House Purchase-1922-6

When the Bank Committee met on June 18th 1923, they considered the following report of the Bank's House Purchase Sub-Committee regarding issues that had arisen with the valuation (by the Bank's Valuer, Frank Wilde) of properties prior to construction:

Valuation of Houses to be erected under Joint Scheme.

The Committee will recollect that under the Scheme for the erection and sale of houses approved by the City Council on the 9th January last, provision was made for the Bank to indicate from an examination of complete plans, specifications etc, what advances they would be prepared to advance on completion of houses.

Consideration has been given in this connection to the question of what payment should be made to the Bank's Valuer in respect of the examination of such plans, specifications and contracts for houses to be built. It is obvious that the work involved by such examination could not be regarded as forming part of the present arrangement with the Valuer, nor could payment at the rate paid for ordinary house purchase valuations, namely 10/- in each case, be considered reasonable.

It will be appreciated that plans may be submitted for a valuation figure or a loan figure based on valuation, and the actual borrowing may not be through the Bank, and it is therefore necessary to guard against persons obtaining a valuation through the Bank at a preferential rate, and using it in other directions.

Your Sub-Committee accordingly consider that the case would be suitably met by the fixing of a graduated scale of fees for the examination of plans etc, on the following lines, such fees to be paid irrespective of whether a loan is subsequently granted through the Bank or otherwise:

Valuation
Not exceeding £500	£2. 2. 0.
Over £500 but not exceeding £700	£4. 4. 0.
Over £700 but not exceeding £750	£5. 5. 0.

also that the following additional arrangements be made with the Valuer:

1. Where the plans are submitted in respect of a single house, either by the builder or his client for own occupation, and the loan is subsequently arranged through the Bank, no charge is to be made by the Valuer for the usual valuation prior to granting the mortgage.

2. Where the plans etc are submitted in respect of more than one house of a repetition character, either by the builder or his client, and loans are subsequently arranged through the Bank, the valuation fee payable on each of the additional houses prior to the granting of the Mortgage shall be 10/-, such fee being transmitted to the Valuer as in ordinary cases.

The Bank Committee discussed the question of the amounts of the valuation fees referred to in the report, and decided to refer the matter back to the House Purchase Sub-Committee for further consideration. The issue was again considered on July 23rd 1923, when the House Purchase Sub-Committee reported again:

This question has again been carefully considered. Your Sub-Committee have conferred with Mr Frank Wilde as to the nature of the work involved in order to arrive at the valuations of prospective houses so that the Bank might indicate what amount they would be prepared to advance on such houses when completed. Your Sub-Committee are satisfied that a considerable amount of detailed work is necessary, including examination of plans, specifications and contracts, in order to arrive at such valuations, and they adhere to the opinion that the fees recommended in their former report are, in view of all the circumstances, reasonable. It should be pointed out that it is probable that the majority of these valuations will not exceed £500, and that Mr Wilde has taken this into consideration in suggesting a low fee of £2. 2. 0. for valuations up to this figure.

Accordingly, the Sub-Committee again recommend that their suggested scale of fees be adopted, which the Bank Committee did subject to minor amendments for the higher valued properties. The new valuation fees now being:

Valuation
Not exceeding £500	£2. 2. 0.
Over £500 but not exceeding £750	£4. 4. 0.
Exceeding £750	£5. 5. 0.

On October 15th 1923, the Bank Committee received two items for consideration. The first was a City Council Minute that clarified the responsibilities of the various Committees involved in relation to the erection and disposal of houses; the second was a report of the Bank's House Purchase Sub-Committee regarding problems arising from numerous mortgage applications received from prospective purchasers on the Farcroft Estate.

On Minute No 1360, the attention of the Committee was directed to the following Minute of the City Council passed on the 31st July last, amending their instruction relating to housing in accordance with certain recommendations of the General Purposes Committee. The Town Clerk informed the Committee that revised delegations to the various Committees' concerned would be submitted to the Council at an early date.

On the 31st July last the Council passed the following Resolution on the proposals of the General Purposes Committee relating to Housing:

26,456. RESOLVED:- That the proposals set out in the report of the General Purposes Committee relating to the erection and disposal of dwelling houses, involving dealing with the Government subsidy and the rendering of financial assistance to persons building or proposing to build houses, be approved and confirmed, and that the various Committees concerned be instructed to act accordingly, not withstanding any inconsistency between this and any existing instruction.

