I move that the Bill be read a Second Time. A necessary preliminary to any discussion on this Bill is, I think, a brief review of the history of rent restriction. It will probably suffice to begin with the first Act passed by our own Parliament—the Increase of Rent and Mortgage Interest (Restrictions) Act, 1923. That Act, like the Act it replaced, the British Act of 1920, was a temporary measure with a life of only three years. It continued the application of control to pre-1919 built premises with a poor law valuation not exceeding, in Dublin, £60, and, elsewhere, £40. Houses built after the 2nd April, 1919, and flats newly constructed after that date were exempt from control. In 1926 an Act was passed which introduced a scheme for the gradual abolition of control by a reduction year by year of the poor law valuation limits and the Act contemplated the final disappearance of control in 1929. Clearly the authors of the 1926 Act were optimistic in their estimate that control could be completely dispensed with by the year 1929, and, in fact, the process of decontrol was arrested by a further Act passed in 1928 by which time the poor law valuation limits had been reduced to £30 in Dublin and £25 elsewhere. This continued to be the position until early in 1944 when the stress of emergency conditions made it necessary to consider the question of extending rent control to a wider range of premises. This was done by the Emergency Powers (No. 313) Order, 1944, under which premises with a poor law valuation not exceeding £60 in Dublin and Dun Laoghaire and £40 elsewhere were brought under control. Under an amending Order which was recently made, premises erected after or in course of erection on the 8th February, 1944, and premises reconstructed into flats since that date were exempted from the scope of the original Order. The position at present might, therefore, be said, broadly speaking, to be that rent control applies to all existing premises of a poor law valuation not exceeding £60 in Dublin and £40 elsewhere.
There is an important difference between the control under the 1923 Act and the control under the Emergency Powers Order. Under the 1923 Act rents are restricted by reference to the 1914 level of rents while under the Order the 1941 level provides the basis. It is hardly necessary to elaborate on the significance of this difference between the two controls. In any event I shall have to refer to it again later when dealing with the relevant part of the Bill.
In 1936, following the passing of resolutions on the subject by the Dáil and Seanad, a tribunal, under the chairmanship of Mr. Justice Black, was appointed by my predecessor to investigate the whole question. The tribunal, after a long and painstaking examination of the problem, presented separate and conflicting reports early in 1941. It is only proper that I should acknowledge, on this the first opportunity that has presented itself in this House, the Government's appreciation of the work of the tribunal. Even though the reports reveal wide differences of view on fundamentals, the tribunal's careful and detailed examination of the existing Rent Acts and the suggestions made for their improvement have been of considerable value.
The House may feel that a word of explanation is due for the long delay in producing the present Bill. Preliminary work on the measure was started as soon as was practicable after examination of the tribunal's reports was completed. At first an amending Bill was contemplated and was actually prepared but, on further consideration, it was felt that, having regard to the already complex and unsatisfactory state of the statute law in the matter, it would be unwise to superimpose on those statutes a further Act of an amending character. Accordingly, it was decided that the old Acts should be repealed in their entirety and that the new Bill should take a comprehensive form and be in the nature of a consolidation measure embodying such amendments and such new ideas as were considered necessary or desirable. When the Government, a few months ago, came to consider the new draft of the Bill, they found themselves confronted with a situation in which the possibility of the Emergency Powers Acts coming to an end at an early date had to be envisaged. The question, accordingly, arose as to what should be done about the rent control imposed by the Emergency Powers Order. It was felt that it would be a mistake to allow slip the opportunity of dealing with the matter in the present Bill. To do so would probably mean that the Dáil would be asked in six or 12 months' time to deal with a second Rent Restrictions Bill to fill the gap created by the lapse of the Emergency Powers Order. It was, therefore, decided that, even at the cost of further delay, the Bill should be revised so as to incorporate the Emergency Powers Order. In this way the whole law relating to rent restriction would be contained in a single Act which would obviously be of considerable advantage to everybody concerned. The grafting of the Emergency Powers Order on to the Bill was a difficult and delicate operation; the result is, I think, very satisfactory. Indeed, I feel I may say, as regards the Bill as a whole, that it will be found to be, from a purely drafting point of view alone, a very considerable improvement on the existing Acts.
Deputies, no doubt, have read the explanatory memorandum which has been circulated and have, I hope, found it of some assistance in their study of the Bill's more difficult and complex provisions. The House will probably wish me to add something to what is said in the memorandum, particularly as regards some of the more important provisions of the Bill.
I have already referred to the fact that the Bill will have a life of only five years. The actual date specified in Section 1 is the 31st December, 1950. This does not necessarily mean, of course, that rent control will automatically come to an end on that date. What it does mean is that the position will be reviewed before the Act is due to expire in the light of the conditions then existing. There will probably be general agreement that the position should be reviewed in five years' time, particularly as the control which the Bill proposes embraces houses on the higher valuation levels and the question will doubtless arise whether houses of the higher valuation could or should then be released from control. I do not think that there would be much to be gained by having the position reviewed any earlier as there does not seem to be much likelihood of such a change in conditions taking place sooner than five years as would justify any substantial contraction in the scope of control. I suggest that, taking everything into consideration, five years is a reasonable and proper period of operation for the present Bill.
