EVASION INEVITABLE

Chronicle (Levin), 11 October 1947, Page 5

EVASION INEVITABLE

Press Association)

Land Saies Act Not Working Out

(Per

WELLINGTON, Oet. 10. The successful operation of the Land Saies Act in its present form, would ha've been practicable only if the basis upon which it was stabilised, nameiy 1942 values, could itself have been stabilised. This Was stated by the president ot. the New Zealand Couneil of Land Agents Institute, Mr. J. Gordon Harcourt, in his address at the annual meeting in Nelson this week. "It is eomnion knowledge," he said, "that building 'Costs which were obtaining in 1942 have inereased alarmingly and, with far more purchasing power in the eountry than the avaiiable goods and services can meet, evasion of the Act was inevitable. " The method of administration al^o, in his opinion, had been sometimes at fault. The eourt's deeisions were based, he said, primarily on the replacement eost which was not necessarily indicative of the market value. Some houses were more attraetive than others but under the methods adopted where eost was the determining faetor, that intangible item of attraetiveness could not be given adequate expression and valuation. "The blaclc market in land is unfortunately rife in the eountry today and human nature being what it is, with eupidity one of the .ingredients in its make-up, I am afraid it will • be very diffieult to stamp it out as long as buiiding costs, which are still rising, eontinue at a level some 30 to 40 per cent. higher than the basis iixed by the Act. The dnly real solution is more houses. The provision of rental houses under the State housing seheme may perhaps be having its repercussions because there undoubtedlv exists in human na ture an ingrained desire for each man to own a pieee of land and much of the building today is by the State for rental purposes. • The result is that a greater part of the very large demand for freehold has to be met from existing houses and thus even though ttie records of the Land Saies Court show a vast volume of land transactions, for the most part these represent changes in occupation and ownershop rather than any real step towards overcoming the shortage. "There is, however, a more serious aspeet of the present setup. I refer to the financial implications and possibie repercussions of having various price levels for the same article. Finance on a house in existence in 1942 is lixed on valuation strietly in accordance..with land saies prices, "that is, on the basis of 1942 building costs. Finance on a house built since 1942 is granted largeIv on valuation based on the eost at thc date of ereetion as approved by Land Saies Committees. Thus it is possibie that an older house of heart timbers and superior materials, is fmanced on a much lower basis than a house built this year of the best materials obtainable, even though the houses may be similar in design. Finance avaiiable on probably the sounder of the two is much less than that which has been obtained on a new place with costs at the present level. If building is to be eneouraged at all, this is inevitable but 1 ask vou to consider tlie implications following ordinary trade cycles. The property market will fluctuate and there must be a reeession in values wherein lies the great danger for owners and mortgagees, partieularly if there is any suspicion of a slump. However, as time passes the difficulties which will arise through different price levels accordin^ to the year of ereetion, will become very real. This, I think, is a matter which has eseaped general notice. If building is to be encouraged and the Land Saies Act maintained without alteration, it is diffieult to see how future dangers are to be avoided."