The proposals approved by the foregoing Minute are as follows:

The Public Works & Town Planning Committee to be the only Committee of the Council concerned with the building of dwelling-houses, whether these are built by the Corporation or by private enterprise, and that that Committee should also deal with the Finance Committee. Also that when the houses built by the Corporation are finished they should be handed over to the Estates Committee for letting or disposal, the Public Works & Town Planning Committee advising the Estates Committee of the price below which, in the interests of the Corporation and the Building Trade, such house must not be sold, the Bank and Estates Committees in conference with the Finance Committee then making such financial arrangements as they consider best calculated to induce and assist the purchase of such houses for occupation under the powers contained in the Birmingham Corporation Act, 1919. It is to be further understood that so far as the exercise of these latter powers relate to rendering financial assistance to persons or bodies of persons undertaking to build houses they shall be administered by the Public Works & Town Planning Committee in conjunction with the Finance Committee.

The adoption of the foregoing proposals would necessarily involve a revision of the Council's instructions with reference to housing, and these would be dealt with in the comprehensive revision of the general instructions at the commencement of the new municipal year.

The House Purchase Sub-Committee presented the following report:

Advances on Corporation Houses, built under 1922 Scheme.

Your Sub-Committee report that numerous applications have been received from prospective purchasers of Corporation houses mainly on the Farcroft Estate, Handsworth. It has not, however, been possible to complete the mortgages in these cases owing to the delay which has occurred in fixing the selling price of the houses.

Your Sub-Committee are of opinion that in view of the urgent need for possession of these houses, and the public feeling on the matter, an announcement should be made through the press showing the position so far as the Corporation is concerned, and they have directed the Chairman of the General Committee and the General Manager to ascertain the views of the Town Clerk as to the desirability of publishing a statement on the following lines:

BIRMINGHAM MUNICIPAL BANK.

PURCHASE OF CORPORATION HOUSES.

The scheme which was inaugurated a short time ago, whereby houses erected under the Corporation's own Housing Scheme could be purchased by the prospective tenants with the aid of financial assistance from the Birmingham Municipal Bank, is now in full swing.

It will be remembered that the scheme was the outcome of a Joint Committee set up by the Council consisting of representatives of the Bank, Estates and Finance Committees under the chairmanship of Councillor Appleby.

As the houses erected by the Public Works Committee are finished, they are handed over to the Estates Committee. At this stage the Estates Committee assume responsibility, and they decide which of the numerous applicants shall become the possessors of the houses. Having done so, the Estates Department notify the Municipal Bank of all applicants who desire financial assistance.

Immediately the Bank receive such notification the ordinary procedure of the House Purchase Department is set into operation, including a professional valuation of each house. When that valuation is received, the Bank acquaint the intending purchaser of the amount they are prepared to advance. This amount, in cases where the full extent of financial assistance is required, is equal to four-fifths of the valuation, but in many cases the intending purchaser does not require the maximum assistance, and a loan for a lesser amount is arranged. The intending purchaser sends a written acceptance of the Bank's offer and the Town Clerk is at once instructed to prepare the mortgage deed. The legal formalities are quickly arranged and the final fixing of the repayment periods and amounts settled, and

THE HOUSE BECOMES The PROPERTY OF THE TENANT.

Thus it will be seen that a simple and inexpensive method is provided. Beyond the small valuation fee there are no other charges in connection with the transaction.

The first Estate to come under this Scheme was the Farcroft Estate at Handsworth, consisting of houses of the parlour type in Hollycroft Road, Farcroft Road, Astley Road, Grafton Road, Aylesford Road and Farcroft Grove.

In the schedule which was issued to the public in connection with this Estate, it was indicated that the average purchase price would be £415, and the approximate advance by the Bank £300.

So far as the Bank are concerned, the valuation in respect of the individual houses shows a slight variation due to the difference in lay-out and the extent of land comprised in the purchase. The result is that in a few cases the advance works out at £280, but in respect of the bulk of the cases an advance of £300 can be obtained.

Up to the end of September they had received 82 applications in respect of Farcroft Estate houses. Of these, 31 had been entirely completed and the loans arranged; 17 were in legal process; and 34 were awaiting valuation, etc. In the last named cases it should be pointed out that the houses were not completely finished and therefore could not be valued, the applications having been sent in a little in advance.

A start has also been made in respect of houses in Vimy Road and Jutland Road, Kings Heath. These are of the non-parlour type, and the Bank have been able to advance £240 in respect of these houses. Up to the end of September, 4 applications for this area had been received and dealt with.

October 1st 1923.

The Town Clerk, however, advised the Bank Committee that, in his view, an announcement relating to the selling price of the houses referred to would be premature until the outstanding difficulties regarding the fixing of the prices had been cleared up. The Committee therefore decided that the House Purchase Sub-Committee's report should be deferred until the outstanding difficulties with regard to the fixing of the selling prices of the houses had been settled.

On November 19th 1923 the Bank Committee received the following Minute of the City Council:

That this Council, acting as the Local Authority for the City of Birmingham under the Housing Acts, 1890 to 1923, do hereby delegate the powers and duties of this Council under the Housing, etc Act, 1923 (except the power of raising money), in the following manner, and authorise and instruct the several Committees concerned to act accordingly.

