§ 38. Sir F. FREMANTLEasked the Minister of Health what rent, excluding local rates, an investor would have to charge for a house costing £360 on which he had borrowed 90 per cent. from a building society under the arrangements proposed in the new Bill; and what would be the similar rent of a house costing £320?
§ Mr. SHAKESPEAREOn a house costing £360 the sum of 8s. a week would enable an investor to repay the 90 per cent. loan in a period of 30 years and provide a return of 6 per cent. on his own share (10 per cent.) of the cost of the house during that time. An addition of 2s. a week would cover maintenance, etc., and leave a margin in the early years. A rent of 10s. a week would, therefore, be sufficient for these purposes, and after 30 years the only charge on the rent would be cost of maintenance. On a house costing £320 the corresponding rent would be about 9s. 2d. a week.
§ Sir F. FREMANTLEMay I take it that at the end of 30 years the house would belong to the investor, so that after 30 years it would give him a higher yield?
§ Mr. SHAKESPEAREThat is true. After 30 years the loan would be paid off and the house, if it was worth £360, would presumably be worth at least half that sum, say £180, and therefore, if he continued to collect a rent of 8s. a week, or £21 per year, on his £36 originally invested, his investment would then yield over 50 per cent.
§ Mr. THORNEWould not the rent depend on the amount of interest he would have to pay?