House Purchase



First National Housing Trust


The history of a scheme to advance a loan to the

First National Housing Trust in order to facilitate the

construction of the residential Pheasey Estate, Great Barr

In a major effort, after the First World War, to house its citizens in properties "fit for heroes" and to remove them from the inner city slums, Birmingham Corporation constructed some 51,000 council houses before the outbreak of the Second World War. In addition, during this 20-year interwar period, some 65,000 houses were constructed in Birmingham by the private sector.


The BMB was actively involved in the Corporation's scheme, working with the City's Estates Department to administer and finance an Assisted House Purchase Scheme - the Bank's principal involvement being to advance sums by way of mortgage to tenants wishing to buy the property that they occupied. The Bank also provided advances to depositors wishing to buy a house constructed by a private developer.

A further avenue for the Bank to invest its funds in housing arose from private developers seeking advances to construct housing estates of various sizes. Three large council estates (Kettlehouse, Kingstanding, and Warren Farm) were constructed close to the city's northern boundary in the 1930s; and it was close to this area that Henry Boot & Sons Limited (of Sheffield) developed an estate at Perry Beeches. Henry Boot was a major constructor of houses in the UK in the interwar period, building in excess of 80,000 houses, of which 50,000 were built for Local Authorities; over 9,000 houses were built for rent (by its subsidiary First National Housing Trust), and some 21,000 houses built for sale to the private sector.

In March 1937, the Bank's Committee were informed that Messrs Boot & Sons had made an approach through the City Surveyor to be granted a loan to finance the construction of more housing in the area. Through their First National Housing Trust subsidiary, the firm proposed to erect houses costing 300 for the building and 80 for the land.

Negotiations between the Bank and the firm's director, Edward Boot, resulted in a report by the General Manager, dated May 31st 1937, regarding a proposal to build 3,246 houses on the Pheasey Estate, Great Barr.


The First National Housing Trust had purchased the 340 acres of the Pheasey Farm from George Smith in 1935. Just 40 acres of the farm's acreage was in Birmingham, the majority being in Aldridge Urban District, Staffordshire. Additionally, some part of the land on which the houses were to be erected was conveyed to the Borrowers on the 22nd February 1937 by Sir Holburt Jacob Waring.


The General Manager's report contained:


            - a full Report and Valuation by Frank Wilde (the Bank's Valuer);


            - an independent Report and Valuation by Messrs Chesshire Gibson & Co; and


           - a report by Mr C F Nightingale of Messrs Fisher and Nightingale upon the question of the possible effect on the houses,

                 of mining activities.


           After considering these reports, the Bank Committee resolved:


           (1) That the foregoing report of the General Manager as to the negotiations by the Bank representatives with Mr Boot (on behalf of the First National Housing Trust) for the erection of houses on the Pheasey Estate and recommendations in regard thereto, together with the report and Valuation of Mr F Wilde and the report of Mr Nightingale be received and entered on the Minutes. 


           (2) That authority be given, as recommended in the foregoing report of the General Manager, for advances to be made to the First National Housing Trust for the erection of houses within three years up to the approximate number of 3,246, such advances not to exceed in any case 90% of Mr Wilde's Valuation for each type of house, with interest charged at the rate of 4% per annum, and to be made in the first place by way of progressive mortgages until the completion of the respective blocks of houses from time to time, when new Mortgages for a period of 30 years in each case are to be created for the respective amounts represented by such progressive advances, on the understanding that the repayments for the first five years shall be made by the reducing payment method, computed on a 25 year loan and that from the expiration of such first five years the repayment shall be by equated payments based on the amounts then outstanding and computed on a loan period of 25 years.


            (3) That the loan in question be made on the terms and conditions recommended in the foregoing report of the General Manager and in accordance with the decisions already arrived at by this Committee as to road making requirements and interest rests and that the General Manager be instructed to make an offer on the lines above indicated, to the First National Housing Trust.


           (4) In the event of such offer being accepted, the General Manager be instructed to take all required steps (if necessary in consultation with the Chairman and/or the Chairman of the House Purchase Sub-Committee) for making such advances as from time to time required, and that the Town Clerk be generally instructed to prepare any necessary documents, affixing the Corporate Seal thereto, where requisite.


            Edward Boot accepted the Bank's offer in a letter dated June 7th, 1937:


            I have submitted to my Board your offer to advance by way of progressive mortgage upon 3,246 houses on this Estate to a total of 1,110,915 (One million, one hundred and ten thousand, nine hundred and fifteen pounds).


            They have instructed me to accept this, all in accordance with the terms which you have set out in your letter of June 1st, 1937, and to convey to you their high appreciation of the way in which you have met our wishes, thus enabling us to proceed immediately with this important contribution to the housing needs of Birmingham.


            We intend to commence building forthwith, so that houses will be ready for occupation as soon as sewerage and other services are available.


           Construction of the estate began later in the year, with the Minister of Health (Sir Kingsley Wood) cutting the first sod on July 14th 1937.


