Build Homes They Can Buy
By Dom C. W. de Normanville, O.S.B.
The recent expansion in housing, plus the increased enterprise of the Building Societies was largely responsible for the overcoming of the slump of the 'thirties; so think many economists.
Most of the materials used in housing are home produced, and those which come from abroad go through manufacturing process in England. An example is wood, which is imported and made into door, window frames, etc. The actual building is all human labour.
There are in England over a thousand Building Societies, many very small, and quite unknown except in the locality where they function. Up to the end of 1937, the Building Societies had advanced over £710,000,000 to the purchasers of some million and a half houses. There are four million people who have their money invested in Building Societies, and they receive on the average 31 per cent.
The house purchaser pays on the loan about 41 to 5 per cent. The difference is swallowed up in the administration, which is necessarily elaborate, with palatial buildings, and huge staffs.
Government Favours Building Societies The societies arc under Government inspection, but like all big financial concerns, they wield a big influence over the Government. The constant tendency has been for the Government to induce the Building Societies to finance the re-housing of the people as much as possible.
The Building Societies and the local authorities, under the Small Dwelling Acquisition Act, 1925, both have the power to advance up to 90 per cent. of the valuation of a house. The Act is only permissive. So many local authorities refuse to advance more than 80 per cent. of the valuation that the Act has lost most of its force.
Builders prefer working in with the societies, for the reason that the societies architect examines and values the house, and as long as it will stand for 21 years, when the loans will be repaid, his valuation will accord with builders' costs. The Building societies want to get their funds on the market and an inflated value helps them. They also want security and the clever drafting of the regulations, unfavourable to the buyers, governing the loan achieves this purpose.
It has been one of the greatest scandals of the post-war building drive, that suc cessive Governments, Conservative, National and Labour, have looked on. while hundre,s and thousands of jerrybuilt houses have been thrown up, stuck together, with ill-seasoned wood, defective materials, poor mortar and the whole galaxy of tricks known to the trade. There are no bye-laws which can prevent jerrybuilding; all they require is that the house shall be hygienic, with proper drainage and efficient damp course, etc.
About 30 per cent. of the houses built by private enterprise are jerry-built; but jerry-builders have not failed in obtaining contracts from local authorities.
Must We Tolerate the Jerry Builder?
The lot of the honest builder is made very difficult by the toleration of the jerrybuilder.
The people with a small income suffer most. The better off, middle-class person employs a private architect, whose business it is to protect him from fraud. The building societies are not averse to legislation protecting people from fraudulent jerry-building, though it would seem in a sense to be profitable to them, as after about twenty years, the maintenance costs of the jerry-built house will be so great, that more borrowing would be necessary to keep pace with adequate repairs! There is another aspect of building societies which is not at all well known, The Government has given the power to local authorities to share the risk to the extent of one-third of the 90 per cent. of the money advanced for building houses to let. This is only another instance of the very close relationship between the Ministry of Health and the building societies. The societies have passed their peak level in advancing loans, almost touched saturation point, though there will always be replacements, new housing developments, improved houses which the more prosperous of the working-class people will be attracted by. Why not put some of this money into some great national scheme— as the Severn Barrage for electricity power?
Give Property: Property Gives Freedom Of the million and a half houses built by local authorities since the war an utterly negligible number belong to the people who live in them. The houses built under the Addison Act, 1919, will have been tenanted twenty years next year, yet the tenants are no nearer to possessing them!
The ownership of a house, the processes, the care, the labour, the interest and love in making the house your own, develop in the parents and their children, characteristics and virtues, which contribute in no small way to the making of the good citizen. The house owner comes to the realisation of the value of property as a basis of economic freedom.
Unfortunately, there is deeply ingrained in all those classes, who get elected to Government bodies, national or local, that we can build up Utopia by concentrating property in the control of the municipality. The people are informed from time to time that now they have a share, every man, woman and child in municipal undertakings, and they are expected to be thrilled with pride and joy.
Men of all parties, perhaps Conservatives most, oppose all efforts and schemes which would enable ordinary people to possess property, even a home of their own.
There is one class at present for whom it is a clamant necessity to provide homes—
the recently married couples. In their hundreds of thousands they are living in most unsatisfactory conditions. No local
authority seeks to provide for them. The Housing Acts allow for providing for those " living in unsatisfactory conditions." In the course of the next few years let a million houses be built for such people of small incomes, who are quite beyond the aid of building societies.
