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House Purchase

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Policy adopted.

 

It follows that in all cases the defects may be termed serious, the manner in which the occupiers should be dealt with (whether owners or tenants) has received and will continue to receive most careful attention.

 

Obviously where the repairs could be executed without seriously inconveniencing the occupier no question arises but where the works are more extensive a definite policy had to be formulated, and the matter was settled in the following terms:

 

(a) Houses which have been purchased.

 

(1) Where in the case of an owner-occupier the Committee are satisfied that the defects are such as to justify another house being offered, an alternative house to be offered to him, the cost of removal from one house to the other to be borne by the Corporation effected without cost to the owner-occupier. If such owner-occupier has carried out decorations in or garden improvements at the house from which he is removed, similar works to be effected in the house to which he is transferred, but no monetary payment whatever (other than removal expenses) to be made.

 

(2) In the event of any person to whom the aforesaid offer is made declining to accept the same, the Committee concerned to take such steps as may be necessary for obtaining possession of the house, such person not to be offered the tenancy of another house.

 

(b) Houses occupied on a tenancy basis.

 

A tenant will, where necessary be given another house, and be moved back on the completion of the repair works, if the Estates Committee so decide, without cost to the tenant.

 

Conclusion.

 

The attention of the Council is particularly referred directed to the policy of the Public Works & Town Planning Committee, (which was approved by the Council) in obtaining the speediest production of houses and the difficulties confronting them at certain periods in consequence of the lack of skilled labour and materials which resulted in the adoption of the concrete house, the building of which permitted the employment of unskilled labour.

 

Your The Public Works & Town Planning Committee are satisfied with the form of construction, and having regard to the large number of houses completed by this system, the complaints are comparatively few.

 

At October 1927, the Bank had 5,725 mortgages outstanding with balances amounting to £1,668,931. At a House Purchase Sub-Committee meeting held on December 5th 1927, the General Manager produced a report with a complete list of the 189 cases where the mortgagors were three months in arrear together with comments on the circumstances in each instance:

 

House Purchase Arrears

 

The General Manager has conducted a close investigation into the cases of mortgagors who are in arrear with their repayments to an extent equal to three monthly instalments of principal, and submits a complete list of such cases.

 

It will be seen from the list that as regards non-corporation houses there is nothing to cause anxiety, but as regards corporation houses (particularly on the Pype Hayes Estate) there is cause for concern.

 

In certain instances the Committee decided that a Receiver be appointed, but after notifying the mortgagor of such decision, a payment was made and the direction then cancelled. Exactly the same procedure was followed on subsequent occasions with the same result. As a consequence of cancelling these decisions the mortgagors pay little or no attention to communications from the Bank as to the state of their accounts. It would be better for administrative purposes and much more effective, if, once the decision has been made, it is adhered to. These unsatisfactory cases, which do not usually spring from the poorer section of house purchasers, or weekly wage earners who have been badly handicapped, should be firmly dealt with as a lesson to others. One cannot help but feel that the liabilities to the Bank are being deliberately ignored, so as to use the money for other purposes, ie for their business, payment of rates etc. There is a feeling amongst certain mortgagors that the payment of rates, etc must come before the Bank, and this brought about by the issue of summonses or the taking of other drastic steps. It should not be admitted that such charges are preferential to payments under a mortgage, but so long as the Bank allows other bodies to be paid before them just so long will the practice continue.

 

In several cases of corporation houses which were dealt with under the original conditions, where the selection of a mortgagor was decided by the Estates Department and keys of the house handed over before the Bank Committee were consulted, it has been clear throughout the period of the loan that they were not suitable cases for purchase and ought to have been dealt with as tenants. It is a real hardship in some of the cases to insist upon purchase, and the Estates Department should be requested to accept them as tenants of other houses and re-sell the houses in mortgage to the Bank.

 

As to the policy which ought to be pursued in dealing with cases in arrear, the Town Clerk has drawn attention to what he fears is a misapprehension of the powers of the Corporation, and the effect of a Receiver being appointed. He points out that the appointment of a Receiver is a necessary course only when it is desired to satisfy the debt by receiving rents and profits out of the property, as for example in the cases of Stockman, Taylor, etc. A Receiver, when appointed, is the agent of a mortgagor for the purpose of collecting the rents and profits - not the agent of the Bank. Such an appointment by a mortgagee in possession has the effect of placing the mortgagor again in possession of the property. Under no circumstances is the entering of a Receiver, a necessary preliminary to a sale by the mortgagee. To avoid any difficulty in future the Town Clerk advises that the first question to be determined should be that of selling the property, and when decided upon, the sale should be effected without the previous appointment of a Receiver. It may be stated that the policy of the Ilford Corporation, who have conducted, very successfully and extensively, house purchase transactions for many years - even before the War - has always been to sell when they were of opinion that the mortgagor was unsatisfactory, and they have never resorted to the practice of appointing a Receiver - a course they regard as cumbersome and ineffective.

