HOUSE PURCHASE DEPARTMENT:
ADMINISTRATION & POLICY
(continued)
Bank Committee: December 19th 1921 (continued)
Limit of Advances.
The amount of advances for house purchase has been limited by your Committee to £600 on a pre-war house and £800 on a post-war house. The former class of property is valued in the ordinary way by the Bank's valuer and advances granted up to 80% of such valuation for a period not exceeding 20 years while advances on post-war property are governed by the contract price, advances being granted up to 50% of such price for a period of 10 years, 33.1/3% for 15 years and 25% for 20 years.
In view of the heavy fall in the market value of post-war property, your Sub-Committee are of opinion that advances on post-war houses should be made on the basis of valuation as in the case of pre-war houses. They also recommend that the limit of an advance be increased to £1000 for either pre-war or post-war property, this amount in no circumstances to be exceeded.
Leasehold property having less than 50 years to run.
Your Sub-Committee have had under consideration the question of the extent and period of advances on this class of property. They are of opinion that it would be desirable for each case to be considered on its merits and have decided accordingly.
988 RESOLVED:- That an applicant for a house purchase advance be required to state on the application form whether it is intended to reside in the house in respect of which an advance is required.
989 RESOLVED:- That the question of making charges where Mortgaged property is sold within 12 months after the granting of the advance thereon, or the mortgage discharged within a like period be held in abeyance until the amendment of the Rules and Regulations is under consideration.
990 RESOLVED:- That the present practice obtaining as to the sale of mortgaged property whereby a discharge of the first mortgage is required before a fresh one is entered into, be continued.
991 RESOLVED:- That no change be made at present in the rate of interest (namely 1¼d. per £ per month) payable by a House Purchase Mortgagor.
992 RESOLVED:- That future advances on post-war houses be regulated by the valuation both as to amount and period in accordance with the procedure adopted in regard to pre-war houses; also that the limit of an advance for either class of property be increased to £1,000 per house, this amount in no circumstance to be exceeded.
993 RESOLVED:- That the Insurance Cover Notes taken out in connection with House Purchase advances be for the amount of the valuation in each case.
994 RESOLVED:- That the question of the date from which an insurance cover note should be taken out be referred to the House Purchase Sub-Committee for further consideration.
995 RESOLVED:- That the appointment of Mr F Wilde as valuer to the House Purchase Department of the Bank be continued at a remuneration of £150 per annum for the valuation of houses up to the number of 300 any valuations in excess of this number during the year to be paid for at the rate of 10/- in each case.
996 RESOLVED:- That the Report of the House Purchase Sub-Committee (except that portion relating to the date of taking out Insurance Cover Notes) be approved.
With reference to the paragraph in the forgoing report relating to the times of meetings it was:
997 RESOLVED:- That the ordinary meetings of this Committee be held on the 3rd Monday in each month at 11:30am instead of 11am as heretofore.
Special meeting of the Bank Committee: May 5th 1922
1128 The following report of the Finance Sub-Committee was presented:
Advances to Depositors.
During the year advances have been made to 300 depositors for the purchase of their houses bringing the total number of borrowers from the Bank up to 1,264. In 142 cases the borrowers have discharged their indebtedness to the Bank, leaving the number of mortgagors at the 31st March 1922 at 1,122.
The sum advanced during the year in respect of House Purchase was £85,365, bringing the total amount of the advances made since the opening of the Bank to £349,453.
As illustrative of the character of the assistance which the House Purchase Department of the Bank has rendered to the depositors, the following information is submitted:
|
|
Number
of cases |
|
Advance did not exceed £100 |
64 |
|
Advance exceeded, but did not exceed: |
|
|
£100 - £200 |
487 |
|
£200 - £300 |
314 |
|
£300 - £400 |
204 |
|
£400 - £500 |
81 |
|
£500 - £750 |
104 |
|
£750 - £1000 |
9 |
|
Exceeded £1000 |
1 |
|
Total cases |
1,264 |
It has been necessary to exercise the Bank's power to obtain possession of property in two cases. In one instance the property was sold by auction and the Bank recovered the full amount of the mortgage, while in the other case a Receiver has been appointed and the rents are being collected from the tenants.
The repayment of principal and interest by the borrowers continues to be satisfactory; although it has been found desirable to suspend or modify the repayments in certain cases where the abnormal circumstances existing justified such action.
Interest on House Purchase Advances.
Careful consideration has been given to this matter, and in view of the fact that there has been a substantial drop in the value of money since the rate of 6½% was fixed, and also to the fact that many of the larger Building Societies are now advancing money at 5%, your Sub-Committee recommend that the rate to be charged on future mortgages be reduced to 1d. per pound per month or 5%.
Your Sub-Committee have further considered the effect which the above action might have with regard to mortgagors who are being charged at present 6¼% and it is felt that it would be only equitable that the reduced rate of 5% should also apply in respect of future payments in these cases.
Under the rules of the Bank however, it is necessary in order to effect this reduction to obtain the consent of the Treasury and Chief Registrar of Friendly Societies in addition to the approval of the City Council. Your Sub-Committee therefore recommend that instructions be given for the necessary consents to be applied for as early as possible.
1130 RESOLVED:- That, as regards future advances granted for House Purchase, the rate of interest payable by a Mortgagor shall be One penny per pound per month; also that with the object of applying this reduction in the cases of Mortgagors at present paying interest at the rate of One penny and one farthing per pound per month, the Council be recommended to authorise the necessary steps to be taken to obtain the required alteration of Rule 68.
Bank Committee: July 17th 1922
1183 On Minute No 1130 (alteration of rate of interest to existing house purchase mortgagors) the Committee were informed that the Treasury had intimated that their consent would be given to the reduction in the rate of interest in these cases to 5%.
