STATE=BUILT HOUSES

Taranaki Daily News, 12 August 1930, Page 14

STATE=BUILT HOUSES

ALARMING LOSS RUMOURS MANY OFFERED AT AUCTION. LEGAL AUTHORITY'S VIEW. Alarming rumours as to the Ic&ses that are facing the Slate Advances Department in regard to house property are being circulated, states the New Zealand Herald. That many houses are being surrendered to the department is indicated by the fact that during the last two or three weeks 21 have been offered for sale at auction in Auckland by order of the mortgagee, which is the department. Few, of course, have been sold at auction, but it is understood that afterwards they have been disposed of privately at a 'substantial less. Notwithstanding this fact, money is still being lent for building, as much as 95 per cent, being available for workers. Discussing the question yesterday a prominent member of the legal profession said that in some cases the system had been a dismal failure and the State had suffered considerable loss. “The question of the indiscriminate advances to workers should be considered very seriously by the Government,” he said. “We certainly know that they have made mistakes in the past and loans far in advance of the security offered have been made by the department.” NECESSARY QUESTIONS.

The New Zealand Herald had already stated that it had been unable to ascertain the number of workers’ homes properties which through default by the mortgagors had been placed in the hands of the department. No official. returns had ever been disclosed on this point and he ventured to say that no member of Parliament would dare to ask the following questions in. the House; ■ 1. Full particulars of the number of workers’ homes in each district that have reverted to the Government through default. 2. The number of workers who are 12 months in arrear with their payments. 3. Particulars of the sales of properties that have fallen into the hands of the department, including, (a) purchase price and terms; (b) loss or profit by the department in the transaction. The secrecy of the Government department in this connection led. to private inquiries. From these it was shown that during the last fortnight about 20 workers’ homes had been advertised for sale by public auction by order of the department. Whether any purchasers were found he was not in a position to state, but the presumption was 'that 00 per cent, were bought in by the department. “If it were possible to get a proper statement of the financial position of tl s workers’ homes department such as would be supplied by an y financial institution.” he said,'“the losses suffered by the department during the last f?w years would astonish most of the advocates of the scheme. NO' SAFE MARGIN. “Under.the Act the department is titled to advance up to £1250 to any worker having an annual income not exceedinrr £3OO, increased by £25 in re-' spect of each child or other person dependent on him, and is not the owner of any other land. The Government will advance 95 per cent, of the total ■'value of his. property, leaving a margin for all administration purposes, wear and tear, and depreciation of property, of 5 per cent.—a percentage at which no man with any grain of common aeiise would lend any money, but of course our paternal Government is looked- upon as a benevolent institution and consequently can be exploited in every way. “Dealing with the application, the Government, unlike a prudent lend i r, does not consider the financial position of the borrower, and provided he complies with the regulations he is entitled to the limit of the loan. The consequence is that some workers have received advances/of an amount which it is impossible for them to repay out of their salary.' They get the loan and perhaps pay the first half-yearly instalment to the Government and then make default without paying any rates jr insurance, and quietly hand over the key to the Government, stating that cannot carry on. In the meantime they have lived in the house perhaps for 12 montits without paying any rent. OUTSTANDING RATES. “Much has been said of late with regard to the scarcity of houses in Auckland. We all know that there are hundreds of houses vacant in Auckland at the. present time, the landlords of .which are only too ready to rent them a l , a reasonable rental. In spite of this

the Government still keeps on advancing loans to workers for the erection of further homefl. Might I suggest that before any further loans by the Government are granted all properties on the books of the department at the present time should be taken up by the intendin ■ applicants. “There is another factor which is often lost sight of in connection. with t l -- Government advancing loans on any

property and that is that in the event o f the mortgagor making default and the property being taken over by the Government, the Government is not liable either for any arrears of rates on the property or for any future rates. It appears to mo that seeing these Government departments are practically trading concerns and interfering with private enterprise they should be in exactly the same position as a private individual at the present time. If he be the mortuasee he is liable for rates. Why should not any department of the Government which is lending money for nrCffat be in the same position? “Furthermore, if a number of these workers’ homes, or State properties are thrown on to the hands of the department, what a loss in revenue it will be to the local body! There is not the slightest doubt that local authorities will suffer severely, seeing that the State will not pay rates on the houses

that fall back on its hands." The system whereby workers pay interest and sinking fund half-yearly was criticised. In the case of soldiers, payments were monthly and this not only was an aid to the mon in discharing their liabilities, but also a gain to the department concerned, seeing that interest came in in 12 monthly instalments. Workers, however, were supposed to pay half-yearly. Under this method it was much more easy for mortgagors to fall into arrears and furthermore the department lost the interest gained by the instalment plan.