MORTGAGE RELIEF

Wairarapa Times-Age, 8 November 1939, Page 3

MORTGAGE RELIEF

SUM OF TEN MILLIONS WRITTEN OFF ADJUSTMENT OPERATIONS REVIEWED. •EFFECTS OF HIGH LAND PRICES. I’esulls of the adniinistriilion of the Mortgagors and Lessees Reha bi lit ation Act, passed in 1936, are examined in a report on mortgage relief legislation in New Zealand, which has been prepared by ihe I ’nder-Secretarv of .Justice, Air 11. L. Dallard. A total sum of £9,885,334 was remitted under this Act, and of Ibis sum £8,533,437 was in respect of farm mortgages.

Allowing for the capitalised value of reductions in rentals, the total remissions could be stated at not less than £19,000,000. Subject to the exercise of certain residual, jurisdiction (such as authorising sales of property in respect of which there has been an adjustment), and a few odd cases awaiting final settlement, the administration of the Act is now complete. The report states that the great increase in land values and land dealings was reflected in the figures relating to mortgages. During the years between 1913 and 1930 the unimproved value of land increased from £212,000,000 to £338,000.000, an increase of approximately 59 per cent. Mortgages increased from £85.000,000 to ’£235,000.000, a rate of increase of approximately 176 per cent. Export farm income of the country, which in 1920 was £48,000,000 and in 1925 and 1929 was £55,000,000, had dropped in 1931 to £ 36,000,000 ( while the mortgages on farm lands had increased from £88,000,000 in 1920 to £130.000,000 in 1931. The total mortgages (suburban and rural) were in 1931 £241,000.000, and interest had to be met on this sum out of greatly reduced income.

SLUMP & LAND VALUES. The general tenor of replies by adjustment commissions as to the causes of the 1930 slump, given in answer to a questionnaire submitted to them by the Department of Justice was that the purchase prices were too high, even in relation to the pre-slump price-le-vel. One commission was of opinion that buyers had arrived at values of farm lands by guess-work, instead of basing it on a careful analysis of work-ing-costs in relation to the value of production.

“Another commission stated," Mr Dallard observes, "that its experience was that the price paid for all lands purchased in the years 1918 to 1920 and 1923 to 1929 was in excess of the true value, and that the majority of the applications in its district were in respect to lands purchased during those years. On the other hand, one commission thought that, viewing land values in relation to the pre-slump le; vel, there was no evidence of excessively high purchase prices, except in isolated cases. I think a fair summary of the replies on this head is thatin perhaps 50 per cent of cases the price was above productive value even if the price-level before 1930 had been maintained."

TOTAL APPLICATIONS. There were 34,596 applications for relief tiled—ls,62l by farmer applicants and 18.973 by other applicants. Adjustment commissions commenced their work alter Easter, 1937, and by December, 1938, practically the whole of the 34.(J01) applications had been disposed of. By Easter 1939 (just two years after the hearings really commenced), with the exception of one or two isolated cases which had been deferred for special reasons, all applications had been finally disposed of, and the Court of Review had dealt with practically all the appeals. Of the applications filed. 2569 were the subject of voluntary adjustments and 8020 were withdrawn. The remaining applications were heard by the adjustment commissions. Of the 9992 farm orders made after a hearing, the principal sum due under mortgage was reduced in 5406 cases. In relation to other applications the figures were 11,151, applications and 4081 cases in which there was a reduction in the principal sum. The amounts written off mortgages were:— Farm mortgages: Principal, £5,598,148: interest. £ 1.368.768; total. £6.957.916. Other mortgages: Principal. £1,047.666; interest. £224.865; total. £1.272.531.

Tile totals for both classes of mortgages were: Principal. £6.636,814; interest. £1.593.633: total. £8.230.447. The rate of rental payable under leases was reduced in respect of 2477 farms and 175 other applications, and arrears of rent were remitted or reduced in 2327 farm and 165 other cases. The total remissions were: Farm, £432.043; other, £12,999: total. £445.042. Unsecured debts were remitted in respect of 3,446 farm and 478 other applications. and the amounts remitted totalled: Farm applications. £1.143.478: other applications, £6G,3G7; total. £l.209,845.

Allowing for the capitalised value of reductions in rentals, the remissions could be stated at not less than £10.000.00(1, of which more than £B.500.000 was in respect of farm properties. the report observes. With some additional remissions on account of applications withdrawn, the total remissions under the Act are estimated at from £10.000.000 to £10.500,000.