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Adventages of a Neglected…

Rhestrau Manwl, Canlyniadau a Chanllawiau
Dyfynnu
Rhannu

Adventages of a Neglected Act. By Edgar L. Chappel). J Wales Garden Cit. a lid Town Planning Ajsi-ouatioa. I In Soulh \Vaie& where the majn'it.; of In South Wa i ea where the ma j ority ?f the workers earn fairly good wages, there exists, a strong desire on the part, ct many to become the owners of thi dwellings m which they reside or in- tend to reside. Most housing reformers agree that this method ow ownership is by no means the most satisfactory, and very fev.- advocate its adoption where the eo-operative method can be satisfac- torily applied. The fact cannot be gain- sa.id, however, that many workers are willing and anxious to become their cwn landlords, and personally I am desirous that they should realise this object with the least amount of trouble and expense. AID FROM LOCAL AUTHORITIES. Only in a very few instances are work- ing men possessed of the full amount necessary to enable them to purchase a dwelling" outiight. In most cases they have to avail" themselves of the aid of some lending agency, such as a build- ing club, a Duiluing society, or a. private mortgagee. Building clubs were formerly very popular in South Wales, but, they ure now declining in popularity. Large Humbers ct men, especially in towns on the sea board, obtain advances from building societies, but in the Swar^et Valley most house purchasers raise their finance from individuals on the security of mortgages. None of these methods are so advantageous to the workers as that provided for them under the Small Dwellings Acquisition Act, and I strong- ly recommend that intending borowers should avail themselves of the exceptional facilities which the' adopted of this m-oasure. by Swansea Valley local auttic-i-t- ties brings within their reach. LOW RATE OF INTEREST I Under the Small Dwellings Acquisition Act public bodies are empowered to borrow money from the Government at a low rate of interest (the present rate for borrowing is 3i pe cent.), and. to lend this money to intending purchasers of dwellings for periods not exceeding 30 years at 3¡ or 4 per cent. In the Swim- sea Valley 3i per cent. is the late charged. The proportion of the valu, vf the house to be advanced must not ex- ceed four-fifths. As compared with the terms offered by building societies, che most popular of all lending agerciea, these terms are exceptionally advantage- ous. Building societies usually advance from two-thuds to three-fourths, and rarely does the, rate of interest fall below five per cent. The period of repayment also is very much less; the maximum period allowed by the largest building society in Wales is 16 2-3 years. I have recently established a series of com- parisons between the amounts paid in Ys- tradgynlais and Pontardawe districts for the acquisition of dwellings under the Small Dwellings Act, and the amounts. that would be required in the case of building companies. By borrowing from the Icoal Councils a financial saving varying from P,30 to £60 per house, can be effected. This is a consideration which workers cannot afford to ignore even were there no other advantages. CONDITIONS OF ADVANCES J Advances ure made subject: to certain conditions being complied with. These are rather stringent- in some respects, and many workers are either unable or un- desirous of complying with them. The principal conditions are as fouows (1) The limit of advance is four-fifths of that which, in the opinion of the local authority, is the market value. In the case of a lease of less than 99 years un- expired the maximum loan is £ 240; in the case of freehold or of a leasehold of not less than 99 years unexpired, a maxi- mum amount of JB500 may be advanced. No advance may be made on dwellings valued at more than JB400. (2) Borrowers must repay each year over an agreed number of years not ex- cee-ding thirty a fixed amount of the principal together with the interest en the balances remaining from time to time unpaid. Borrowers may also by giving one calendar month's notice not only repay the instalments agreed upon, but the whole of the principal, or by sums of £10 or multiples of JS10 repay a.ny part of the principal. When such re- payments are made the interest payable is, of course, proportionally reduced. OWNERS MUST BE OCCUPIERS. (3) The borrower must reside in the house; when he removes he must repay the loan to the Council. (4) The hcuse must be kept in good "nitary condition and repair, and must not be used for the sale of intoxicating liquors. (5) The house must be kept insured against fire, and the borrower must pro- duce the receipts for tha premiums to the Council when required. The essential conclition is that owners must be occupiers. This is a perfectly just condition, && the object of the Act is to enable individuals to become their own landlords. It would obviously be undesirable for the State to finance per- sons desiring to become the owners of property for the purpose of making pro- fits by renting dwellings to others. Let as now compare the coat of ac- quirin a house by borrowing from the ..noil with the coat of renting one. The following is a statement of the finances of a dwelljng in Ystradgynlais built en lea?