Let them be enabled to become owners of the ordinary standard three-bedroomed houses, of 760 square feet, at 20 years purchase.
No deposit, only an undertaking to take proper care of the house, and failure to do this would end the agreement. The overcrowding Act obliges separate bedroom accommodation for children over 10 of different sex. Therefore my house of less than three bedrooms can only encourage the one-child family. The additional bedroom only adds £40 or £50 to the cost of building.
The Danger of Sub-letting
All authorities forbid sub-letting or taking in lodgers, without definite written permission. A clause to this effect would be put in the contract for the purchase of the house on weekly instalments. The Greenwood Act gives power to the local authority, when it does give permission to sub-let, to fix an equitable rent for the one or Iwo rooms available. It would seem to be wise to allow a certain amount of sub-letting when it does not serve selfish ends of young married couples who refused to have children.
The houses would be built under the 1935 Act, not the Slum Clearance Act; the former allows for the larger accommodation of six and a half persons, the half person being reckoned as a child under 10 years of age.
Many people are puzzled by the advertisement for house purchase only requiring £5 deposit. How is this done? The maximum advance by the building societies or local authorities is 90 per cent. of the valuation of the house, hence £40 should be the deposit for a house valued at £400. All smaller deposits, however, are arranged by builders who share the risk with the societies. Then the balance of the deposit is paid by increased weekly instalments over the necessary period.
The Ministry would not sanction a deposit of less than £10 but it might leave it to the discretion of the local authority to accept a £5 deposit, with the rest to be paid during the first year by the young married couples. The deposit is meant to cover the risk of perhaps rapid depreciation in the first year by careless people, which they could not defray if they died or became unable to continue paying instalments.
What Plan Would Cost The houses should be semi-detached as this gives greater privacy, and only increases the cost slightly. With land at £200 to the acre and ten houses to the acre, which gives £20 for land for each house, all services and the house £380, total cost would be £400 in all.
What will be the interest on the loan? The smaller local authorities, with under 50,000 population have to borrow through the Public Loans Board, a department of the Treasury. The big authorities can float loans on the public market.
The present rate through the Board, is, I believe, about 3* per cent., and then the local authority charge per cent. more to
the borrower, or, say 31 per cent. in all. The Government should be persuaded to finance a million houses for ownership and loan the money at 3 per cent., giving the whole advantage to the purchaser.
With a house at £400, and money at 33 per cent. the economic rent would be 8s. 6d., which allows about £5 a year for repairs. Many authorities require the tenants of Council houses to do their own internal repairs, but provide the materials. In the case of a house being purchased by a contract with a local Corporation, the purchaser is responsible for all repairs, but with a well-built house this is not a big burden to an intelligent man or woman.
The weekly instalment after paying the deposit of £10, would work out at 10s. 5d. a week, including fire insurance, and at a 20 years' purchase. if the period were 25 years, the weekly instalment would be 9s.
With the payment of the last instalment, the freehold conveyance is made over to the purchaser free of cost. For every extra £10 deposit, the weekly instalment is reduced by 3d. I think if the money was loaned at 3 per cent. it would reduce the weekly instalments by about ls. per week. If those with less than a living wage were derated, as they should be, then the 9s. a week would be within the capacity of the low wage earner.
Catholics Can Act
There is over 15 per cent. unemployment in the building trade, which means similar unemployment in the trades providing raw materials for houses. There are hundreds of thousands of young married people living in a deplorable state of discomfort, paying exorbitant rents for small rooms, deterred from having children.
If the Government gave the lead, the local authorities would follow. The local authorities can initiate, and there are officials at the Ministry favourable to the scheme of house purchase for poorer people through the local authority.
There are, of course, mountains of opposition to overcome in a local council where vested interests of landlords, lawyers and property speculators are deeply entrenched, but this should give way before a determined campaign for the moral right of working-class people to become owners of their houses.
Local councillors have more freedom than members of Parliament; they can put forward motions at every monthly council meeting.
Catholics could have debates on the advantages of working-class people owning their houses, talk about it at trade union meetings and labour clubs, get resolutions sent up to the local council, popularise the principle by a well-worded leaflet, get local councillors interested and obtain the most forcible debater to bring up a motion in favour of the plan at a council meeting.
Get a move on, pray, fight and we can win through.