General Purposes Sub-Committee: October 16th 1922
House Purchase Advances.
With a view to effecting economy in both time and labour in drawing the necessary cheques to meet the advances arranged, your Sub-Committee recommend that an account be opened in the name of the Manager at the London Joint City and Midland Bank to be used solely for House Purchase Advances, and that the sum of £10,000 be transferred thereto from the funds of the Bank, the Chairman of the General Committee to make the necessary arrangements with the Chairman of the Finance Committee.
Insurance of Mortgaged Properties.
Your Sub-Committee are desirous of avoiding the duplication of labour which results from the practice of dealing with these insurances through the intermediate channel of the Finance Committee. The insurance of the property in the ordinary way would be effected by the borrower himself, but to avoid the necessity of calling for premium receipts a rule was inserted to enable the Manager to effect the insurance and charge the premium to the account of the borrower. The property, not being "property belonging to the Corporation" does not appear to come within the expression used in the Standing Orders of the Council, and in the opinion of your Sub-Committee the insurance should be dealt with by the Manager direct, thus saving the keeping of duplicate records in the Finance Department and the consequent correspondence thereon.
Your Sub-Committee have therefore requested the Chairman of the General Committee to endeavour to arrange with the Chairman of the Finance Committee for their wishes to be carried out.
Bank Committee: October 16th 1922
The Chairman reported that an interview has taken place between representatives of the Estates Committee, and the General Manager and himself with reference to a scheme to finance the building of houses. As a consequence the Chairman and General Manager had drafted certain suggestions, and a copy had been sent to each members of the Committee:
Scheme to finance the building of Houses.
1. The Birmingham Municipal Bank to lend a sum of money (the amount to be decided upon later) to the appropriate Committee of the Council to enable them to build houses, or to make advances on buildings in course of erection.
2. The interest chargeable upon such loans to be at the rate of 5% per annum, or such lower rate as may from time to time be charged by the Bank to Depositors operating the House Purchase Department.
3. The period of years in which the loan is to be repayable to be 20 years, but may be extended by arrangement between the Bank and the appropriate Committee.
4. The Estates Committee as and when houses are ready for occupation would arrange to sell the same to purchasers requiring a house to live in.
5. The purchaser could obtain an advance from the Bank to enable him to buy his house; such advance would be made in the usual way and under the conditions laid down by the Rules in the Mortgage Deed.
6. The Town Clerk would prepare the Mortgage Deed for the Bank, as now, and such Deed should include special clauses safeguarding the Corporation's interest in the property.
7. The purchaser in thus paying to the Committee the purchase price, viz, the advance he has had from the Bank, plus his own cash contribution, would enable the Committee to re-use that money for the erection of another house.
8. The figures below show the weekly sum required to repay the amount advanced to the purchaser with interest by the Bank, the calculations being based upon a house sold at £435 and on the assumption that such figure would represent the value of the house.
|
|
£ |
|
Value
of house |
435 |
|
Amount advanced by Bank (80%) £348 say |
350 |
|
|
85 |
|
Amount
per week during the year: |
|
|
1st year |
13/4d |
|
4th |
12/4d |
|
7th |
11/4d |
|
10th |
10/3d |
|
13th |
9/3d |
|
16th |
8/4d |
|
19th |
7/3d |
With pro rata decreases during the intermediate year.
In addition to the above payments the purchaser would have to pay the ground rent if the house is sold leasehold, and the rates.
Before definitely fixing the price at which the houses will be sold, it would be well to discuss the point with the Assessment Committee, and settle the amount at which the houses will be assessed.
After discussion, it was:
1248 RESOLVED:- That the matter be referred to the General Purposes Sub-Committee, and the Chairman of the House Purchase Sub-Committee (Mr Councillor Fryer) with instructions to consider and report thereon in due course in the light of any instructions that may be given by the City Council in the near future.
Bank Committee: November 13th 1922
The following Minutes of the City Council relating to the preparation of Schemes by this Committee and the Estates Committee in connection with Housing, were received:
It was moved by Mr Councillor Talbot, seconded by Mr Alderman George Cadbury, Junr, and
Resolved: 26,079. That the policy recommended by the Public Works and Town Planning Committee that facilities should be offered to the tenants of municipal houses to buy the houses in which they reside be approved and adopted, and that the Estates and Bank Committees respectively be, and they are hereby, instructed to consider this policy and prepare a scheme for bringing the same into effect for submission to this Council at the earliest possible date.
It was moved by Mr Councillor Talbot, seconded by Mr Councillor Alderson, and
Resolved: 26,080. That the Estates and Bank Committees respectively be instructed to prepare and submit to this Council for consideration a scheme for advancing money by way of mortgage to persons to build or purchase houses repayable on the instalment principle, and subject to the conditions contained in Section 7 of the Birmingham Corporation Act, 1919.
The Committee were informed that a communication had been received from the Estates Committee stating that their Finance & General Purposes Sub-Committee had been appointed to consider this question and to confer with representatives of the Bank Committee thereon. An invitation had also been received from Mr Alderman George Cadbury, Junr for Bank Committee representatives to meet the Estates Committee representatives at Bournville on Tuesday the 14th instant at 11am to inspect the system of financing Housing Schemes in operation there.
1256 RESOLVED:- That the foregoing communications from the City Council be referred to the General Purposes Sub-Committee with instructions to confer with the representatives of the Estates Committee thereon reporting their recommendations in the matter to this Committee in due course.
1257 RESOLVED:- That the invitation of Mr Alderman George Cadbury Junr above referred to be accepted and that arrangements be made for representatives of the General Purposes Sub-Committee to attend.