           On March 21st 1938 it was reported to the Bank Committee that the General Manager had received a letter from the First National Housing Trust pointing out the present position of the building work, from which it appeared that about 300 houses would shortly be completed. The Trust, therefore, asked for the first Mortgage to be in respect of that number instead of entering into separate Mortgages in respect of each block of 100 houses as originally contemplated. The Bank complied with this request and directed the Town Clerk to prepare any necessary documents.


           On May 16th 1938 the Town Clerk reported as to the sealing of the first mortgage and the payment of the first instalment:


           Your Committee will be interested to know that the first Mortgage in this matter, which related to a principal sum of 117,000, was on Friday sealed by the Borrowers, and the Corporation's cheque for the first instalment despatched to them on that day.


            The question of arrangements regarding insurance of the buildings was considered by the Bank's House Purchase Sub-Committee who recommended to the main Committee as follows:


            (1)      The insurance to be effected with the Alliance Assurance Company (with whom the First National Housing Trust, Ltd have all their insurances and whose credentials your Sub-Committee are advised are satisfactory), in the joint names of the First National Housing Trust, Ltd and the Corporation, in regard to buildings in course of erection, time on risk cover, and completed houses.


           (2)       The permanent policy of insurance taken out on completion of the houses to be in the sum of 275 for each house - a figure slightly higher than two-thirds of the full freehold value, which your Sub-Committee are advised is a reasonable basis. Although it is the practice of the Bank in regard to individual houses to require insurance to be for the full amount of the loan or as laid down in the title deeds, your Sub-Committee do not deem that practice appropriate for houses involved in a large estate such as the one in question, and they consider the option of the Committee under the Regulations should be exercised by fixing the amount at 275 for each house.


            (3)      The Alliance Assurance Co agree that no insurance in which the Corporation is interested will be allowed to lapse without the Corporation's consent and that in respect of any claims arising under any of the policies or covers the Corporation shall be consulted before any payment is made to the Trust.


           (4)       With regard to payment of premiums and commission, the Trust will pay the premium of 1/- per house on the policy for houses in course of erection, builders' plant, etc. and will receive the commission. On houses taken out of such policy and covered by "time on risk" the premium, fixed at 1/6d per cent, will be paid by the Trust to the Assurance Company and the commission transmitted by the Assurance Company to the Bank. On houses covered by the permanent policy the premiums of 1/6d per cent will be paid by the Bank and recovered from the Trust and the commission will pass to the accounts of the Bank.


            In the course of the proceedings relating to the advance to the First National Housing Trust, the Town Clerk submitted a report as to the requirements regarding method of construction of buildings that was contained in the Conveyance by Sir Holbert Jacob Waring to the First National Housing Trust of the land on the Pheasey Estate.


            The Town Clerk's report was dated April 22nd 1938:


           Pheasey Estate.


            In connection with the advances which the Bank have agreed to make to First National Housing Trust Limited (in this report hereafter referred to as "the Borrowers") in respect of the erection of houses by the Borrowers on the Pheasey Estate, I have to report to your Committee that some part of the land on which houses are to be erected was conveyed to the Borrowers on the 22nd February 1937 by Sir Holburt Jacob Waring (hereafter in this report referred to as "the Vendor"). The Conveyance of the land in question contained an exception in favour of the Vendor of the mines and minerals under the land conveyed with a proviso that the Vendor should not work the same at a depth of less than 300 yards below the surface. The Conveyance further provided that compensation was to be paid for all damage caused by subsidence due to mining operations to any buildings which might after the date of the Conveyance be erected on the surface of the land in question "Provided always that if the purchasers or their assigns or successors in title should thereafter erect any dwellinghouses or buildings of a similar nature on the said pieces or parcels of land or any part thereof the same to be constructed with concrete under the walls thereof which should be not less than six inches thick and six inches wide on either side of the footings and there should also be inserted in the walls thereof broad bands of expanded metal fixed in cement so as to overlap at the corner of any such dwellinghouses or other buildings".


            The Borrowers have already constructed a few houses on the land in question and the constructional details of these do not comply with the requirements set out in the Conveyance. The Borrowers' Architect has not unnaturally expressed the opinion that the method of construction in fact adopted is as satisfactory as, if not superior to, that set out in the Conveyance. The Surveyor acting for the Corporation inclines to the view that the method of construction is at the most not inferior to that set out in the Conveyance. Your Committee will appreciate that the Borrowers have entered into a Conveyance in which is set out in detail the method of construction to which houses erected on the land in question are to conform. Houses already erected do not conform to the agreed details of construction. It is important to bear in mind, in considering this matter, that no question arises here of equating the relative merits of different methods of construction; on the contrary, the only point to be remembered is that the Borrowers and the Vendor have solemnly agreed that compensation should be dependent (inter alia) on the houses conforming to an agreed form of construction. 


