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HOUSE PURCHASE DEPARTMENT:

ADMINISTRATION & POLICY

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Special Bank Committee: June 21st 1939

 

The following report of the General Manager as to Housing Developments undertaken or contemplated by Mr Douglas Dyas James, was submitted:

 

Housing Development by Mr D D James.

 

On the 6th December 1938, Mr James forwarded plans in connection with the housing development on various plots of land of which he is the owner, and for which he desires advances from the Municipal Bank. Details of the proposals were given as follows:

 

Mr James also stated he had an Estate of approximately 1,000 acres adjoining the Birmingham Airport and the main London Railway line, on the Coventry Road at Bickenhill, for development in the near future.

 

Mr James was interviewed by Alderman Morland, Councillor Martineau and the General Manager, when his proposals were discussed. It was intimated to him that the Committee were sympathetic towards granting advances on houses to be erected at Sheldon and Rednal, but were not so sympathetic in respect of the Queslett proposals because the Bank was already dealing with a large scheme in that area.

 

The matter was considered by the House Purchase Sub-Committee on the 12th December, when it was directed that Mr James should be informed that the Committee were interested in the scheme mentioned in his letter and he was asked to put forward definite proposals.

 

Mr James then submitted his proposals for the Rednal House Estate, which he intended to develop immediately, and Mr Wilde was instructed to examine the plans and specifications for such Estate and furnish his report, which he did on the 7th January 1939.

 

Alterations in the matter of ground rent and doubts as to advances being with Mr James or the Excelda Housing Supplies Ltd, led to much delay, but on the 2nd March I was directed to send an offer to Mr James of advances in respect of 870 houses, based on the valuation of Mr Wilde. The offer was based on 90% of Mr Wilde's leasehold valuation, the loans to be by progressive mortgage and subsequently ordinary the mortgage for 30 years. It was pointed out to Mr James that if he was prepared to offer as collateral security a first charge upon the ground rent, the offer might be increased. The letter conveying the terms of the offer was approved by Alderman Barrow, Alderman Morland, Councillor Martineau and the Town Clerk.

 

Subsequently, Mr James saw Mr Wilde regarding the low valuation placed on the houses, and Mr Wilde pointed out what he considered to be defects in the specification. Mr James undertook to improve the type of houses to Mr Wilde's satisfaction and a revised specification was agreed, whereupon Mr Wilde supplied me with an improved valuation. Mr James was then asked to clarify the position with regard to the number of houses to be erected and the different types, and to decide whether the loans would be with himself or with the Excelda Housing Supplies Ltd for 111 houses then in course of erection, and that he would be prepared to deposit the leases and counterpart leases, so that any advance from the Bank might be on the basis of a freehold valuation. Of these houses, 63 would have two bedrooms and 48 would have three bedrooms. With regard to the remaining 800 houses to be erected, Mr James undertook that they would be constructed to the revised specification; that the mortgages should be with himself as the freeholder, and that there would be approximately the same number of two bedroom and three bedroom type houses.

 

On the 16th May an approved letter was addressed to Mr James offering him advances in respect of the 800 houses on the basis of 90% of the revised valuation, but requiring an assurance that the total number of two bedroom type houses would not exceed 360. With regard to the 111 houses already being erected, Mr James was informed that the Bank would be prepared to consider granting advances to the Excelda Housing Supplies Ltd when the houses are completed and ready for occupation, and that the extent of any such advance would depend upon the report and valuation ascertained at the time the houses, or sections of the houses, were finished.

.................................................

 

Mr James has accepted the offer in respect of 800 houses to be erected, and given the assurances required.

 

Mr James had also asked Mr Wilde for a valuation in respect of houses to be erected on the Manor Park Estate, Kingstanding, and this was subsequently sent to the Bank. Approximately 550 houses are in course of erection, for which temporary financial arrangements have been made, and the erection of a further 300 houses was contemplated. The matter was considered by the House Purchase Sub-Committee on the 8th May, when it was decided that the Bank could not add to its commitments at the present time in this particular area, and Mr James was informed that his application could not proceed.

.................................................

 

On the 5th June Mr James submitted his proposals with regard to houses to be erected at Sheldon, for which he has supplied plans and the lay-out of the land. On certain land bounded by The Radleys, Sheldon Heath Road and Garretts Green Lane, 2000 houses are to be erected; on other land bounded by The Radleys and King George V Memorial Park, 750 houses are to be erected; on other land adjoining Brays Road, Fallingdale Road and Collingdale Avenue, 234 houses are to be erected. I understand a start has already been made on the houses near Brays Road. Mr Wilde has furnished his report and valuation on these houses, as follows:

 

 - 2 bedroom type .... £335

 - 3 bedroom type .... £360

 

A decision on this application is now desired.

