REDUCING BURDEN ON COMMUNITY— Higher Rents For New State House Tenancies: Income Limit Of £520

Greymouth Evening Star, 1 April 1950, Page 4

REDUCING BURDEN ON COMMUNITY— Higher Rents For New State House Tenancies: Income Limit Of £520

WELLINGTON, This Day (P.A.).—The rents of State houses being-let for the first time—as distinct from existing, tenancies —will in future be adjusted, according to a statement by the Minister in Charge of State Advances, Mr J. R. Marshall, who explained that it is the Government’s desire to place the State housing scheme on a sound financial basis and thus help in easing the burden at present borne by the community as a whole. At the same time this major policy change provides that in future, apart from existing tenancies, State as a general rule, not be let to persons earning more than £520 a year. , ■ .

“Our objective,” said Mr Marshall, “is to ensure that in future the people to benefit from the lower rentals of State houses will be those in the lower income groups, whose need is greatest.” The Minister said that it was not proposed to change the rent of pensioners’ flats nor to disturb existing rentals where the present tenants remained in possession. When houses were vacated and let to new tenants, or when exchanges of houses were arranged, thus creating new tenancies, the future rents would be based on the hew scale.

At the same time, he added, in order to avoid any serious hardships as a result of the new rental scales there would be a new provision by which the case of a tenant in difficulties through il-health or other unavoidable circumstances could be given special consideration. “The general idea of the Government,” he said, “is to reach the position where no family should be required to pay more than one-fifth of the family income by way of rent.”

cluding many thousands of wageearners who had provided their own homes, had been obliged to shoulder the losses arising out of the State housing scheme, and it was concerned at the increasing disparity between the State rentals and the housing costs of the great majority of the citizens. At the same time it recognised that current tenancy agreements represented a contract binding the State Advances Corporation to observe the present rentals entered into by the tenants in good faith, and, accordingly, the Government felt -that such contracts must be respected.

Mounting Losses Under the previous Government 'the loss for the year ended March 31, 1949, was £llO,OOO, and this despite the low interest rate payable 'on the finance advanced for housing 'purposes by the Reserve Bank. ' For the year just closed on March 31, 1950, the estimated loss is £195,000, and on the existing 32,500 State housing units, if no alteration in the rents were made, the future loss would be at least £236,000 per annum. “As the accumulated loss at March 31, 1950, will be approximately £415,000, the situation is one which no Government, conscious of its duty, can ignore,” Mr Marshall said. ' “The Government’s decision is supported by the recommendations ’of the State Advances Corporation and by members of the housing allo- ’ cation committees, who have been consulted,” said Mr Marshall, “and I am confident that it will be endorsed by every member of the public who recognises the great changes that have taken place in the cost structure of New Zealand, particularly relating to house-building, since the original rents were fixed in 1937. “At that time, the rents were assessed on a standard four-roomed house costing, with section, £1202. The average cost of such a house is a great deal higher today and yet the rents charged for new houses have not been altered. Labour's Own Formula “Is is of interest to note that under the formula introduced during the term of office of the previous Government for the fixing of a ‘fair rental under the Fair Rents Act, the permissible rent for a four-roomed State house would be £2 18s 9d, whereas for a six-roomed State i house the fair rent under the same 1 formula would be from £3 15s to £4. It is is not proposed to go to the limit of that formula.” . The National Party, the Minister said, while in Opposition had been disturbed by the increasing extent to which the rest of the community, in-

Gradual Adjustment The action now being taken would gradually correct the position without inflicting sudden inconvenience or hardship on anyone. Last year 3687. new houses were completed and let, 1113 houses were vacated and re-let, and 1712 exchanges were arranged between tenants. Thus there was a total of 6512 new tenancies during the year. At that rate, or anything approximating to it, there would after a year or two be a substantial improvement in the general financial position of the State housing scheme. This would not only be to the advantage of every taxpayer, but also it would tend to correct the present maladjustment which placed State tenants at a pronounced _ advantage compared with other sections of the community. Ignored By Minister As long ago as August, 1940, and at intervals since then the State Advances Corporation had drawn the attention of his predecessor (Mr W. Nash) to the prospect of losses in the Housing Account unless the rentals, originally fixed on a more or less economic basis at the inception of the scheme in 1937, were adjusted to keep pace with the continued rise in building costs and also to cover significant increases in the rates levied by local authorities, which had not been reflected in the rentals. These representations had been ignored. .