           The legal position in this matter would seem to be, therefore, that it is a condition precedent to the recovery of compensation for damage resulting from subsidence that the buildings should comply exactly with the details of construction set out in the Conveyance. In order to give a complete picture of the legal position I think it must be assumed that if the Court were satisfied that the method of construction in fact used was incontrovertibly superior to that set out in the Conveyance (and, therefore, that the Vendor had received by the variance in construction, an advantage) the Court would not allow the Vendor to escape a claim on the ground that the constructional details did not comply with the requirement set out in the Conveyance: that, however, is not the position in this case.


The most satisfactory method of dealing with this matter would be to obtain the approval of the Vendor to the method of construction in fact adopted by the Borrowers and for this consent to be embodied in a supplemental deed, and I have to ask your approval to my taking such steps as are necessary to achieve this solution; and to take such further steps as may be necessary to safeguard the Corporation's interests.


            After considering the report of the Town Clerk, the Bank Committee authorised him to take any necessary steps to obtain the approval of the vendor to the method of construction adopted by the First National Housing Trust and to take any further steps that may be desirable to safeguard the interests of the Bank, and to enter into any necessary agreement.


            In due course (August 31st 1938), the Town Clerk reported on the negotiations that had taken place between First National Housing Trust and Sir Holburt Jacob Waring. The Town Clerk was able to report that: an agreement has at last been reached as to the method of construction to be used by the Borrowers in connection with houses erected or to be erected on land conveyed to the Borrowers by Sir Holburt, to whom the Borrowers were under an obligation to conform to a specific type of construction.


            The position is now satisfactorily regularised and, in the remote event, of any damage occurring to the houses in question as a result of mining operations beneath the site of the houses the Borrowers will be in a position to require appropriate compensation from Sir Holburt  in respect of such damage.


            On January 16th 1939, the Town Clerk further reported that: First National Housing Trust Limited have agreed to convey to the Walsall Corporation two small pieces of land having areas of 133 square yards and 126 square yards respectively, in order that the same may be used by the Walsall Corporation as electricity sub-station sites. The pieces of land referred to above do not form part of land mortgaged to the Corporation.


           In addition, certain rights are given to the Walsall Corporation to lay and maintain electricity cables over land, portions of which are subject to Mortgages in favour of the Corporation. It is, therefore, necessary that the Corporation should, as Mortgagees, be a party to the proposed Conveyance to which I have referred.


            Progress by First National Housing Trust on its development of Pheasey Estate was interrupted by the commencement of the Second World War. The Bank's General Manager reported to the Bank Committee on September 11th 1939 and expressed the opinion that it was unlikely that the Trust would proceed with further building operations beyond the 12 sections already in hand.


            The Committee agreed that authority should be given for advances to be made upon the completion of the various stages of the building in the sections already commenced; and that advances on other sections be held in abeyance until it was definitely known what the Trust proposed to do, when the matter would be further considered.


            The ability of the First National Housing Trust to make repayments seems to have suffered difficulties during the Second World War. The General Manager reported to the Bank Committee on January 16th 1943 as follows:


           Application is made for continuance of the suspension of capital repayments on Pheasey Estate mortgages. In May 1941, when the original application was made, the Bank expressed their willingness to suspend payments of principal on Pheasey Estate to the same percentage as would apply to Building Society loans on other housing estates of the Trust. Considerable delay occurred in obtaining necessary consents from Building Societies, Local Authorities and the Ministry of Health, but finally all agreed to the suspensions. In January 1942 it was decided the Trust should pay the Bank half the amount of capital payments and full interest charges on outstanding balances, and this arrangement should apply for a period of twelve months from the 1st January 1942. The arrangement has been adhered to, and it is recommended it should continue for a further twelve months.


           The arrangement was renewed on an annual basis. In January 1945, it was determined that the amount outstanding on the loans represented 74% of valuation.


            During the Second World War, 410 of the estate's houses were occupied by British Forces, and later by American Forces. In 1945, the First National Housing Trust arranged to sell these houses when they were handed back to the Trust by the War Office. The houses were then sold by the Trust on a leasehold for 99 years and a ground rent of 3. The purchase prices were fixed at 500, 550, or 575, according to the type of house. Purchasers were required to find a deposit of about 10% and the Bank agreed to provide mortgage loans of 450, 500, and 520 on the respective house types.


            Some of the houses had been damaged by the wartime occupiers. The Bank's valuer (Mr Wilde) issued a certificate to enable a loan to proceed when the necessary repairs had been made. Mr Wilde was paid fifty guineas for the leasehold valuations, plus 5/- for each certificate.           


            Despite experiencing cash flow problems during the War, the Trust probably paid the loan off in about 1961, when the Trust offered to sell the houses to sitting tenants at a discount to market value, providing finance if required by the purchaser through the Banner Building Society.


           The Trust's development of Pheasey Estate would undoubtedly have been profitable. Interest paid to the Bank on a house costing (say) 300 to build would have been 12 a year. In addition, the Trust paid the tenant's general and water rates amounting to approximately 9. Rent received at 15/- (75-pence) per week amounted to 39 a year.