LIFE ASSURANCE AND THE HOUSING PROBLEM.
To what extent life assurance can be utilized as a factor in assisting towards the solution of the housing problem is a matter which we feel may be of interest to a number of our readers. The Caterham Urban District Council is, we believe, one of the- first of the Local Government bodies to adopt a scheme combining house purchase and life assurance.
In the first instance, it was decided to experiment in a small way, and the number of houses to be built under the scheme was limited to twelve, but immediately particulars were issued the demand exceeded the supply, and additional houses are now being erected.
The main features of the scheme are that the purchase is carried out by payment of £40 down in cash and the balance in weekly instalments spread over twenty years sufficient to provide for payment of interest on the balance of the purchase price and the premiums on a twenty-year endowment assurance policy on the life of the purchaser. At the end of the twenty years the endowment policy matures and is sufficient to pay off the balance of the purchase money, whilst if the purchaser dies in the meantime the house is immediately freed of all further debt.
The houses are well built and contain good sized living room, kitchen, scullery, three bedrooms, bathroom and the usual offices. The price freehold is £480, which is the actual cost of land and building.
The purchaser pays down 140 in cash, and the balance of 1440 is lent by the council on mortgage of the house with a twenty-year endowment assurance on the life of the purchaser as collateral security. The purchaser is given the benefit of the Government subsidy of £6 a year, provided the weekly instalments are regularly paid, which is, of course, an inducement to punctual payment.
In the ease of a man aged thirty, the net weekly cost works out at 12s. 7d., made up as follows :- Interest on £440
.. £20 18 0 Premium on 20-year Endowment Policy .. 17 16 5 Total annual cost £38 14 5 Deduct Government Subsidy .. 6 0 0
Net annual coat .. • • • • • •
.. £32 14 5 .amaiana
12 7
Weekly cost • . • • • • Seeing that in this particular area there are a number of working-class people who are paying anything up to 15s. a week for accommodation consisting of two rooms only, it can be seen that the scheme is proving a decidedly popular one.
Under the latest Housing Act a larger annual subsidy can be claimed for a period of forty years, but it would appear that these larger subsidies are only applicable in the ease of houses built to be let on special conditions, and it does seem to the writer of this article to be somewhat of a defect that every man should not be encouraged to become eventually a houseowner.
If the larger subsidies could be utilized in a scheme of this nature the weekly payment could be very much reduced, and there should be only a very small pro- 'portion of the wage-earning community who would not be In a position eventually to become owners of the houses in which they reside.
ScRUTATOR.
Previous page