 

In reviewing the question of arrears, and the impossibility of disposing of Corporation houses by auction under present conditions, the Committee would do well to consider whether the time has not arrived when the terms of purchase should be revised. The deposit required of sitting tenants of Corporation houses, viz, 1% of the purchase price, is not a sound proposition, as it prevents the Bank Committee exercising any discretion in such cases. The present low deposits of £20 for a non-parlour type house and £25 for a parlour type house should also be reconsidered. The margin between purchase price and loan is far too near to prevent loss in the case of an unsatisfactory mortgagor, and although that loss would, in the first instance, fall upon the Finance Committee, the policy should be to prevent such a possibility arising. That position would be eased by increasing the amount of the deposit required.

 

Allied to this question of low deposit, there is the position in the case of second purchasers. Where a mortgagor could not, owing to financial circumstances, continue his payments, permission to sell and discharge the mortgage has always been given, but it was found that sales could not be effected at a price equal to four-fifths of the valuation. To meet this difficulty, the Estates, Finance and Bank Committees decided that in approved cases the re-sale could be effected at a price equal to the original loan; thus allowing in many cases the low deposit terms to apply. In cases where the resale was effected at a price in excess of the original sale price, it has been the practice of the Bank and Finance Committees to advance such an amount only as would equal the original loan, again giving the benefit of the low deposit terms. It would be well for the Committee to bear this policy in mind when considering the larger question of deposit terms.

 

The schedules attached to the General Manager's report were:

52 Non-Corporation houses

137 Corporation houses analysed by area:

           Acocks Green 17

            Yardley, Small Heath, Hall Green, Kings Norton 9

           Alum Rock, Bordesley Green, Northfield, Yardley Wood 18

            Erdington 14

            Kings Heath, Ward End 26

           Pype Hayes 53

 

The General Manager produced an individual report in relation to each of the 189 mortgages in arrear listed on the schedules. The most common reasons for the mortgagor being in arrears were:

Illness	24
Unemployed or Short of Work	17
Financial Difficulties	11
Deceased or Family Problems	5
Classed as 'Troublesome' by the GM	9

 

 

 

 

 

 

In the cases of Corporation houses, some mortgagors cited problems with the construction of their property, and in other cases houses had been 'sold' by the Estates Department either without giving the Bank the opportunity to assess a loan application, or ignoring the Bank's advice. The following are samples of the General Manager's individual reports:

 

1018 Tyburn Road - Hingley. Mortgage arranged December 1926. Advance £413
Amount outstanding and Arrears at November 23rd 1927:	£406/2/6 £12/1/1
Last payment:	£3/8/- made on 6th August 1927
On October 31st 1927, complained that house had one huge crack at corner, and wall was slowly bulging out, exactly same as in other houses on Estate which had been condemned. Asked for suspension of mortgage repayments under Bank Regulation 90, until Public Works Committee had made their enquiry and on the ground that the house is falling down and unsafe to live in. City Surveyor communicated with; replied that defects are of a minor character and chiefly plaster cracks; there is no evidence of any structural defects. The Contractor is dealing with these minor defects.

 

Bank Regulation 90 (Depositor in arrear) stated that:

In case of any depositor being in arrear with such an amount as represents the total of three monthly instalments of principal, the Corporation shall have power to take possession of the property. But the Committee of Management shall have power to suspend or modify the repayments of a depositor for such period as they shall determine on his showing satisfactory reasons for requiring such suspension or modification.

 

1020 Tyburn Road - Day. Mortgage arranged December 1926. Advance £392
Amount outstanding and Arrears at November 23rd 1927:	£385/19/7 £11/18/11
Last payment:	£3/11/8 made on 9th July 1927
This man is apparently a partner in Day & Tonks, Art Cabinet Makers, Witton Road, Aston. On 28th October, he applied for suspension or modification of repayments under Bank Regulation 90, stating that he was dissatisfied with house for reasons given in Memorial to City Council. Wishes suspension until Council have decided their course of action. States he is not applying because of any financial difficulty.

  

1022 Tyburn Road - Bate. Mortgage arranged September 1926. Advance £413
Amount outstanding and Arrears at November 23rd 1927:	£406/2/6 £12/1/1
Last payment:	£5/14/10 made on 2nd July 1927
On 19th October 1927, said he was protesting, along with others, against the houses having been sold by misrepresentation. On 23rd October, applied for suspension of repayments under Bank Regulation90, until Public Works Committee had completed their enquiry.

  

5 Welland Grove - Small. Mortgage arranged November 1926. Advance £360
Amount outstanding and Arrears at November 23rd 1927:	£363/16/7 £20/6/7
Last payment:	£5/14/10 made on 2nd July 1927
In July 1927, wished to cease buying; house falling to pieces; been waiting for Corporation to effect repairs. States that Contractors admitted house was in a bad state. Building Committee came near but did not look at this house, which he states is worst in Grove; entire fabric crumbling. Asks to rent this particular house; not a sound investment. Does not want expense of removing. Has six children to support. Spent much money and labour on garden. On 19th July City Surveyor said house had been included for inspection; nothing heard since.

