MONEY AND BUSINESS TOPICS

Manawatu Standard, Volume LV, Issue 255, 25 September 1935, Page 6

MONEY AND BUSINESS TOPICS

HOUSING ECONOMICS. STATE CRITICISED. (By H.J.K.) It is common knowledge that throughout the Dominion there is an acute 'shortage of dwelling-houses. It is most marked in the lour centres and particularly in Wellington. The result is that rentals are rising, and in Wellington a four-roomed cottage in the suburbs cannot be rented at under 30s per week, to which the tenant must add transport charges in and out of the city, winch is no small item. The rentals are high because tho demand for cottage property for rent is in excess of tho supply; that is, the old unchanging law of economics is in operation. Certain politicians are endeavouring to make political capital of the situation instead of probing the problem, and endeavouring to get at the root cause of the trouble. The house shortage of to-day is the effect of a ruthless interference with economic law. In the housebuilding problem there aro two prominent factors, the landlord and the mortgagee. The landlord whether he be individual or company builds a house or houses to be let, so that an income may be derived. Such landlords build out of their own resources and look for an adequate return on the capital expended, which is no crime but a natural economic procedure. The mortgagee fills a sphere of importance in the building problem. He finds the home builder with a large proportion of the capital cost of the building and looks for a return at market rates on the capital he has thus advanced. The landlord and the mortgagee are necessary and inevitable factors in home building. How have thev been treated in recent years? The Rent Restriction- Act and the Mortgagors Relief Act tell the tale. The mortgagee and. th-e landlord, the two indispensable factors, have been sometimes treated as pariahs, hardly entitled to common justice. Can it be wondered that the landlord and the mortgagee have to a considerable extent retired from the business, and because they have ed there is a cottage shortage and hardship. This is economic retribution. But people are still prepared to build. The writer knows of one building company in one of the big centres that is ready and willing to build 15 to 20 or more cottages, but is being held up by the Unemployment Board. This may appear strange to some of our readers, and therefore a little explanation' will not be out of place. The Unemployment Board conceived the idea some time ago that by subsidising building operations it would be helping to relieve unemployment. This policy was wrong in principle for the people are being taxed to relieve the unemployed, and not to provide cheap buildings for those able to stand the full cost of such buildings. The building society mentioned above naturally desires to get a cut of the board’s building subsidy, and as usual bureaucratic control is exasperatingly slow. Negotiations are alleged to have been in progress for months past, and the board is still considering the matter. Had there been no subsidy -bait, the building society would have gone ahead as soon as it obtained its permits. This illustrates the inconveniences and dangers of interference and economics. Rents are high and profitable, which should be an inducement to capital to step in and get the benefit of this; but, although there is plenty of money for investment —and capital would like to earn higher rates than at present—both landlords and mortgagees are hesitant and naturally so. The precedent of the State’s interfering with its business and imposing restricting conditions is embalmed in the Statute Book, and some future Government may think itself exceedingly clever if it goes a few steps further and imposes harsher conditions. To relieve the housing shortage the landlord and the mortgagee must be set free and encouraged within limits to carry on their business. In Britain the greatest success has attended the building trade because the British Government helped without actively interfering and relied on the building societies to take a leading part. The Government is being pestered to do something and presently we shall probably see a Housing Board established and money voted for building. Then an era of extravagance will commence. Building costs will go up—timber and roofing iron are already up —and the whole purpose of the building scheme would be stultified., for with the higher costs cheap rentals would be impossible. After all the position is a simple one. )Ye must pay for State interference with, its cumbersome methods with economic laws. That interference has resulted in hardship on the community.