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HOUSE PURCHASE DEPARTMENT:

ADMINISTRATION & POLICY

 

Extractions from the Minutes of the Bank Committee and its Sub-Committees that show how the Bank's policy and methods of administration in relation to its House Purchase facility were developed in the period September 1919 to October 1939. Also included are extracts from the Minutes showing examples of how various mortgage applications, accounts, etc were dealt with.

This section of the website provides more detail and background to the following related topics:

 

The History of the House Purchase Department

 

The First Five Years

 

Miscellaneous Reports to the City Council

 

The House Purchase Department in 1927

Bank Committee: September 22nd 1919

 

With regard to the preparation of the Mortgage Deed and other documents, and examination of title deeds, etc in respect of advances to enable individuals to purchase houses, it has been suggested that the Acting Town Clerk should prepare the documents in the same way that it is done by building societies. Your Sub-Committee have considered the general position with regard to this, but, before coming to any decision, they have requested the Acting Town Clerk to confer with the President of the Birmingham Law Society to sanction his views on the subject.

 

The Committee considered the appointment of a Valuer in connection with advances to depositors in respect of the purchase of houses.

 

329     RESOLVED:- That subject to the approval of the Birmingham Overseers Mr S J Lancaster be appointed Valier of properties in respect of which advances for house purchase are applied for, at a fee of 10/6 per house for houses valued up to 500 and a fee of 15/- per house for houses valued at over 500.

 

The Acting Town Clerk submitted a draft form of mortgage deed proposed to be used in connection with house purchases. The Committee considered the document and it was:

 

330     RESOLVED:- That the draft form of Mortgage deed as now submitted by the Acting Town Clerk be approved.

 

Finance & General Purposes Sub-Committee: October 6th 1919

 

Your Sub-Committee have considered the question of making advances to prospective house purchasers. In the majority of cases it is essential that the advance should be made without delay and your Sub-Committee consider that, having regard to the rules governing the making of advances, whereby advances shall not exceed 80% of the market value of the property and shall be repayable within 20 years, these applications might with advantage be left in the hands of the Manager to deal with. They therefore recommend that the Manager be authorised to consider urgent applications for advances in respect of house purchase and that he be given authority to make advances in accordance with the rules of the Bank, reporting to your Committee from time to time such advances as are made by him, subject to the proviso that any applications of a special nature are submitted to the Committee for decision. They also recommend that a general instruction be given to the Acting Town Clerk to prepare mortgage deeds in all cases in which the Manager makes advances.

 

344     RESOLVED:- That the Manager be authorised to deal with any urgent applications for advances in respect of house purchase with authority to make advances in accordance with the rules of the bank, reporting to this Committee from time to time such advances as are made by him, subject to the proviso that any applications of a special nature are submitted to this Committee for decision, also that the Acting Town Clerk be instructed to prepare the necessary Mortgage Deeds in any cases in which the Manager makes advances.

 

Bank Committee: December 1st 1919

(re Report of Finance & General Purposes Sub-Committee)

 

Advances for House Purchase to Married Women.

 

Your Sub-Committee have had under consideration the question as to whether, where applications for advances for house purchase were received from married women, it was advisable for the husband to be made a joint party to the Mortgage Deed. It was pointed out that cases had arisen where a married woman had desired to purchase a house in her own name.

 

Your Sub-Committee are of opinion as a general rule no advance should be made to a married woman for house purchase unless her husband is a joint party to the Mortgage Deed; if objection be raised to this course by the intended house purchaser the case to be brought before this Sub-Committee  for decision.

 

They recommend your Committee to issue an instruction accordingly.

 

375     RESOLVED:- That as a general rule, in cases where applications are received from married women for advances for house purchase, the husband be made a joint party to the Mortgage Deed, but, that where objection is raised to this course by the intending house purchaser, the case be brought before the Finance & General Purposes Sub-Committee for their decision.
 

Finance & General Purposes Sub-Committee: January 5th 1920

 

Valuation of Houses.

 

Your Sub-Committee have been informed by Mr Lancaster that a number of cases have come before him where a valuation has been asked for property possession of which could not be obtained. In several cases in which it was clear the applicants had no intention of purchasing the property, a fee of 2. 2. 0. had been charged. He asked for the instructions of the Sub-Committee as to the course to be adopted, where the cases did not appear to be bona fide.

 

Your Sub-Committee are of opinion that in cases where the Valuer is doubtful that the purchase will be carried through, a valuation fee of 2. 2. 0. be charged, and recommend the General Committee accordingly.

 

Finance & General Purposes Sub-Committee: March 29th 1920

 

House purchase - Limit of amount of advances.

 

Your Sub-Committee have had under consideration the question of the proportion of the Bank's funds which it would be advisable to allocate for advances on house property generally.

