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A further Conference between the Lord Mayor and the Chairman and Chief Officials of the Bank, Estates, Finance,

and Public Works Committees was held on May 15th 1925:

 

Present:

 

The Rt Hon The Lord Mayor Alderman P Bower, MBE, JP	In the Chair
Mr F H C Wiltshire	The Town Clerk
Councillor Appleby
Mr J P Hilton	Bank Committee
Mr A Everall
Councillor Kenning
Mr F T Cox	Estates Committee
Mr W H Harris
Alderman Williams
Mr J R Johnson Mr H W Alderson	Finance Committee
Mr H H Humphries	Public Works Committee
Mr C Walker

 

The Lord Mayor was authorised to sign the report of the Conference held on the 31st March 1925 as being a true record of the proceedings.

 

He stated that in response to his request a copy of the report had been circulated to the Chairman and Chief Officials of the four Committees concerned, and that he had now received the Committees' observations upon the recommendations of the Conference:

 

Bank and Finance Committees.

The Bank and Finance Committees had both endorsed the recommendations of the Conference.

 

Estates Committee.

The Estates Committee, at a meeting held on the 28th April, has passed the following resolutions:

Sale of Houses.

5596  A report on a conference between representatives of the Estates, Finance, Bank and Public Works and Town Planning Committees held on the 31st March with regard to the sale of municipal houses was submitted.

5597   The General Manager presented a report.

After a lengthy discussion of the two reports it was:

5598   RESOLVED: That the recommendations of the conference as to the sale of houses to sitting tenants on a first payment equivalent to one month's repayment of interest and principal plus rates, be approved, providing the Corporation retains an option to repurchase the house should the purchaser desire to dispose of it within three years from the date of purchase (Councillors Stevens and Mrs Howes were in favour of extending the period of the option to 5 years).

5599  RESOLVED: (Councillors Mrs Howes, Stanley, Stevens and Goodrich dissenting) that subject to the sales not exceeding the agreed percentage of 33.1/3 and 10. for the parlour and non-parlour type of houses respectively, the recommendations of the conference as to the reduction of the existing minimum deposits required from would-be purchasers who are not tenants of Corporation houses to £25 and £20 be approved.

5600  RESOLVED: That the conference be informed that this Committee are of opinion that the Finance Committee alone would be asked to advance money to purchasers of Municipal houses, that they should be asked to accept repayment of the loans on the equated system and allow repayments to be spread over periods up to thirty years at the option of the purchasers.

5601   RESOLVED: That the conference be informed that this Committee are of opinion that they should be responsible for the collection of the instalments of principal and interest together with rates, water rate, ground rent and insurances, and that these should be collected weekly or monthly from the owner-occupiers in exactly the same way as the rent is now collected.

 

Public Works and Town Planning Committee.

The Public Works and Town Planning Committee had forwarded the following resolution on the 30th April, 1925:

On the motion for the approval of the report, the Chairman referred to the Minute of the Joint Conference relating to the Sale of Houses and it was:

20401 RESOLVED: That the principle of the sale of Municipal houses on the basis set out in the report of the proceedings of the Joint Conference of representatives of the Public Works and Town Planning, Estates, Finance and Bank Committees respectively, be approved, but that in the opinion of this Committee the collection of principal and interest from purchasers should be undertaken by the Estates Committee and not the Bank Committee.

 

Based on the above resolutions, the Lord Mayor stated that it appeared that all four Committees had agreed in principle to the proposal to allow sitting tenants of Corporation houses to purchase their houses on a first payment equivalent to one month's repayment of interest and principal plus rates, but that the Estates Committee had suggested that the Corporation should retain an option to repurchase the house should the purchaser desire to dispose of it within three years from the date of purchase. He then asked for the views of the Conference upon this proposal and after discussion it was agreed that it should be adopted, on the understanding that the Chief Officials of the Bank, Finance and Estates Committees should reach an agreement as to the terms on which the Corporation should repurchase the house.

 

The Lord Mayor then referred to the proposal to reduce the existing minimum deposits required from would-be purchasers who are not tenants of Corporation houses to £25 and £20, and stated that all four Committees were in agreement on this point.

 

A discussion then followed as to which Committee should be responsible for advancing money to would-be purchasers who were not in a financial position to pay the whole of the purchase money at the time of purchase.

