Since 1919, advances were made by the Bank by way of mortgage, for purposes other than the usual straight-forward application by owner-occupiers to enable them to purchase a house. This article describes three of these alternative types of loan.

 

[1] Purchase of Municipal houses
 (copy of an article written for the Bank's Golden Jubilee in 1969, based on J P Hilton's book: Britain's First Municipal Savings Bank)

 

Selling municipal houses is not new to Birmingham. It can be traced back to 1923, four years after the Municipal Bank formed its housing department.

This department developed at a phenomenal rate which can be attributed to two factors. Firstly, the general publicity given to house ownership at the end of the First World War, and, secondly, the inducements offered to citizens to buy municipal houses.

In October 1922, the city council decided to provide facilities allowing municipal tenants to buy their homes. The Bank and Estates Committee were directed to prepare a scheme.

After many conferences a joint report was presented to the council in January 1923 and the authorisation of the sale of municipal houses was obtained. It was agreed that the money received from such sales should be used for building additional houses.

At this time the Public Works and Town Planning Committee fixed the sale price before a house was handed over to the Estates Committee for resale.

When the scheme was inaugurated the Bank advanced up to 80% of the value of the house.

Conferences were held to popularise the purchase of council houses which resulted in a scheme whereby with a deposit of £60 for a parlour-type house, or £50 for a non-parlour-type; the bank advanced up to 80% of the value and the Finance Committee became responsible for the rest.

In March 1925, the Lord Mayor (Alderman Percival Bower) took up the question of offering still further inducements to sell municipal houses.

As a result of his strong line on the issue, lower deposits were arranged. These were £25 for parlour-type houses and £20 for the non-parlour-type. Special arrangements were also made for tenants to become owners on paying 1% of the purchase price.

In Britain's First Municipal Savings Bank, J P Hilton, the first General Manager of the Birmingham Municipal Bank writes: 'The psychological effect of the creation of owner-occupiers in the city is important. It lifts the individual out of the class who are dependent on the whim or fancy of a landlord. He will cease to pay rent year after year and never own a brick in his house; he will realise it is a wiser policy to be his own landlord; he will learn to become independent.

'House-ownership, moreover, gives a man a direct interest in the affairs of his city, and anything which tends to create a keener interest in the affairs of our city should be welcomed.'

The low deposit terms referred to above resulted in many citizens becoming owner-occupiers instead of tenants:

 

 

 

 

 

	1927	1934
- Number of mortgages effected up to March 31st	2,422	4,113
- Amount advanced uo to March 31st	£790,647	£1,343,917

The Council Meeting in January 1923, regarding the Sale of Municipal Houses (referred to above),

considered a joint report of the Bank and Estates Committees.

A copy of the report is reproduced at Assisted Housing Scheme.

 

 

[2] Introduction of Progressive Mortgages
(Extract from Britain's First Municipal Savings Bank)

'The council took a further step towards easing the housing problem when they ordered a scheme to be prepared for advancing money by way of mortgage to persons willing to build houses. The Bank and the Estates Committees presented a joint report in which they pointed out that the Corporation possessed the necessary powers under Section 7 of the Birmingham Corporation Act, 1919, to advance money by way of mortgage to persons to build houses, but the Bank, as constituted under Section 12, were limited to advancing money on mortgage to enable persons to purchase houses already erected.

'It was ultimately decided that the Finance Committee should advance money on progressive mortgage to persons to build houses within the city on freehold land, or on land leased for the purpose by the Corporation. At a later stage it was arranged that similar assistance should be granted to persons erecting houses on land leased to them by parties other than the Corporation. A scheme was adopted which provides for these applications to be dealt with by the Public Works and Town Planning Committee. The Finance Committee advance the money on certificates issued from time to time by the city surveyor, and the Bank acted for the city treasurer in collecting the repayments, and arranges the transfer to a Bank mortgage as soon as the final payment under the progressive mortgage had been made, unless the loan is entirely paid off. Up to 31st March, 1927, the Bank had dealt with seventy of these cases.'

(The balance outstanding on Progressive Mortgages at March 31st 1936 was £3,465 - the only occasion on which this figure was reported in the published annual acounts.)

 

 

The Birmingham Corporation (General Powers) Act of 1929 empowered the Bank to lend money to enable an allotment holder to purchase his allotment. The Annual Report at March 31st 1930 showed Advances to Allotment Holders of £876, on 25 advances.

The 1931 Annual Report's Balance Sheet detailed the amount outstanding on these advances under the heading 'Allotment Purchase Dept' ie as distinct from the standard mortgage advances shown under the heading 'House Purchase Department'.
Balances outstanding on allotment advances were shown in Annual Reports as follows:
- 1931 .... £554
- 1932 .... £459
- 1933 .... £314
- 1934 .... £205
- 1935 .... £164
- 1936 .... £133

No further reference was made in ensuing Annual Reports, and in view of the low level of advances, it must be assumed that the scheme produced little demand, and was discontinued.