses would change the market from ■ a vendor’s to a buyer’s market, Mr Skinner stated: “Large numbers of men are back from active service and all, or most, of them have joined in the scramble for farms, houses, and businesses, none of which has been surplus to demand. How, then, is a buyer’s market likely to be found at present; in fact, can a buyer’s market be found until saturation point is reached and passed? ... I am afraid that this is one of the widest points of differentiation between your own views and those held by me.” .