(June 19th 1939)

 

After careful consideration had been given to the application of Mr James for a loan in respect of the housing developments contemplated by him at Sheldon, it was:

 

6553   RESOLVED:- That the General Manager be directed to inform Mr James that the Bank would be prepared to make advances not exceeding 90% of the valuation on not more than 1,000 houses in the Sheldon area on sites to be determined; such houses to be completed before the 31st March, 1941, and the terms in other respects to be similar to those relating to the advances arranged to be made in respect of houses to be erected on the Rednal House Estate.

 

The following report of the General Manager was also submitted as to the application by Mr E P Booth for advances on houses to be erected on the Factory Farm Estate, Streetly:

 

Factory Farm Estate, Streetly.

 

Mr E P Booth, a Director of Eborall Estates Limited and Bannons (Builders) Limited, put forward an enquiry with reference to the Bank granting advances in connection with the erection of 1,500 houses (or thereabouts) on the Factory Farm Estate.

 

The House Purchase Sub-Committee directed that Mr Booth should furnish plans and specifications, and that Mr Wilde should report thereon.

 

Mr Booth states that it is their intention to commence immediately with 200 houses of different types, and it is in respect of such houses that Mr Wilde has furnished his valuation. The owners of the freehold are the Eborall Estates Limited, and it is their intention to grant leases to Messrs Bannons (Builders) Limited and to charge a ground rent of £4. 10. 0d per annum per house.

 

Mr Wilde's valuation is £350 in respect of houses of types A, B, C, and D, £400 in respect of type E, £375, in respect of type F, and £325 in respect of type G.

 

A paragraph dealing with the matter was included in the report of the House Purchase Sub-Committee to the Bank Committee at its meeting to-day, but was withdrawn at my request on Saturday morning, after the issue of the Report. As a result of my conversation with Mr Booth this afternoon, it is now understood that the ground rent will stand at £4. 10. 0d, and that the loans (if granted) will be with Bannons (Builders) Limited.

 

The following terms are now submitted for the consideration of the Bank Committee:

 

(a) Advances by way of progressive mortgage in the first instance, and upon certificates of the Bank's Valuer at the various stages and in the proportions already laid down for such cases, to be granted to Messrs Bannons (Builders) Limited, with interest charged at the rate of 4½%.

 

(b) The extent of the advance to be:

£315 . 0d for houses of types A, B, C & D

£360. 0. 0d    "      "     "   type E

£337. 10. 0d   "     "    "      "    F

£292. 10. 0d   "     "    "      "    G

 

(c) When the final progressive advance has been made repayments of the mortgage would commence; repayments to be by a fixed monthly instalment of principal calculated to discharge the loan in 30 years; interest to be at 4½% per annum calculated on the monthly balance outstanding.

 

(d) Providing repayments are made on or before the appointed monthly date, a rebate of ½% interest to be allowed.

 

(e) The personal guarantee of each of the Directors of Messrs Bannons (Builders) Limited to be incorporated in the Mortgage Deed, and the guarantee to apply throughout the period of the loan.

 

(f) The freehold deeds to be deposited with the Bank by the Eborall Estates Limited as additional security in respect of the loan.

 

(g) All the 200 houses to be completed and ready for occupation by September 30th 1940, and the offer of an advance on the terms mentioned above to be open for acceptance for a period of fourteen days.

(June 19th 1939)

 

After consideration, it was:

6554   RESOLVED:- That the General Manager be authorised to inform Mr E P Booth that Bank would be prepared to make advances, on the terms set out in the foregoing report, to Messrs Bannons (Builders) Ltd in respect of 200 houses to be completed and ready for occupation by September 30th, 1940.

 

Bank Committee: July 17th 1939

 

6568   RESOLVED:- That authority be given for advances to be granted to Messrs Bannon's (Builders) Ltd, by way of progressive mortgage in respect of 200 houses to be erected on the Factory Farm Estate, Streetly, on the terms indicated by Minute No 6554 and the offer made thereunder; and that the General Manager be instructed to take all necessary steps accordingly.

 

With reference to the proposed housing development by Mr D Dyas James at Sheldon, the General Manager reported that a firm acceptance had now been received from Mr James of the offer made to him in accordance with Minute No 6553.

 

6569   RESOLVED:- That authority be given for advances to be made to Mr Douglas Dyas James upon houses to be erected by him in the Sheldon area on the terms and conditions indicated by Minute No 6553 and the offer made thereunder; and that the General Manager be instructed to take all necessary steps accordingly.

 

With reference to the proposed release of a house from the mortgage by Messrs S J & F P Smith of houses in Coombes Lane, Northfield, the Committee considered the question of the amount to be paid in reduction of the mortgage, and it was:

 

6570   RESOLVED:- That, subject to a sum of not less than £350 being paid to the Bank in reduction of the amount due under the mortgage with Messrs S J & F P Smith in respect of houses in Coombes Lane, Northfield, consent be granted to the release of any house from the mortgage.