 

Mr Alderman Williams (Chairman of the Finance Committee) stated that the Finance Committee were not prepared to undertake the responsibility of financing purchasers. Machinery was in existence whereby the Municipal Bank could undertake this duty, and up to the present they had carried it out with marked success. If the proposals of the Estates Committee to collect the instalments of principal and interest together with rates, water rate, ground rent and insurance from the owner-occupiers weekly or monthly were adopted, there would be endless confusion, and very difficult legal questions would arise if the purchaser defaulted in his payments. He was of the opinion, and would recommend his Committee to endorse that opinion, that the system at present in force whereby the Municipal Bank dealt with all applications for advances should be continued.

 

Mr Councillor Appleby (Chairman of the Bank Committee) said that out of approximately 3,290 cases in which they had advanced money to purchasers of property, in only one instance had they been forced to take action to recover possession of the property, and this action had only been taken after the tenant has been given every possible consideration and opportunity to pay. Moreover, out of the 3,290 cases, only six persons were in arrears with their repayments, and in one case only was the borrower not making some payment on account.

 

He stated that if a purchaser borrowed £300 for a period of 20 years under the equated system, he would ultimately have repaid approximately £40 more than he would be required to pay under the present Municipal Bank system. The Borrowers themselves preferred the Bank system, as sometimes they were able to pay off sums in excess of the stipulated repayments, with a consequent reduction of the interest payable. To his mind the proposals of the Estates Committee were open to the following grave objections:

 

(1) That the cost of collection would be heavy.

 

(2) That under the present Bank system the Borrower was not tied down to fixed amounts and fixed dates, and within limits he could repay as much and as often as he liked.

 

(3) That all the necessary machinery for collection was in existence, if it was decided to continue under the Bank system. On the other hand, if the collection was to be undertaken by the Estates Committee, a new organisation would have to be set up, which would overlap with the Bank's functions, and which would practically be in opposition to the Bank.

 

Mr Councillor Kenning (Chairman of the Estates Committee) stated that they had not experienced any great difficulty in obtaining payment of the rent charged in respect of Corporation houses and that he saw no reason why the collection of the inclusive payments as suggested in the Estates Committee's resolutions, should be any more difficult.

 

After a further discussion the conference agreed by a majority that all financial arrangements in connection with the advancing of money to would-be purchasers of Municipal houses should be left in the hands of the Municipal Bank.

 

A short discussion followed as to the methods to be adopted in collecting the repayment of principal and interest from the Borrower, but the Lord Mayor suggested that inasmuch as it had been decided that the Municipal Bank should be the sole Committee responsible for the advancing of the purchase money, it was only right that the collection of the repayments should be left entirely in their hands.

 

At the conclusion of the Conference, the Lord Mayor requested that a copy of the report of the proceedings should be submitted to the Chairman and Chief Officials of the Committees concerned, and that when their decisions were available a further meeting be convened, when the question of which Committee should report upon the matter to the City Council could be decided.

 

Subsequent to the above Conference of all the interested parties, the Bank Committee met with the Estates Committee on May 25th 1925, and a Memorandum of the proceedings produced:

 

The following representatives of the two Committees were present:

 

Bank Committee.

Councillors Appleby, Cooper, Gelling and Poole, the General Manager and Committee Clerk.

 

Estates Committee.

Councillor Kenning (the Chairman) Councillors Godrich, Provost, Roberts, Saunders and White, the Manager of the Estates Department and Committee Clerk.

 

The Town Clerk was also present.

 

The Conference was called at the request of the Estates Committee to discuss certain questions, on which decisions had been made by the Conference of representatives of the Bank, Estates, Finance and Public Works Committees, convened by the Lord Mayor, on the 15th May, the Estates Committee not having concurred in certain of the decisions arrived at, and desiring to discuss the questions at issue with the Bank representatives before deciding on their action in the matter.

 

The points in regard to which the Estates representatives were not in agreement arose out of the following decision of the Lord Mayor's Conference:

 

"That all financial arrangements in connection with the advance of money to would-be purchasers of Municipal houses and the collection of repayments should be left in the hands of the Municipal Bank".

 

The Chairman of the Estates Committee and Councillors Roberts and Provost expressed views in favour of the following proposals (which were contained in the original scheme submitted by the Manager of the Estates Department):

 

(1) That the repayment of loans to sitting tenants should be made on a weekly system of equated payments.

 

(2) That the Estates Committee should be responsible for the collection of the instalments of principal and interest, together with other charges on the property.

 

The principal points cited by the representatives of the Estates Committee in favour of their proposals were the following:

 

(1) That the class of individuals for which the Scheme was intended would be better able to meet their liabilities by means of an equal weekly payment embracing principal and interest and other charges on the matter.

