NEW HOUSING LOANS

Otago Daily Times, Issue 27388, 13 May 1950, Page 8

NEW HOUSING LOANS

Increases Authorised For Ex-servicemen GOVERNMENT STATES POLICY New housing loans for eligible ex-servicemen have been decided upon by the Minister of Rehabilitation, Mr Macdonald according to advice received by the Dunedin RSA. The loans include:— New Houses.—Up to 100 per cent, of the value of the property, with a limit of £2OOO, inclusive of suspensory loans and/or supplementary loans. Includes rural houses. Suspensory Loans.—Houses built to approved plans not exceeding £2OOO in value, exclusive of section, will qualify for a free-of-interest Government loan of 10 per cent, of the cost of the completed house. Supplementary Loans.—lnterest-free loans assessed at 5 per cent, of the reasonable cost of the house to be erected, with a maximum of £IOO. Retrospective Applications.—The new loans will not be retrospective beyond December 1, 1949, but in some cases advances up to £250 may be allowed to eliminate second mortgages. ■ • Existing Houses. —Loan limit unchanged at £ISOO maximum. No suspensory loan, but supplementary loans up to £75 may be allowed. Additions to Houses.—Loan finance may be granted for additions to existing houses, where justified, up to a grand total for housing and additions loans of £1750.

The new provisions are In line with NZRSA policy, approved by the Dominion Executive Committee in October, 1949. The Minister has set out details of the loans as follows: Loans for the erection of new houses may be granted to eligible exservicemen up to 100 per cent, of the value of the property, with a limit of £2OOO, inclusive of the suspensory loan and/or supplementary loan. The value will be the approved cost of the new house, plus the value of the section. Interest rates will continue to be at the rate of 3 per cent, per annum, with a rebate to 2 per cent, for the first year, provided that the conditions of the loan are fully observed. Loans for new houses will be granted up to a maximum of 35 years. Suspensory Loans As a result of the sharp increase in building 'costs which has taken glace over the past year or two, the [overnment has introduced suspensory loans which are intended to be a subsidy to compensate for these increases. Homes built to approved plans and specifications, not exceeding £2OOO in value exclusive of the cost of the section, will qualify for a free-of-interest Government suspensory loan of 10 per cent of the cost of the completed house. The granting of these loans will operate for three years from December 1, 1949, and will apply to houses for which a building permit has been issued on or after that date.

To provide for the needs of applicants with large families, however, the Rehabilitation Board has discretionary power in any particular case to waive the £2OOO cost limit and approve a suspensory loan in cases where an ex-serviceman has three or more dependent children. ■ In agreeing to waive the limit in these cases, the board will be required to be satisfied, amongst other things, that the additional floor space is essential for the applicant’s family, and that the contract price is reasonable. In the exercise of this discretionary power, it is mentioned that the maximum loan limit has not been raised, and in no case will an exserviceman receive a greater advance than £2OOO under all headings. Where an owner has a suspensory loan and personally occupies a house for seven years from the date of the advance of the loan, the loan will be cancelled and the mortgage reduced or discharged as may apply. Where, however, before the expiration of seven years, the ex-serviceman for any reason ceases to reside permanently in the house, or sells or otherwise disposes of it, the suspensory loan become due and payable. If the ex-serviceman resides in the house for seven years, he may dispose of the property, but if he does so before seven years are up, he must first offer the house to the Crown. A general condition attaching to all grants in respect of rehabilitation housing is that if an ex-serviceman sells his property, he is expected to offer it to another eligible ex-serviceman. The basis of assessment for supplementary loans was formerly the difference between the normal determined value of the security and £ISOO, or the cost, whichever was the lesser. Assessment on that basis met the position fairly by and large, but misunderstandings arose, and with the increase in loan limits it was decided to revise the system. A percentage of cost basis of calculation in line with that adopted for suspensory loans was decided upon. Supplementary Loans In addition to the suspensory loan, ex-servicemen are now eligible for a supplementary, interest-free loan which will be assessed at 5 per cent, of the reasonable cost of the house to be erected, with a maximum loan of £IOO. In cases where the ex-service-men have had their income earning ability reduced by war service, the Rehabilitation Board has power to grant an additional supplementary loan of 5 per cent, (maximum again £100) where this is warranted. Although it was decided that the new loan provisions will not be retrospective beyond December 1, 1949, the Government is aware that there may be cases of ex-servicemen who, in order to finance their building operations, were forced to raise money on second mortgage over and above the £ISOO then available as a rehabilitation loan. In some of these cases the second mortgages may be on terms burdensome to the man. and to meet the circumstances the board has been given authority to make advances of up to an over-all total of £1750 to eligible applicants. Among the conditions attaching to these advances are: (a) That the additional finance will clear the debt completely; and (b) the production of evidence of the existence of a registered or registerable land charge related to the complete construction of the house. The interest payable on any such advance will be 3 per cent, per year. Under the amended policy the loan limit for the erection of a dwelling on a rural worker’s unit is increased to £2OOO, which makes the total limit, inclusive of the land, £2500. The policy regarding the granting of a suspensory interest-free loan applies equally to rural houses as to urban houses, provided that the cost of the house to be erected is not more than £2OOO. Existing House*Loan limits for the purchase of existing houses are unchanged at £ISOO. Loans for the purchase of existing houses do not qualify for the suspensory loan. The same basis of supplementary loans, however, has been introduced as it applies to new houses, with the exception that the normal maximum loan under this heading is £75. Here again, however, the Rehabilitation Board may grant an additional supplementary loan of 5 per cent, where this is considered necesary in respect of ex-servicemen with impaired earning capacity due to war service. The Government is aware that many ex-servicemen purchased houses that have now proved insufficient in floor space to meet the needs of their growing family requirements, and it has been decided that loan finance may be granted for this purpose provided that the charges do not exceed a total of £1750. A main requirement is that the additional floor space is needed and is suitable for family requirements. Supplementary loans or suspension loans are not available for additions to existing houses.