THE RENT PROBLEM

Dominion, Volume 9, Issue 2832, 25 July 1916, Page 4

THE RENT PROBLEM

The Government lias again fallen into error in its' treatment of tho question of excessivo houso rents. Its purpose may have been a worthy one, but its proposals under tho War Legislation Bill are both inequitablo and unjust. It is proposed that any increase in rents above the amount paid in August, 1914, shall be made illegal in tho ease of houses let for less than £104 per annum, and provided that thero has been no capital expenditure on the' property since tho- date mentioned. Where thero has been capital expenditure since that date an increase of rent equivalent to a return of 8 per cent, on tho new capital is made permissible. Tho Bill, if passod, is not to apply to any rent which has accrued iprior to its passing. On a recent occasion wo pointed out tho .unfairness of tho position taken up by tho Government _ in recognising, in the caso of certain sections of the community, claims to consideration on tho grounds of increased cost of living and refusing to rccognisc- it in the case of others. For instance, railway servants and others have been granted bonuses or increased wages because of tho increased cost of living, whereas the owners of house property and others equally affected by the. increased prices of tho ordinary necessaries of life arc told in effect that they must not attempt to better their position < to meotthe changed conditions. A man earning £3 10s. a week in wages is granted a bonus to tide him over tho increased cost of living in war time, but a man who has an income of £3 a week (or any income at all) from house property, and who is just as much affected as anyone else by the general conditions prevailing, is not permitted to increase his income from his rentals in tho slightest degree. * Tho unfairness of tho position is aggravated by the fact that the owner of house property, while not permitted to increase his rentals, is hit especially Ijard in the added cost of tho upkeep of his property, duo to the cost of building materials as well as tho cost of labour. Everyone must sympathise with the rack-rented tenant, and with anything reasonable that may be done for his relief, but tho Government,, in its hastily-devised moans of preventing tho war being used as a lever to exact extortionate rents, has'failed to perceive that it strikes indiscriminately at the fairrent house-owner as well as at tho rack-renter. The meeting of pro-perty-owners held last evening to protest against the Bill waxed very indignant over the action of the Government, and some useful facte were adduced in support of their side of the question. They, however, will gain little by angry talk. If tho Government really wishes tc treat the question in a fair and honest fashion on its merits, the way is simple enough, and tho' pro-perty-owners who are interesting themselves in tho matter should point it out to tho Prime Minister and the Finance Minister. The way to deal with this question is on the basis of a recognised maximum return on tho capital value of tho property. In the Bill itself tho Government admits that in the caso of any additional capital expenditure on a property an increase of rent which will yield 8 per cent., per annum on the amount so expended may bo made. Tho Government thus conccdcs tho principle that houseproperty should fairly carry a rental which will yield 8 per cent on its capital value. Hero is aclear basis to work on. In tho Finance Bill, a 10 per cent., yield is considered a reasonable roturn in the case of a wasting asset—house property is a wasting asset—and the deputation may consider 10 per cent, a fairer figure than 8 per cent. That is a matter for argument. Tho main point is,that to placo the proposed limitation of rents on anythin, 1 ; like'an equitable basis to both tenant and owner some recogniscd reasonable return on tho i capital value of the property must ho do-

finitely fixed as a governing prim ciple. We would commend this point of view to both the deputation and the Government.