CLAUSE 6.—(Temporary continuance of provisions as to mortgages where property decontrolled by this Act.) (Hansard, 6 April 1933)

§ Mr. STUART BEVAN

There is a very strong feeling among those who see professionally the working of mortgages, and, in particular, the effect of control with regard to mortgages, that the time has now come when, in the interest of mortgagor and mortgagee alike, mortgages should become decontrolled. If ever there was a case in which the views and opinions of lawyers are of value, it is this one, because lawyers, by their situation and activities, are of all people the best qualified to see how the control of mortgages works from the point of view of the interest of both parties. For some 17 years mortgagees have been unable to call in their mortgage money, and, while that mortgage money carries with it the obligation on the mortgagee to pay the 2064 interest, the money, as capital, is sterile, and the mortgagee is prevented from making such use of it as in ordinary circumstances he would desire to do. The position becomes even more oppressive in cases where the mortgagees are trustees. The tenant for life dies, and, instead of the mortgage being called in and the capital distributed among the remaindermen or beneficiaries, who would apply it to various uses—starting in business, and so forth—the capital remains tied up, and has remained tied up for all these years. Other disadvantages that flow from this are that in course of time trustees die and new trustees have to be appointed and the estates cannot be wound up, and in the case of small estates the cost of appointing new trustees is a considerable burden upon the estate.

I have presented it so far from the point of view of the mortgagees and particularly of the cases where the mortgagees are trustees of an estate. Now we have to consider the position of the mortgagor. For all these years he has been protected from the obligation which he would otherwise have been under of repaying his loan upon statutory notice being given. In that respect he has been in a position far superior to that of the borrower who, instead of borrowing on the security of land, has borrowed on a note of hand or has raised money by a bill of sale or by other means, in which case the law has given him no protection at all. It will be said that it would create a very great hardship if mortgagors were suddenly exposed to the obligation, after all these years, of repaying the capital sum advanced. The answer that is made to that is that money is much cheaper to-day than it was and the rate of mortgage interest is lower, and, if only mortgagors were so advised and got out of the lethargy in which they find themselves through this protection having been extended to them for so many years, they could pay off their mortgages and create new ones at a lower rate of interest than they have been paying all these years. These are the proposals that are put forward by the Incorporated Law Society and most of the provincial law societies in the country. They come with very great 2065 weight when they are put forward and supported by these influential and experienced bodies of men who in the course of their daily practice are brought face to face with the position of mortgagors and mortgagees alike.

§ The SOLICITOR-GENERAL

I can assure my hon. and learned Friend that there is no lack of sympathy on the part of the Government with the hard cases to which the has referred, but the Marley Committee dealt with this matter after they had heard representations from the Law Society and other bodies on the subject and pointed out that it was essential to stick to the cardinal principle that a man who had borrowed on a free security should not be compelled to re-borrow on a controlled security for the purpose of repaying a loan and that, as long as control of houses remained, so long must control of mortgages remain. But, of course, in this Bill we are sweeping away control over the whole range of houses from £45 to £105 in the Metropolitan area, and corresponding figures elsewhere, and by that very fact the control over mortgages in that range will disappear at the same time.

The hon. and learned Gentleman has pointed out the difference in the financial position now. The Marley Committee reported at a time when these changes had not taken place. The report was issued in July, 1931. If it is true that it would be so easy for mortgagors to go into the market and re-borrow at a lower rate of interest, that in itself affords the answer to the suggestion that mortgages should automatically be decontrolled. There is nothing in the world, at any moment, to prevent a mortgagee from transferring his mortgage. He has a perfect right to do so. He has a pre-War mortgage at, shall we say, 6 per cent. If people are tumbling over each other for mortgages at that rate when at present they can only get, shall we say, 4 per cent. or whatever the prevailing rate is, the only issue involved in this Clause is as to bearing the cost of the transfer. That is all it comes to, because any mortgagee can transfer, and it is simply a question of whether he is to bear the whole cost of the transfer, or whether the transferee, with the object of getting 6 per cent. instead of 4½ per cent., is willing to pay the whole or some part of the cost. That 2066 is really the end of the story and all that there is in it.