NO HELP TO HOME-BUILDERS

Chronicle (Levin), 6 March 1947, Page 7

NO HELP TO HOME-BUILDERS

PRICE INCREASE NULLIFY SALES TAX REMOVAL That the benefit to home-builders consequent upon the removal of saies tax from building materials last -September was now praetically nonexistent because of subsequent increases in prices of supplies, was the stateniQnt •made by Mr. R. T. Griffin, an officer of the State Advances Corporation, when giving evidenee at a sitting of the Wellington Itural Land Saies Cominittee in Palmerston North. Mr. Griffin said that his depaftment kept a register of building eontraet prices submitted by various builders in the city and from this they worked out basic building rates from month to month. The' basic rate for a good type of house during 1946 was 31s a square foot. Figures he produced showed that the basic rate in October was 31s 11 d. It dropped to 29s lOd in November when the first elfects of the removal of the saies tax were f'elt, but during Deceinber and January it rose again to 30s lOd, and in Pebruary this year it was 31s 8d. The case was oue in which Onslow Edney, building ' contractor, sought eonsent for the sale of a newly-erected house, together with a section of 32 perches in Eongopai Street, to E. J. Itichards for a cousideration of £1750. ' ' This boils down to a question of whether speculative builders can continue in business or not, " said Mr. G. I. McGregor, counsel for Edney. "The total costs of the building and the section amount to £1699 4s lOd, and this represeuts the actual monev paid out to date. The builder has allowed for his own Jabour at scale rates for carpenters, but has ineluded nothing for supervision or the setting up of the job. It is claimed that a person in business as a builder is entitled to soiue profit. In the old days it was usually regarded as about 10 per ceut., but tliere is no such margin today. lf the transaction is approved, his prolit will be about £50. ' ; The wages cost, which amounted to £177 10s was the only item over which tlie builder liad auy control, continued Mr. McGregor. Every other.item was a lixed or competitive charge. Such materials as timber were a lixed charge, while plaster work, plumbing, etc., were let on sub-contract to the lowest tenderer, and were, therefore, a competitive charge. The cost of the house wras based on 900 square feet, and it worked out at just under 32s a square foot without allowing for any prolit. The materials and supplies liad been purchased before the saies tax had been removed. The cost of the land, the land transfer, paths and commission on the sale of house amounted to £277 10s, leaving the cost of the house itself at £1421. Mr. W. J. lieveridge, jt'or the Crown, said their valuation was £1428, including remission of saies tax £58. The removal of the saies tax t.oolc place in September and the house was thon ncarl-y completed. Tlie Crown valuation of the house and property was £1678. I "The Crown is disturbed in this case because our valuation is based on 31s a square foot, which in other -instances includes ,the builder 's profits, " said Mr. "Beveridge. "lifehabiTitation houses are being erected at this Jigure, and no oue would suggest that the builders are worldng at a loss." Mr. Griffin then gave his evidenee regarding building rates, and said the basic ligure of 31s for 1946 was for a superior type of house tdvthat built by Edney. In repily to M r.\j\lcGregor he agreed that thefe should be encouragement to speculative builders, provided their cost were right, to build houses at the prcsent time of shortage. His department did not now take saies tax ixito cousideration because it had been found that its removal made no difference as a result of increases in the costs of materials. He thought allowance sliould be* made for the preparation of plans. The ehainuan of the cominittee (Mr. O. X. Cuiupbell) said that builders' eontraet prices might not be an aecurate picture of the final value of houses, because they did not include the yjreparatiou of tlie plans and many extras which usually crept into the actual building work. Tlie cominittee passed the transaction at the full price of £1750.