FARM MORTGAGES.

Putaruru Press, Volume VI, Issue 253, 6 September 1928, Page 4

FARM MORTGAGES.

In e. discussion of farmers finance by the Wairarapa Farmers’ Union one speaker suggested' that mortgages on farm lands should receive preferential treatment in respect to taxation, as an inducement to lend on first mortgages of rural properties. The income tax on large incomes in excess of £B7OO is 4s 6d in the £, and a large income taxpayer who lent on mortgage at, say, 6 per cent, would after payment of income tax receive a net return of £4 13s. In pre-war times, before tha moratorium and the subsequent inflation of land values, it was not entirely the big investors who took up mortgages. Broad acres were considered more or less as giltedged and many hundreds of small investors were glad to have their limited funds out on farm mortgages.

Farmers in some districts' are said to bo finding difficulty in arranging mortgages, and the trouble is attributed by some to inflated land values. No doubt this has had a good deal to do with the difficulties of the situation, but this is not the sole cause. During the war and since, investors, and small investors in particular, have become acquainted with Stock Exchange securities. The issue of loans by the Government and local

bodies, and the joint issue of additional shares by many of the banks and other strong joint stock companies have, with the help of sharebrokers, familiarised the small investors with this class of business, and not a few have withdrawn from lending on mortgage and have bought j gilt-edged stocks and shares. They find that as most, if not all, joint stock companies distribute dividends free of income tax, they obtain an advantage as holders of such shares. Furthermore, there is no trouble in respect, to interest on bonds or debentures or dividends on shares. On due dates these are paid promptly, •and in the case of dividend warrants, they are posted to holders of the shares. It is not so simple a matter with respect to a mortgage, as the mortgagor is entitled to a month's grace, and frequently has to be written to and reminded of his obligation.

Other speakers at the meeting were of opinion that, as valuations were now being made on a strictly conservative basis, money is beginning to flow back into rural investments. It is to be hoped that this is correct, but in any case rural investments must compare with other investments as to yield, safety, and ease of collection. Preferential treatment in respect to taxation would be very wrong, but fair treatment would be mere justico. —Marlborough Express.