To the Editor of the "Nonmi-Cinxa Dany News"
Sm—The question asked Lawotuonen in your correspondence columns of Saturday last, as to "who, fare the property" owners"? requires appropriate reply, owing to its importance, Even to a layin, it would sound Mogical and junbusinesslike (apart from the Joga aspect) that a. purchaser of landed property should vest the ile of ownership, from "the moment he purchases the property (at his own risk and expense) In the mortgagee or financier who advances part of the purchase amount. I should think the "Registered Owners" in Shanghai are really the. Registered "Agents" and the mortgagors are Always the property owners or the The reasons are obvious why in the ease of realty, the title of ownership should remain vested in. the mortgagor, and in no one else, although the legal tile may (only where there is no equitable mortgage in existence) be vested In the more Gage. 'The danger lies in the facts (especially under conditions prevailing in Shanghai where there is no actual market contre where landed property may readily be bought and sold of current prices) that if at_any' time the mortgagee finds an opportunity Whenever there is the slightest business panic, to threaten or fores the mortgagor' (before the mortgagor prepared to redeem a matured mortgage) to pay the mortgaged Amount or else the mortgagee appl for foreclosure and sale of the proerty, on an undesirable market, in which ease it would be an easy task for the mortgagee, to succeed while the ihe of ownership is vested in 'There is a real danger, under teca) Conditions, as a real estate market, in general, could not be compared 10 markets of commodities, for instance, such as wheat, rubber, cotton or. merchandise which have a' ready sole, and for which actual market prices may be obtained on the spot, it is true of Shanghai where one can purchase real estate by offering (ex-Sept in rare cases) about 20 per cent. Over the market price of the properly, so it is when a foreed sale takes place, the property is not likely to fetch' but about 20 per cent, below the current or nominal price, "Now: Detween the said minimum and Maximum price, the margin Is about 40 per cent, Well! Who can under the present depression in Shanghai Justly value landed property where there fs no market by which he may. be guided? For this reason valuers, are likely to differ in their valuations, In many cases prices of real estate do not depend on their return, Take, for example, properties on the Bund, Apartment houses, detached residences, 'oF stores, all these different classes of properties, their return on thole capital varies from 3 to 8 per cent. or more, Some properties the return of which is very low consist of more lands as detached residences) which are expected to appreciate in value and make up for their poor return. While apartment houses are not 50, their value is based actually on their Yeturn, The future prospects of the} property also depend on the kind of construction and location. One must, therefore, realize that It is far better, it possible, for Shanghai. property owners to avoid mortgages, eonsidering local complicated questions, in-eluding the dangers arising from unsettled market prices, Here it shows the dispute between mortgagers and mortgayoes is a com= pleated one. But where there will, there is always a way how to settle such a dispute to mutual satis faction, Can we say that both mortgagees: and mortgayors made the mistakes? No. Not in the majority of cases. Many mortgagors undoubtedly have been tempted (this is a mistake) to take loans when money was easy and was freely offered to them, and the mortgagees (or financiers including Banks) agreed and found it convenient, to give the loans at rates of interest ranging from 8 to 12 per cent. Why not!
T disagree with Mr, Paevor's star ment that mortgagors reaped prof If Mr, Pnevor looks into the balance sheets of mortgagors, he will find, owing to the heavy interest they had to meet on their mortgages, no matter what rents they have been receiving, the majority, if not all, have jin reality worked at a great ess, taking the average of good and bad times. "Morlyagees and financiers evidently, yes, did reap, in many cases, good profits considering the high rates of interest they charged to mortgagors, without undertaking any risks, T should think in no other parts the world such rates of interest can. be obtainable on mortgages of realty if not in Shanghai where 8 to 12 per cent. have been possible. The return, fs far as 1 am informed, on realty investment in many other parts of the world, considered there, 10 be fairly
Text read from the printed page and cleaned; old type leaves the occasional error.