Section 5 (1) (a) (ii) Bank, Estates and Finance Committees, jointly.

The Housing Act of 1923 (known as the Chamberlain Act) withdrew the subsidies (introduced by the Housing Act of 1919) for council houses except for private builders and houses for sale. Councils could undertake to build houses and offer these for sale but also to sell off some of their existing properties. This policy was essentially reversed the following year.

On January 29th 1924 the Bank Committee received a communication from the City's Finance Committee regarding the question of advances on Corporation Houses, together with a letter from the Chairman of the Estates Committee. The Finance Committee's communication consisted of a copy of a Resolution recently passed by them to the effect that they would be prepared to make loans enabling house purchasers to obtain a house with a deposit of only £60 or £50:

1503. Resolved: That, subject to agreement on the part of the Bank Committee, the Estates Committee be informed that in cases where the amount which the Municipal Bank are enabled to advance on mortgage to a purchaser of a Corporation houses is not sufficient to meet the needs of the purchaser, this Committee will be prepared, under the powers contained in Section 7 (3) of the Birmingham Corporation Act of 1919, or if they so desire under Section 5 1a (ii) of the Housing Act 1923 if the limits of such Act so permit, to loan in suitable cases the sum required so as to provide for the payment of a fixed deposit by the purchaser of £60 for a parlour type house and £50 for a non-parlour type house, as suggested in the letter of the 24th instant, addressed to the Chairman of this Committee by the Chairman of the Estates Committee; the arrangement to be reviewed from time to time.

The above Resolution followed the receipt of a letter written by the Finance Committee from the Chairman of the Estates Committee:

24th January, 1924

Sir David Davis, JP,

Chairman of the Finance Committee,

(Priority Sub-Committee.)

COUNCIL HOUSE.

Dear Sir David,

SALE OF HOUSES.

I am asked by the members of the Estates Committee (Finance & General Purposes Sub-Committee) to express to the Members of the Finance Priority Sub-Committee their thanks for the sympathetic manner in which they were received on Monday last.

The Estates Committee desire that the present sale of houses should evoke no criticism, and they are most anxious to assist the artisan class to buy by making the purchase of houses as easy as possible.

Unfortunately, at the moment, there is criticism as to the price at which the houses are sold, for the following reasons:

The public generally know that a subsidy equivalent to a capital sum of £75 is given to the Council in respect of the houses now being sold, and they feel and believe that it is the intention of the Council to pass this subsidy to a purchaser.

That this is not done in its entirety is shown by the following figures:

	Parlour type	Non-parlour type
The average type of houses is believed by my Committee to be about ....	£430	£360
Deduct subsidy	75	75
	£355	£285

	Parlour type	Non-parlour type
Whereas sale prices range from	£365 to £400	£300 to £335

The sale prices are fixed by the Public Works & Town Planning Committee (in conference with the Ministry's representatives) and are communicated to the Estates Committee in accordance with the General Purposes Committee's report to Council of 31st July, 1923 (Resolution No 26456).

It has been mentioned in the past that the above sale prices are "values" determined by the Ministry's valuer, but the Estates Committee are faced with another value when sales are arranged with the help of the Municipal Bank, a value which is always lower and it is here that the help to the artisan class to buy is largely upset.

The following figures give some indicative information on this point:

	Sale price of house	Bank values	80% of value Bank advance	If limit of advance is 80% of Bank's value purchaser must pay minimum deposit of :
	£	£	£	£
Parlour	400	385	308	92
		380	304	96
		390	312	88
Parlour	380	365	292	88
		375	300	80
Parlour	385	370	296	89
		380	304	81
Parlour	365	365	292	73
		365	292	73
Non-parlour	335	300	240	95
		300	240	95
		300	240	95
		300	240	95
Non-parlour	320	315	252	68
		310	248	72
		310	248	72
Non-parlour	300	280	224	76
		285	228	72
		290	232	62

The Estates Committee feel that, within reason, the sales should be made as easy as possible, and it is admitted that the full subsidy is not passed on and justifiable reasons can be given, my Committee suggest that as the recent Housing Act authorises a Municipality to advance 90% of value that advance should be made and deposits reduced accordingly. If this is done a purchaser will only pay as follows:

Sale price of houses as communicated to the Estates Committee	90% advance of Sale price, ie Ministry's value	Minimum deposit to be paid by purchaser
£	£	£
400	360	40
380	342	38
385	346. 10/-	38. 10/-
365	328. 10/-	36. 10/-
335	301. 10/-	33. 10/-
315	283. 10/-	31. 10/-
320	288	32
300	270	30

It will be noticed from the foregoing paragraph that the deposit is reduced considerably, and ranges from £40 to £30 in comparison with the £96 to £68 now acceptable.

Continued ....

HOUSE PURCHASE DEPARTMENT:

THE ASSISTED HOUSE PURCHASE SCHEME

(continued)