The Washington herald., 1920-10-03

a question OF great interest TO
realtors and the general public is:
What is fair rent; at what point
is the rent so high as to be un-
fair?" according to Alex SINNERS,
Windsor, Ont, who has written on
the subject in the current issue OF
the National Real Estate Journal.
Indignant tenants" he says. pro
test against the raising to $40 per
month of a rental which was s25 per
month some years ago. ! have in
mind a house which recently sold
for $500 which in the winter of
l9l6-17 was $40 per month, in 1913
l9, S45 per month. and was renting
at this figure when sold, showing
about per cent gross. per cent
net on the selling value after al
lowing taxes and insurance, leaving
nothing for maintenance and de-
probation.
The only basis on which a fair
rental can be arrived at is that of
certain net return to the owner
on the capital invested. The inter-
est return on any investment must
bear some relation to the class of
security and the risk involved.
! The government of Canada pays
per cent or over with no risk or
! trouble to the lender. The landlord
renting a house should be entitled
to better compensation. On first
mortgages of the highest grade. one
can secure Z per cent with little
more risk than that of government
or municipal bonds. The risk of
owning and renting houses is GER
/ tainly greater than high class
/ mortgage investments.
1T is proposed by some people
that the rental of houses should be
limited by law to a basis which
would give a net return of not
/ more than 10 per cent on the capt.
tai invested. The happiest class of
people in the border cities would be
the landlords II they could be as
sured of a net return of 10 per cent
on the value of their rented proper
ties. and there would be no scarcity
of houses If this happy condition
existed.
To relieve the shortage of houses
the Border Cities Housing Com
mittee last year constructed a con-
| siderable number of reasonably
priced homes. The government
regulated the plan and set the price
( The lowest price was to be $4,000.
/ which with the lot made the total
cost approximately $500. What
! would be proper return on a
/ house value of $500 on the basis
/ of 10 per cent net return? This is
allowing that the house was built
for investment, To give the owner
10 per cent net would be $3.50 per
year, after deducting all charges.
This is $50 per month to begin with.
| The house would be assessed for
approximately s2,40O and the taxes
about $50. This is IS per month
additional. Insurance would be $50
for three years, almost 81 per
month, and in addition to this the
owner must provide repairs, re-
decorating and painting. A reason
able depreciation should be allowed,
per cent, which on a house cost
ing $4,000 is 500 per annum or $3.50
| per month. The owner Of one of
\ the houses to make 10 per cent net
on his investment would require a
monthly return of $3.50 per month.
This on the supposition that the
! house is never vacant. If there
were such vacancies an additional
allowance would have to be made.
NOW, this Is dealing with houses
OF cost of only $500, and I think
l am safe in saying few houses are
renting at this amount with a value
! of only $500. AS for tenants who
demand something better, ana there
/ are thousands such. they should
pay more. Let us take a $4,000
house which is only modest
i dwelling. the rental on the same
basis would be s64 per month,
nothing allowed for vacancies or
deprecated value of investment by
change of environment. 1 doubt if
| the average rental in the border
! cities ever yielded an equal return
on the investment, than could be
secured on first mortgages at cur
rent rates, and frequently yielded
! less.
Il may be told that my allowance
/ OF per cent depreciation on house
property is too high, that landlords
seldom make any repairs and that
land values are always increasing,
therefore there Is no depreciation
but that the increased value of the
land will make up any depreciation,
( You need only to ask owners who
have experience. Change of condiJ
tions. or environment may change
land values up or down. but IL the
landlord is not to be allowed depre-
citation and he Is to be limited to
10 per cent net on his Investment,
J he will be unable to receive any
benefit from Increased values, and
must therefore sell his house to a
new owner and the new owner
would have to raise the rant IN get