THE MODERN HOME.

Waipa Post, Volume 47, Issue 3359, 26 August 1933, Page 3

THE MODERN HOME.

PRIDE OF OWNERSHIP

WHY PAY RENT?

(By A. C. Brookes.)

We have been told on different occasions that it is cheaper to pay rent than to build one's own home. Let us leave out of the question the pleasure one gets from owning one'.-? home and forget for the moment that improvements can very materially add to the unearned increment. My case for argument is ownership versus tenancy.

To start with one must fix a basis on which to buid one's arguments. Rents are down, but I think you will agree that a tasteful five-roomed home, full|y and modernly equipped, should bring at least 30s per week rental. Assuming that you either have or can purchase a section, and that it costs £l5O, and let us take it that such a house would cost £650 to build, and that rates and insurance wculd amount to £l3 per annum.

Interest at 6 per cent on £650 is £39 per annum, to which wc j must add £l3 to get a total outgoing of £52 per year, or £1 per week. You may ask, "What about the mortgage when it becomes due?" Let us assume that the mortgage term is five years and that a clause has been inserted providing that we shall pay off at, least £26 per year (or 10s per week) to bring us up to the same outgoing as a 30s per week rental. Assuming that we have only to pay interest on the actual balance from time to time, we should at the end of five years, have reduced the mjortgage to aproximately £SOO, and if the mortgagee would not renew (Avhicjh most likely he would) we should have no trouble raising the balance due from another quarter.

Now, while Ave have still been paying out 30s per week we must not lose sight of the fact thai; 10s per week of that has been sinking fund, in other words, we have beon banking that in reduction of our liability. Then again, many of us could, and would, pay more than 10s per week in sinking fund and thereby get rid of the liability so much sooner.

So far the writer has only stated the case from the point cf view cf borrowing from private mortgagees. Advances from the State Advances Office are not now available, but money can be obtained from building societies at very advantageous terms. A loan of £6OO under building society mortgage would cost £1 9s 6d in weekly repayments. These loans have the decided advantage that payment of the above sum weekly liquidates the liability in approximately Hi years, so that at the end of that time we have an unencumbered home.

At the present time the Unemployment Board is granting a subsidy on the wages cost of building, and to those contemplating building the saving is decidedly worth while. On a house costing say, £6OO, the subsidy on wages cost would be in the vicinity of £9O.

, Below is a tabulation which should be of real interest to all tenants and

particulary those who long for &• home of their own. It is too expensive to pay rent, and the tabjj shows how rent money counts up at C per cent interest over different periods of years:

(To be continued.)

Rent per In In In month 10 years 15 years 20 years £ £ £ , £4. G32 1,117 1,700 £5. 719 1,39(5 2,207 £6. 940 1,076 2,048 £7. 1,107 1,955 3,090 £8. 1,265 2,234 3,531