THE HOUSING SHORTAGE

Matamata Record, Volume XIX, Issue 1790, 10 December 1936, Page 5

THE HOUSING SHORTAGE

GOVERNMENT SCHEME Why Morrinsville Council Objects The attitude of the Morrinsville Borough Council towards the Government’s housing proposals was further explained by the Mayor, Mr. W. T. Osborne, in an interview with a representative of the Morrinsville Star.

At last week’s meeting of the Morrinsville Chamber of Commercethe Mayor had expressed to Mr. R. R. Coulter, M.P., the difficulties which the council saw in the way of undertaking the building of houses in the borough for letting to people who could not obtain houses in the ordinary course of events. Costs Up 25 to 33 1-3 Per Cent. As one with considerable experience of the building trade, Mr. Osborne considers that costs of building have gone up by from 25 to 33 1-3 per cent, during the year. A house that could have been built for £7OO a few months ago would now cost £IOOO to build. To show the effect of the rise in building costs, Mr. Osborne took the case of a house which could have been built until recently at £7OO Taking interest at 5 per cent. —although money could have been obtained at 4 per cent. —the interest charge would be £35 a year, and the sinking fund charge of 1 per centwould amount to another £7, making a total of £42 a year for interest and sinking fund. Nowadays, with the same style of house costing £IOOO to build, the interest charge at the Government’s announced rate of 3 per cent would be £3O a year; but the sinking fund of 1 per cent, an a loan of £IOOO would be £lO, making a total of £4O. Thus there was actually a reduction of only £2 a year, ip spite of the reduction in the rate of interest to 3 per cent. Greater Depreciation That was not all, continued Mr. Osborne. Any slight saving would be offset by the higher cost of insurance on a £IOOO house as compared with a £7OO house, and also the greater depreciation to be written, off annually, and the greater amount to be allowed for repairs and maintenance where; a . municipality was letting; houses [to[ what . might -. be term}esd “ thec(loating population.” •: . • *( 1 '

To indicate. what he meant about the greater depreciation in value to be considered, Mr. Osborne mentioned houses which Vhis firm had built for £250 in the years before the postwar . “ boom.” In the boom years such houses had changed hands at £IOOO, and to.day they would be worth-only £550. What would houses built today . for £IOOO be worth in future years? , Probably the £IOOO house of to-day would. be worth only £SOO in a few years’ time when property values had declined as might be expected, judging from the experience of former “ booms ” and “ slumps.”

Not Payable Proposition If the purpose of the Government’s proposals as outlined by Mr. Coulter was that the municipality should provide homes for “ the floating population ” it followed that the council must expect a certain amount of loss of rent while tenants were leaving and other tenants coming, and the more frequently such houses were let the greater the loss. With frequent changes of tenants it was inevitable that there would be a greater expenditure on renovation and redecorating. It was a fact that families who were “ always on the move ” seemed to comprise usually those with the most children, and consequently there would be frequent demands for the repapering and repainting of rooms when new tenants went in.

In building houses for letting, a municipality, like an individual, had to take into consideration the effect of possible rent restriction legislation, which might substantially reduce the revenue it had budgeted for when embarking on a loan scheme.

Mr. Osborne said : “ I maintain that the Borough Council could not economically let these houses to this class of tenant at less than a rental calculated to give a return of 10 per cent, per annum on the capital outlay, and that would bring the rent of a £IOOO house up to approximately £2 a week. I do not think the Government would allow us to charge £2 a week to such people, for its housing scheme is intended only for people in receipt of less than £6 a week.”

Private Enterprise or State . “ In my opinion,” said the Mayor, “ it should be left either to private

enterprise or to the State to provide houses for* the class of people whq are not in a position to own their own homes. It is not a matter for the municipalities to spend their ratepayers’ money on. Members of local bodies have to be as careful of ratepayers’ money as they would be of spending their own money.” ■*“lt may be alb right for big city or borough councils or power boards which can build houses for their large staffs or for letting to people who are in more-or-less regular jobs,” said the Mayor, but if we are called on to cater for what may be termed the ‘ moving population,’ I maintain that instead of local bodies being saddled with the burden of providing houses, it should be spread over the whole of the community.”

Mr. Osborne considered that Mr. Coulter had not been able,, to give satisfactory replies to the points he had raised. Mr. Coulter had said that he would like to have an opportunity of discussing the question of housing at greater length with the local bodies.

While pointing out the objections to the Government’s scheme from the local bodies’ viewpoint, Mr. Osborne said he recognised that there was a national shortage of houses — stated by Mr. Coulter to be 20,000. Surely then it was a problem to be tackled on a national basis, and not left to local bodies whose resources were limited.