BUILT IN THE BOOM

Sun (Auckland), Volume III, Issue 898, 15 February 1930, Page 13

BUILT IN THE BOOM

REPORTED LOSS ON WORKERS’ HOUSES CITY COUNCIL’S DILEMMA For assisting to relieve the acute housing shortage in Auckland, six years ago, by the .erec- j <tron of a village of workers’ dwellings at Grey Lynn, the City Council has lost heavily when purchasers walked “'out. There is a prospect that further heavy loss may have to be incurred. In sympathy -with the trend of the property market here, the council’s houses —which in the boom period cost an average of £l,ll1 —are said to be valued today at £250 to £3OO less. As mortgagee, the council has bee nasked by purchaser-tenants to reduce the valuation accordingly. Should such a course be decided upon, the council will have to write off from £12,000 to £15.000. the council’s benificence in this respect having to be met by the ratepayers. The scheme was begun in 1915, when five cottages were built. Ten more were erected In 1919, and 50 In 1924. It had been intended to build some hundreds, the housing situation then being very acute. However, after the 65 had been completed no more were built. The scheme was financed by the ! State Advances Department, which lent the council £40,000 at 4J per cent., paid in Instalments of £IO,OOO, the last of which was lifted in April, 1925. The land on which the houses were built was City Council freehold. The prices of the sections to the purchasers varied from £l6O 'to £3OO, according to situation and configuration. The total price of dwellings and land varied from £1,045 to £1,185. The average cost of each of the final batch of 50 houses was £l,lll. Purchasers, who were in all cases men with families of two. or more children, paid a deposit of £3O, which the council then thought sufficient. A large part of that sum in each instance was used, however, in payment of stamp duties and legal costs of one sort and another. Interest on the balance of purchase money was fixed at 51 per cent., and the half-yearly payments spread over a period of 361 years were based on an amount of £3 3s lOd for each £IOO of principal. Over and above interest charges, the tenant-owners paid the usual charges which go with the purchase of a mortgaged property—namely, fire insurance and rates. Summarised, the weekly cost to purchasers worked out as follows: House and land priced at £1,045, £1 8s lid; house and land at £1,185, £1 13s sd; averaged-prieed house and land, £l,lll, £1 11s 9d. QLJARTER WALK OUT Since the completion of the scheme about a quarter of the original purchasers have relinquished their houses, which have come back into the council’s hands, and are now rented to ordinary tenants.. In accepting the mortgages given by the first purchasers the council could not have given sufficient weight to the fact, that in a number of instances the purchasers were living on wages which left a small margin, and that in the event of sickness or unemployment payment of interest, sinking fund and other charges must stop. From the outset, then, it was inevitable that some purchasers should fall into arrears. It tvas found that several got £SO and £6O In default and at least one buyer ran three figures into arrears, according to information given by one occupier. , -Hopelessly behind, some walked out leaving the council with unpleasant book debts which the small deposit did not greatly assist. In an effort to keep the houses occupied the civic landlord Invited tenants on a . weekly rental averaging 27s 6d, rates and insurance to be payable by the council — that is, citizens of Auckland. The housing shortage is now history. Empty dwellings are scattered over the city. Rents have come down. Valuations have necessarily had to be reduced for private owners. As yet. however, the council has not seen fit to reduce the valuations of its colony at Grey Lynn, though applications have been made both for the purposes of rating and the mortgage. The town clerk. Mr. J. S. Brigham, who was asked for Information regarding the amount the. council has forfeited through arrears of payments, what sum ratepayers in general have now to find in rates for houses which have come back to the council’s hands and whether a general revaluation was proposed, declined to comment other than to say that, he considered it improper to make a statement at a stage when the whole matter was under review by the Finance Committee.