  

7 Welland Grove - Plumpton. Mortgage arranged November 1926. Advance £361
Amount outstanding and Arrears at November 23rd 1927:	£355/5/9 £10/16/8
Last payment:	£2/19/5 made on 5th August 1927
In July 1926, as a result of interviewing applicant, Estates Department were asked for grounds upon which he had been granted the house as a purchaser, seeing he had no spare money, and had only just come from Renfrew to commence work at Bromford. Reply received that application had been granted because of his need for a home; that he was able to find the deposit, and that his ability to keep up his future payments was a matter for the applicant, the Corporation, in any event, being fully secured. Bank Committee held there was insufficient evidence that the man could keep up his payments, and considered he was not of a particularly thrifty nature. Mr Cox (Estates Department) again examined case, and reported that he was quite satisfied the man could meet his obligations. No complaints as to construction of house, and no explanation of arrears. Estates Department should be called upon to re-purchase.

  

8 Welland Grove - Roberts. Mortgage arranged September 1926. Advance £360
Amount outstanding and Arrears at November 23rd 1927:	£356/12/- £17/12/-
Last payment:	£2 made on 8th 1927
Object of buying house was, apparently, to cut down expenses of family, who were living in Walsall and working in Birmingham. In addition to mortgagor and wife, there are seven children - four above school age, two at school, and one under school age. Mortgagor suffers from neurasthenia. Sold a fish and chip business in Walsall on coming to live in Birmingham. In June 1926, applicant explained he was unlikely to be able to meet payments as a purchaser, but might manage as a tenant; in July, repeated the statement; Estates Department were communicated with; suggested application be cancelled and tenancy arranged. Estates Department interviewed him and in August they were convinced he could carry out his obligations, and asked that loan should be arranged. In July 1927, the man explained that he could not keep up his payments; that five out of his children had been on short time, and he himself had been unemployed for 14 months. On appealing to Estates Department says he was told he had made the bargain and must stick to it. Prepared to rent, but cannot continue as a purchaser. No complaints regarding construction of house. Estates Department ought to re-purchase and accept him as tenant.

  

38 Welland Grove - Hawkins. Mortgage arranged November 1926. Advance £361
Amount outstanding and Arrears at November 23rd 1927:	£355/8/8 £10/19/7
Last payment:	£3 made on 2nd June 1927
In September 1927, complaint made that ever since entering house workmen had being doing repairs; the most vital being filling in a huge space in outer wall. This has been done once before, and Contractor wished to now fix ties to the building. Requested that someone with authority should inspect house before further repairs were effected. Copy letter sent to City Surveyor, who replied saying that house was one of the worst on Estate , and that it was necessary to partially reconstruct; suggesting to Estates Department that a house in exchange should be offered. On 2nd November  mortgagor applied for suspension of payments under Bank Regulation 90, on ground that house was in a shocking condition after 17 months' occupation, and after being twice repaired. Further letter sent to City Surveyor, who replied that mortgagor was willing to allow necessary repairs to be carried out, but that would not be satisfied with house, and did not intend to continue its purchase. Again suggested to Estates Department that another house be provided. Joint Conference on 11th November was against offering another house, as it would create a precedent; and it was agreed that case should be deferred pending general policy being settled regarding these houses. Estates Department should re-purchase and find the man another house. There is no justification for delay.

 

6 Paget Road - A S Smith. Mortgage arranged October 1926. Advance £360
Amount outstanding and Arrears at November 23rd 1927:	£358/19/5 £16/10/5
Last payment:	£3 made on 2nd June 1927
In July 1927, complained of condition of house and also financial position; unemployed through introduction of cheap boy labour; is not prepared to pay on a dilapidated dwelling. City Surveyor communicated with in August. In November reported that house had been dealt with in reports placed before Joint Committee, and that mortgagor refused to allow anyone to enter house to make good any defects.

 

3 Burcote Road - Whitewood. Mortgage arranged February 1926. Advance £392
Amount outstanding and Arrears at November 23rd 1927:	£383/9/8 £24/3/-
Last payment:	£3/16/- made on11th June 1927
In August 1926 said arrears caused through meeting with an accident; promised to make good. In December was still having treatment in regard to his accident and pleaded for further grace. In February 1927, proposed to pull up arrears by paying £1 per week. In April 1927 said arrears would be paid when builders had completed house, about which he had made many complaints. Two holes had to cut in chimney to clear away concrete; about two wheelbarrow loads were taken out. Estates Department reported that complaints had been referred to City Surveyor. In November, City Surveyor was asked for observations, and replied that there were one or two minor matters which could easily be put right, but mortgagor would not allow anyone to enter to put them right.

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