 

(2) That the Estates Department's Collectors would be able to collect the amounts due in the same way as rent was collected at the present time.

 

(3) That the equated scheme of repayment would provide for a lower initial burden on a tenant.

 

(4) That, for the reasons above stated, the Estates Department's Scheme would be more attractive to a sitting tenant than the present Bank procedure.

 

Mr Councillor Roberts suggested that a Scheme might be considered whereby the ordinary advance should be made by the Bank on mortgage as at present, but that a further advance should be granted by the Corporation on second mortgage to be repaid by instalments within ten years after the Bank Mortgage is discharged, no interest to be charged on the second Mortgage until the same became operative.

 

It was also intimated by the Estates Committee representatives that there was no intention of interfering in any way with the work of the Bank, it merely being proposed that the Estates Committee should make the necessary arrangements for the collection of instalments, and pay the money over to the Bank as collected.

 

The Chairman of the Bank Committee (Mr Councillor Appleby) pointed out that the system adopted by the Municipal Bank in regard to house purchase advances and repayments had proved highly satisfactory, and the method of repayment, whereby the interest was reduced on the payment of each instalment of principal was considered to be the system most attractive and advantageous to borrowers. The Bank had experienced very little trouble in connection with the payment of instalments when due, and the arrears were practically negligible.

 

With reference to the suggestion of Councillor Roberts, Councillor Appleby stated that the proposal would be considered by the Bank and Finance Committees.

 

Councillor Appleby referred to the delegation of the City Council, which empowered the Bank Committee to deal with advances for house purchase, and pointed out that the question of financial arrangements in connection with the advance and repayment of loans was a matter entirely for the Bank and Finance Committees, the Estates Committee being responsible for the sale and letting of Corporation houses. He stated, however, that in the event of it being found that the Bank system was not working satisfactorily in regard to the tenant-purchasers of Corporation houses, he did not think the Bank Committee would have any hesitation in seeking the assistance of the Estates Committee, if found desirable. He also stated that when the decisions of the Lord Mayor's Conference were approved by the Estates Committee, it would then be the time to go into any questions of detail relating to procedure. The Members of the Bank Sub-Committee  supported this view, and expressed their opinion that such decisions should not be departed from.

 

The Chairman of the Bank Committee further intimated that it was probable that a scheme would be considered by the Bank and Finance Committees for the Bank to increase the amounts of their advances, and also the period for the repayment of loans, it being suggested that the Finance Committee should indemnify the Bank for the amount advanced in excess of 80% of the Bank's valuation of the property.

 

The Estates Committee representatives asked that their Committee should have the opportunity of considering the Scheme, to which reference had been made by Mr Councillor Appleby. The latter stated that he would approach the Bank and Finance Committees on the matter, and the proceedings of the Conference then terminated.

 

Regarding the proposed inclusion in the scheme for the Corporation to re-purchase houses within a specified period after sale, a report of the Chief Officials of Bank, Estates and Finance Committees was produced:

 

1. In accordance with the instructions of the Conference held on the 15th instant we have to report that we have discussed the point referred to us as follows:

" . . . . that the Chief Officials of the Bank, Estates and Finance Committees should reach an agreement as to the terms on which the Corporation should re-purchase the house".

 

2. Consideration of this question demands recognition of the following important points:

 

(a) New (ie hitherto unoccupied) houses are at present sold with the internal walls left undecorated, ie simply as finished off by the plasterers.

(b) In consequence, the purchaser has to decorate the walls of the house.

(c) Minor repairs accruing during the three years within which the Corporation will exercise their option to re-purchase are the liability of the purchaser.

 

3. In view of the expressed desire of the Conference that the sale of Corporation houses should be encouraged regard should also be had to the effect on a prospective purchaser of an intimation that within the short period of three years the Corporation would, if he desired to sell, have the option to re-purchase at a reduced figure.

 

4. It will be observed that paragraph 2 (a) above does not apply to the majority of houses proposed to be sold to sitting tenants where, in most cases, internal decorations will have been completed prior to completion of the sale. Following upon the preceding paragraph and having regard to the fact that repairs would normally cost a sitting tenant more than the purchaser of an entirely new house, it is suggested that no distinction should be made between the two classes of sales particularly as the possibility of financial loss to the Corporation is practically negligible in view of the existing housing situation and having regard to the fact that the cost to the owner occupier of living in his house is equivalent to the cost of renting it - even if repayments of principal are disregarded.

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