 

In connection with this matter, your Sub-Committee have also considered the limitation of the amount of an advance to a depositor for the purchase of a house, applications having been received for advances of over 2000 in certain cases.

 

Your Sub-Committee are of opinion that the time had arrived when a definite policy should be laid down in regard to these matters, and they recommend the Committee to adopt the following limitations with reference thereto:

 

(1) The proportion of the Bank's funds to be utilised for the purpose of house purchase advances not to exceed 25%.

(2) That the limit of an advance to be made to a depositor in respect of the acquisition of a house be as follows:

    (a) In the case of a pre-War house, advance not to exceed 700.

    (b) In the case of new houses, advance not to exceed 1000.

 

Your Sub-Committee have thought it desirable to make a distinction between pre-War houses and new houses, owing to the enhanced cost of construction of the latter.

 

(Amendments were carried as follows:

 

Recommendation

 

(1)

"33-1/3%" to be substituted for "25%"

(2a)

"600" to be substituted for "700"

(2b)

"800" to be substituted for "1000"

 

447    RESOLVED:- That no advance for the purpose of house purchase shall be granted when the balance due in respect of advances already made represents 33-1/3% of the amount due to depositors.

 

448     RESOLVED:- That the maximum advance to be made to a depositor in respect of the acquisition of a house be as follows:

(a) On a pre-War house      - 600

(b) On a new house              - 800

 

Fire Insurances of mortgaged premises.

 

It has been the practice to insure mortgaged premises on the basis of the valuation and in the name of the Bank, but in order to meet the wishes of several applicants, your Sub-Committee now recommend that, if desired, the policy be taken out in the joint names of the Bank and the Mortgagor, and that as far as possible his wishes be complied with as to what extent an insurance shall be effected.

 

With reference to these insurances, the Treasurer reports that he has arranged with the Manager for his Insurance Officer to be advised of insurances to be effected from time to time as the agreements are signed. The Insurance Officer will then obtain cover notes and give instructions for the preparation of the policies. When the policies are received they will be recorded in the Insurance Registers and forwarded to the Manager so that they may be deposited with the Deeds in the sealed packets for reference and audit purposes.
 

Finance & General Purposes Sub-Committee: May 3rd 1920

 

House purchase advances - Valuation.

 

Your Sub-Committee report that the present arrangement as to the valuation of properties in respect of which advances are made will cease very shortly, a communication from the Birmingham Overseers having been received stating that, in view of the forthcoming revaluation of the City, it would not be practicable for the Valuation Department to continue this work and intimating the termination of the arrangement with your Committee within one month from the 16th April.

 

Your Sub-Committee have, therefore, had under consideration the question of the appointment of a Valuer to deal with properties in respect of which advances are applied for: and also the basis on which the remuneration for this work should be made for a period of which the remuneration for this work should be calculated.

 

They now recommend that the appointment be made for a period of twelve months, the remuneration to be 150 for the valuation of houses up to the number of 300; any valuation of houses in excess of this number being paid for at the rate of 10/6d per valuation; also that the Chairman and Manager be authorised to appoint a suitable person to carry out this work.

 

Consideration has also been given to the question of charging the applicant a fee in respect of the valuation of a property in such case and as your Sub-Committee are of opinion that the cost should be a charge on the Mortgagor, they ask that power be delegated to them to give effect to this arrangement at such time as they consider most desirable.

 

Bank Committee: May 3rd 1920

 

457     RESOLVED:- That [the advisability of raising the rate of interest payable by Mortgagors in respect of House Purchase advances] be referred to the Finance & General Purposes Sub-Committee, with instructions to consider and report their recommendations thereon to the next Meeting of this Committee.

 

479     RESOLVED:- That the appointment of a Valuer for properties in respect of which advances are applied for be referred to the Chairman and Manager; such appointment to be made for a period of 12 months at a remuneration of 150 for the valuation of houses up to the number of 300, any valuations made in excess of this number being paid for at the rate of 10/6d in each case.

 

Special Meeting of the Bank Committee: May 14th 1920

 

House Purchase Advances - Rate of interest.

 

With further reference to Minute No 457 of your Committee, your Sub-Committee have had before them the question of raising the rate of interest payable by Mortgagors in respect of House Purchase advances.

 

Your Sub-Committee are of opinion that the time has arrived when the rate should be raised; and now recommend that as regards house purchase advances granted after (*date not yet fixed) the rate of interest payable by a depositor on the amount of advance outstanding, be 1 (one penny farthing) per pound per month.

 

Bank Committee: May 14th 1920

 

On Minute No 479, the Chairman reported that he had interviewed two candidates for the appointment of Valuer to the Bank, viz: Mr F Wilde and Mr Foskett. He recommends the appointment of Mr Wilde to the position.