<held land, the cost of erection of which was 2250. It is as- sumed that the owner will be content with interest at the comparatively low rate of five per cent. on his capital ex- penditure, nothing being allowed for amortizement, that is, the recovery of principal CASE 1.—OCCUPIER NOT OWNER. I ANNUAL FINANCIAL STATEMENT I £ s d Interest (5 per cent, on £ 250). 12 10 0 Groun d Rent 2 0 0 Rates and Taxes (say) 4 0 0 r-.epa Irs 1 10 0 Rent Collection and Supervision 0 10 0 Insurance 0 3 9 Voids a.nd Bad Debts 0 10 0 Gros Annual Rental 21 3 9 I Gro?s weekly rental, 83.3d. To obtain a mod-grate return on 1,:3- capital expenditure an owner dad". inh of the value stated would TC n e to charge at least 3?.3d. Der week. Let us row see what the tenant k,. ill require to pay por week if he rJei:0, to I purchase the house under the terra, of the Act as it is worked by the District Councils of Ystradgynlais and Pontar- dawe. It will, of course, be understood tlut ho is able to provide the initial fifth, that is 250, arW that he is prepared to waive the interest on this sum in order to enable him to purchase his house in a period of 30 years. CASE 2.—OCCUPIER BECOMES I OWNER IN 30 YEARS. i House costs £ 250. Owner-occupier I provides £50 him5elf, and borrows £ 200 from the District Council at 31 per cent. I FINANCIAL STATEMENT— I First Year £ s d Interest 7 10 0 Repayment 6 13 4 Ground Uent. 2 0 0 Hatilis anu Taxes (S< y) 4 0 0 Repairs 1 10 0 Insurance 0 3 9 Annual Payments. 21 17 1 Amount payable weekly, 8s.6d. ADVANTAGES OF PURCHASE. I The maximum amount which a person will nctc-d to pay to purchase his own dwelling under the terms of the Act is 8s.6d. per week, or only threepence more than he would be required to pay in rent to a landlord. Moreover each year after the first his annual rental will be- come less by five shillings per annum, and a.fter the third year it will be chea.per to buy the house than to rent it. In thel follow.ing statements the calcu- lations are given for shorter borrowing periods, and intending purchasers will be .:ble to see at a glance what amounts they will require to pay during the first year to enable them to become their own landlords in 25, 20. 15, and 10 years is- spectively. In each case, of course, it is assumed that the purchaser is able to find the initial £ 50, and that he is pre- pared to invest this amount in the dwell- ing without receiving a cash dividend thereon. CASE 3.—REPAYMENT OF LOAN I IN 25 YEARS. FINANCIAL STATEMENT— I First Year. £ s d Interest 7 10 0 Repayment 8 0 0 Other charges (as in Case 2) 7 13 9 £ 23 3 9 Amount payable weeky, 93. Amount reduc-ed bv 6s. per annum each year after the first. CASE 4.—REPAYMENT OF LOAN IN 20 YEARS. FIRST YEAR'S STATEMENT. £ s d Interest 710 0 Repayment 100 0 Other Charges 7 13 9 JE25 3 9 Amount payable weekly, 10s. Amount reduced 7s.6d. per annum eich yfir after the first. CASE 5.—REPAYMENT OF LOAN IN 15 YEARS. FINANCIAL STATEMENT. First Year. £ s d Interest 710 0 Hepaympot 13 6 8 Other Charges 7 13 9 L28 10 5 Amount payable weekly, lis. Payment reduced 10s. per annum each year after the firs-t. j CASE 6.—REPAYMENT OF LOAN IN 10 YEARS. FINANCIAL STATEMENT. First Year. Interest 7 10 0 Repayment 20 0 0 Other Charges 7 13 9 £ 35 3 9 Amount payable weekly, 13s.6d. Amount reduced by 15s. per annum each year after the first. ADVANTAGEOUS TERMS. I From the above statements it will be seen that working men may, if they de- sire, acquire their residences on very ad. vantageous terms, and the Y-strdgyn- liis and Pontardawe District Councils are anxious that the exceptional facilities offered by them should be more widely utilized. The great difficulty in the way of the more widespread use of tho Act consists in the fact that only a com- paratively small proportion of workers are able to provide the necessary initial fifth. This difficulty could well be over- coma if local citizens cf financial stand- ing act as securities to the books for a part of the amounts necessary to enable respectable workmen to avail themselves of the terms offered by the local Coun- cils. An arrangement of this character was reoantlv madfe in the Panteg Urban. District with excellent results. In a further article I will suggest methods by which the Act can be worked much more extensively than is now possible.

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