“FREEHOLD”FLATS

Southland Times, Issue 18972, 20 June 1923, Page 9

“FREEHOLD”FLATS

AN EXTRAORDINARY SCHEME. A new and ingenious device for securing treble profits out of a building enterprise has been introduced into Australia (reports the Melbourne Age.) Of course, it has come from America, and equally, of course, it is a scheme which will tend to make the rich richer and the poor poorer. The idea is a brilliant one—from a city property owners’ point, of view. A large building is divided into sections—flats, suites or offices, or plain, ordinary 12 by 10 rooms. A prospective tenant comes along, and he is told that he can buy the “freehold” of a section—in other words, that he can become the permanent owner of a flat, suite, or room on payment of a lump sum. If he

“falls” for the new idea he enters into possession of a cube of air, bounded top and bottom and on each side by brick or plaster, and located somewhere between the floor of the first and the ceiling of the tenth storey. That is his domain, and from it he cannot be ejected, for, having paid the price outright in hard cash, this bit of enclosed air is his own property as long as the walls hold together. In actuality, however, the alleged “freehold” is no freehold at all, but merely a lease for a long term of years. The practice in many large cities of America has been to grant a lease for 99 years, but the benefits are obviously largely illusory. The freehold or lease is actually merely an encumbrance on the Title of the owners of the land in the form of a guarantee to tenants that their rights of egress and ingress will be preserved, and that they will enjoy certain other facilities and undisturbed tenancy for the currency of the lease. A leading city architect said recently that in his opinion the scheme was unworkable. In the first place, the average building would be out of date in 20 or 30 years, and in the case of the civic authorities insisting on rebuilding, all sorts of complications would arise. The law furnished little protection for persons who entered into arrangements of the kind, for there was nothing tangible which could be protected. The freehold title was a sham and a delusion, because where the premises were located above the ground floor, the so-called title amounted to nothing. This view will appeal to every sensible man who considers the question. Speculative builders have already introduced the idea in Sydney, but so far it has not met with general acceptance. In a block of buildings erected in Macquarie street it is possible to secure, by the payment of a lump sum of money, what is temptingly held out as the freehold title to a flat, but to the level-headed section of the Sydney people the prospect of acquiring permanent ownership of a few rooms. in a building which actually belongs to someone else does not make any great appeal, particularly when they realise the difficulties which will arise when the question of gas, water, and sewerage pipes, electric light, and telephone lines, the apportionment of municipal rates, and the provision of elevators and other conveniences are taken into account. Some time ago a wealthy financier in Seattle, U.S.A., offered to come to Melbourne and finance the erection of buildings which would be sold in sections, but so far his offer has not been taken up. The new idea has, however, been freely discussed in connextion with a new building which it is proposed to erect in Flinders street. The citizens of Melbourne shculd approach propositions of this kind with the greatest caution. They are designed merely for money-making purposes, and whatever benefit does arise from them will accrue, not to the man of moderate means in search of a flat or an office, but to the enterprising speculator who erects the building.