 

501    RESOLVED:- That as from 17th May, 1920, Mr F Wilde be, and he is hereby, appointed Valuer to the House Purchase Department of the Bank for a period of 12 months at a remuneration of 150 for valuation of houses up to the number of 300, any valuations made in excess of this number being paid for at the rate of 10/6d in each case.

 

Finance & General Purposes Sub-Committee: June 7th 1920

 

House Purchase Advances - Rate of Interest.

 

Your Sub-Committee have given further careful consideration to this matter, which was referred back to them by your Committee. The Manager has been in communication with various Building Societies and it appears that advances have been curtailed considerably, and the rate of interest is being or has already been increased. The Manager stated that Mr Neville Chamberlain agreed with the recommendation to increase the rate.

 

Your Sub-Committee therefore adhere to their previous decision, and again recommend that as regards house purchase advances the rate of interest payable by a mortgagor on the amount of advance outstanding be one penny-farthing (1d) per pound per month until further notice.

 

Advances to Small Holders.

 

The Manager reported that the Agricultural & Small Holdings Committee had approved of an application by Frederick William Spicer, of London Road, Canwell, Sutton Coldfield, for an advance of 30 under the Land Settlement (Facilities) Act 1919. A form of promissory note to be signed by the Applicant in accordance with the Regulations of the Treasury has also been received.

 

Your Sub-Committee approved of the granting of this advance.

 

Bank Committee: June 7th 1920

 

516     RESOLVED:- That as regards advances for House Purchase, applied for after 14th June next, the rate of interest payable by a Mortgagor on the amount of advance outstanding shall be one penny farthing (1d) per pound per month until further notice.

 

Finance & General Purposes Sub-Committee: August 30th 1920

 

Advances in respect of new Houses.

 

Your Sub-Committee have had under consideration an enquiry from Weoley Hill Ltd as to the amount the Bank Committee would be prepared to advance on certain newly erected houses. It was pointed out that the cost of construction of the houses in question was 1,260 per house, which after deducting the Government subsidy of 260 would be 1,000.

 

It will be remembered that the Committee passed a resolution on the 29th March 1920 defining the limit of advances on a new house as 800, but in view of the exceptional circumstances prevailing in regard to building construction at the present time, and the possibility of a fall in the value of such properties during the next few years, your Sub-Committee consider it desirable that the policy of the Committee in regard thereto should be defined.

 

Your Sub-Committee are of opinion that in making advances of this nature, the applicant must be prepared to pay a larger proportion of the purchase price than heretofore and that it will be necessary for the period of repayment of the advance made by the Bank to be considerably shortened. They have, therefore, requested the Chairman to lay before your Committee his recommendations in regard to the application of these principles.

 

Income Tax - Arrangement with the Board of Inland Revenue.

 

Since your Committee's last Meeting, a representative of the Board of Inland Revenue has visited Birmingham and had an interview with the Chairman (Mr Councillor Appleby) and the Assistant Manager (in the absence of the Manager). As a result of such interview, a scheme has now been put forward by the Board of Inland Revenue set out in a letter dated 19th August 1920, dealing with the liability to Income Tax, particulars of which are as follows:

 

(a) The Bank to furnish a list giving the names and addresses of borrowers, the properties on which the mortgages are secured, and amounts of interest payable during the current financial year.

(b)       (1) Where the purchaser is exempt no charge is to be raised on the property in respect of the interest payable.

            (2) Where the purchaser is not exempt, tax on the amount of interest certified under (a) to be allowed by schedule of discharge from

                            Schedule A Assessment.

(c) The statutory list also to be rendered annually on or before the 1st May by the Bank of names and addresses of depositors who receive interest exceeding 5 and amounts of interest received by them.

(d) If the untaxed interest received by the Bank exceeds this interest paid to depositors, the excess of the untaxed interest received over the interest paid to be directly assessed upon the Bank, under Schedule B subject, however, to any claim which they may be entitled to prefer in respect of Management Expenses under Section 13 of the Income Tax Act of 1918.

(e) If the untaxed interest received is less than the interest paid to depositors the Bank to reclaim tax both on the excess of such interest paid over the untaxed interest received, provided the Bank has sufficient taxed income under Schedules C and D to cover, and in respect of any claim for Management Expenses to which it may be entitled as in (d).

 

Your Sub-Committee recommend that the Scheme as above set out be agreed to, as they feel that no better position could be secured for the Bank as the law at present stands.

 

Bank Committee: August 30th 1920

 

With reference to the paragraph in the Report [of the Finance & General Purposes Sub-Committee] as to advances in respect of the purchase of post-war houses. The Committee considered the various aspects of the matter, particularly from the point of view of the probable extent to which the value of property would depreciate after various periods of years.

 

583     RESOLVED:- That the matter be referred to the Finance & General Purposes Sub-Committee with instructions to have prepared a Table of Statistics showing the probable depreciation of value of post-war properties over various periods, and to submit their recommendations in the matter to this Committee in due course.

 

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