 

Special Bank Committee: September 11th 1939

 

With reference to the question of mortgage advances, the following report of the Town Clerk as to the Rent and Mortgage Interest Restrictions Acts 1920 to 1939; and the Courts (Emergency Powers) Act, 1939 were submitted:

 

Rent and Mortgage Interest Restrictions Acts, 1920 to 1939.

 

The Mortgages entered into by your Committee have not hitherto been subject to restrictions, as the Act of 1920, (following the line of the preceding Acts, which it consolidated) did not apply to any Mortgage created after the passing of that Act, ie the 2nd July, 1920.

 

By the new Act, which received the Royal Assent on the 1st September, the restrictions are applied to every Mortgage, where the mortgaged property comprises one or more dwellinghouses, to which the Acts now apply, without regard to the date of the Mortgage.

 

The Acts now apply to any dwellinghouse with a rateable value of £75. It is important in this connection to note that municipal houses are not protected by the Acts, and Mortgages relating to them would seem, therefore, not to be restricted.

 

The restrictions are contained in Section 7 of the Act of 1920, as now amended, and prevent foreclosure or sale or recovery of the principal where (i) the permitted interest is not more than 21 days in arrear and (ii) the property is kept in a proper state of repair. It is to be noticed that all these conditions must be observed before protection is granted.

 

There is no provision made in the new Act for increasing the rate of interest, which stands fixed as to existing mortgages at the rate prevailing on the 31st August.

 

The restriction on the recovery of the principal money shall not apply where this is repayable by instalments extending over not less than ten years, nor where the Mortgagee was in possession on the 1st September.

 

The Mortgagee of a leasehold security may be protected by the Courts if the value of the security is diminishing, unless the Mortgagor pays such part of the principal as corresponds with the diminution.

 

There are other details by way of exceptions and modifications, but the above represents a general summary of the effect of the new Act.

 

Municipal Bank Mortgages.

 

By the Courts (Emergency Powers) Act, 1939, unless a Mortgagee is already in possession of the mortgaged property or has appointed a Receiver, an Application has to be made to the Court before the Mortgagee can realize any security, take possession of any property, or appoint a Receiver. This does not apply to any contracts made hereafter, nor does it prevent any proceedings being instituted for the recovery of possession of land.

 

If, on the Application, the Borrower can satisfy the Court that he is unable to perform his obligations, by reason of circumstances directly or indirectly attributable to the war, the Court may refuse leave for the exercise of the remedy applied for.

 

The above procedure also applies in order to enforce, by way of execution or otherwise, any Judgment or Order for the payment or recovery of a sum of money.

 

By the Landlord and Tenant (War Damage) Act, 1939, as soon as practicable after any damage caused by war, the Borrower has to serve a Notice on a Mortgagee setting out the extent of the damage and permit the Mortgagee to enter upon the property for the purpose of making it good, if desired.

 

A Mortgagee has to apply to the Court before he can enforce any right arising out of a breach by the Borrower of a covenant to repair.

 

6590   RESOLVED:- That the foregoing reports be received and entered on the Minutes and that the Town Clerk and General Manager be authorised to take any required action thereunder.

 

With reference to the proposed advance to Mr D Dyas James in connection with the development of the Rednal and Sheldon Estates the General Manager reported that a letter from Mr James had been received from which it appeared that he desired to proceed with the building operations. After consideration it was:

 

6593   RESOLVED:- That as a matter of principle this Committee agree to make advances in those cases where the houses are in course of erection and substantial progress has been made, but that no advance be made in respect of houses not yet commenced; also, that with regard to the proposal to make advances upon the houses already erected for the Excelda Housing Supplies Ltd. and in mortgage to the Bradford Building Society, Mr James be informed that in the circumstances the Committee cannot see their way to take over such liability, but would deal with the  remaining completed houses in accordance with the agreement.

 

6594   The General Manager further reported that Messrs A & J Mucklow Ltd had intimated that they did not intend to proceed at present with building on the Callowbrook Farm Estate.

 

The Committee discussed the general question of making of advances in ordinary cases and after consideration it was:

 

6595   RESOLVED:- That in respect of applications already received the principle of granting advances in cases where the applicant was found to be financially sound and the circumstances such as to justify the advance, should be adopted, the decision in such cases to be in the discretion of the Chairman and/or the Chairman of the Sub-Committee, conjointly with the General Manager.

 

With reference to the question of arrears under existing mortgages, it was:

 

6596   RESOLVED:- That sympathetic consideration should be given to cases of hardship, and that in the discretion of the Chairman and /or the Chairman of the Sub-Committee, conjointly in each case with the General Manager, authority be given for payment of principal to be suspended in appropriate cases.