STATE HOUSES

New Zealand Herald, Volume LXXVI, Issue 23400, 17 July 1939, Page 14

STATE HOUSES

Sir, —Tn his letter of the 12th instant, in which he adversely criticises the Fair Rents Act and the State housing scheme, Mr. J. Thonies overlooks, or does not mention, a matter of some importance. It is this: any scheme or legislation, no matter who brings it into being, that tends to keep rents to a low level, is of benefit to the people as'a whole, and that is fill that counts. The intention behind the Fair Rents Act is to protect a large number of people from the imposition - of rack-rents. In this respect the has provided a wholesome check. There is yet room for improvement in a widening of its scope. In his criticism of the State housing scheme Mr. Thornes lets himself go with a vengeance, and in doing so exhibits a. good deal of confusion of thought, lie asks a dozen and one questions and infers that information is withheld by the Government in its operation of the housing scheme. A perusal of the public accounts would provide all the necessary information. To anyone interested in the subject the cost of any "State house can he ascertained by a little simple arithmetic. State houses vary in design and size, therefore rents vary. A simple method of arriving- 1 at the approximate cost of any State house is to capitalise the rent at 51 per cent. Thus a house yielding a rental of 2Gs per week has cost £1250; a larger house, yielding 30s per week, £llOO. As the money for the building of these houses is .provided by means of Treasury bills a return of 5} per ceiit on the capital cost is ample enough to meet all charges. A 2 per cent charge (£2B) on the annual rental of a £l-100 house yields a handsome profit to the Reserve Hank; the remaining £SO is sufficient to cover all other charges, such as .rates, maintenance, insurance, depreciation, etc. Mr. Thornes says: "The Hon. ,Armstrong can already boast that he has had .£10,000.000."-I didn't know that he had "boasted" about the matter, but I do know that £10,000,000 is not nearly enough to meet the demand. The number of State houses already built is approaching the 5000 mark. As the lodged applications for these houses exceeds 15,000. it looks as if another £10,000,000 will soon be required—to go on with. As these State houses are revenue-producing assets, the caviller has no just cause for complaint on the score of capital expenditure/ And _the limit of this expenditure is the limit of demand, which, with .so much leeway to make up for past neglect, and a growing population to boot, is not even remotely in sight. . . J.O.