The two most important features of the Bill are the provisions of Chapter 1 of Part II relating to fixing of lawful rents of premises at present controlled under the 1923 Act and the special provisions of Part III for the relief of tenants of small premises. Under the 1923 Act the standard rent, which is the basis for the determination of the lawful rent, is fixed by reference to the 1914 levels of rent. Where the premises were let in 1914, evidence of the actual rent then being paid must be produced before the standard rent can be fixed. The difficulty of producing reliable evidence nowadays of rents being paid more than 30 years ago is self-evident. The matter was referred to in the Reports of the Town Tenants' Tribunal and it was recommended that the law on the point should be amended. While everybody will agree that the need for the production of evidence of 1914 rents should be dispensed with, it has not, I think, been generally appreciated that it is almost equally important that whatever scheme might be adopted should avoid as much as possible the risk of disturbing settled cases and thus causing uncertainty and opening up possibilities of litigation in cases where there was no justification or reason for such undesirable developments. That is the underlying idea of the provisions of Chapter 1 of Part II. The twin objects in view have, it is hoped, been attained by taking first all those cases in which standard rents have already been fixed by the courts and providing that the basic rent in such cases will be the standard rent (which, as it is a matter of court record, should be known or easily ascertainable) plus the statutory increase of 20 or 25 per cent. permitted under the 1923 Act. In cases in which standard rents have not already been fixed by the court, the Bill provides (Section 9) that the basic rent in such cases is to be determined by the court as the sum which the court considers to be reasonable having regard to the basic rents of comparable premises.
There will, no doubt, be many cases within the category of Section 9, cases in which the parties have been able, without having recourse to the courts, to settle the lawful rents between themselves on the basis of the known 1914 rent. Theoretically, these cases would be liable to be reopened under Section 9. In practice this is most unlikely to happen. The basic rents of the comparable premises by reference to which the rent of a house in any such case would have to be determined under Section 9 are firmly anchored to the 1914 level. It would, therefore, be a foolhardy tenant or landlord who would resort to court proceedings in order to upset a rent arrived at on the basis of the 1914 rent and agreed upon as the rent lawfully permitted under the 1923 Act.
The scheme propounded in Chapter 1 of Part II is, of course, experimental. I feel, however, that I can confidently recommend it to the House as a very definite improvement on the existing position, and we may, I think, entertain reasonable hopes that it will work out satisfactorily in practice.
As regards the provisions of Chapter 2 of Part II, these are merely a reenactment of the provisions of Emergency Powers (No. 313) Order, as amended by the recent Order, governing the fixing of lawful rents for premises to which Chapter 2 applies, these being the premises at present controlled under the Emergency Powers Order. The basis for the determination of the lawful rents in these cases is the rent passing on the 7th May, 1941, or, if the premises were not let on that date, the rent at which they were last let during the previous five years. This follows the scheme of the 1923 Act but, with 1941 rents furnishing the standard, it is free from the objections that can be urged against the continued application of the 1923 Act provisions to premises controlled under that Act.
There is one section in Chapter 2 to which I should, perhaps, specially refer, namely, Section 15. Following the making of Emergency Powers (No. 313) Order, we received numerous representations regarding cases in which the landlord demanded a substantial increase of rent to offset the increased rates which became payable by him on the expiry of the "rates remission" period. I do not think that there is any doubt that the landlord was entitled under the Order to such an increase. I am satisfied that normally it was quite right and just that the landlord should be allowed an increase in such cases, as rates are primarily a charge on the occupier. It was suggested, however, that in some cases at least, the fact that there was a remission of rates in operation was not adverted to when the rent was agreed upon in 1941 or before that date and that, even had there been no such remission, the landlord could not have obtained any bigger rent for the premises. Consequently, it was further suggested, it was unfair to the tenant that the landlord should now be allowed to increase the rent by the equivalent of the increase in the rates. The matter was carefully considered and it was decided to amend the Emergency Powers Order so as to give the tenant in any such case who felt aggrieved an opportunity of asking the court to review the rent. That amendment of the Emergency Powers Order has been embodied in Section 15 of the Bill.
The incorporation in the Bill of two different standards for the determination of the lawful rent, each applicable to distinct categories of premises, made it necessary to consider the position of premises that might, by reason of a change in the rateable valuation, slip from one category into another. For example, a house of £29 poor law valuation would be subject to control under Chapter 1 of Part II. If, on a revaluation, the poor law valuation were raised to £31, it would come within Chapter 2 control. The converse case of a reduction in the poor law valuation bringing a house from Chapter 2 control into Chapter 1 control might occur, although perhaps more rarely. The point is of importance to both landlords and tenants since, in one case, the change might mean a substantial increase of rent for the tenant and, in the other, a substantial reduction in the rent being received by the landlord. We came to the conclusion that a change in rateable valuation should not, in itself, operate to effect either an increase or reduction in the rent and we have so provided in the Bill. The relevant provisions are Section 7 (2) (b) and Section 10. The effect of these provisions might be briefly summed up as "once Chapter 1 premises, always Chapter 1 premises, and once Chapter 2 premises, always Chapter 2 premises." I think that this is the best solution. So long as premises are controlled, it would be undesirable that the basic rent should be liable to variation. Variations of the basic rent during the period of control would create uncertainty and doubt and might easily militate very adversely against genuine buyers for value of controlled premises.
I now come to what is, possibly, the most important and is, certainly, the most novel feature of the whole Bill, namely, the special provisions of Part III for the relief of tenants of small premises. I feel sure that the object aimed at in this Part of the Bill will command general support and, if differences there should be, they can only be on the question whether a better scheme and one calculated to be more likely to achieve the desired object is capable of being devised. As to the need for some such scheme as that proposed in Part III there can, I suggest, be no question.
The problem was discussed at some length in the agreed report of the Town Tenants' Tribunal. There we find it stated, as the considered and unanimous view of the tribunal, that, by reason of the usually tedious, troublesome and complex nature of Rent Act cases,
"so far as many of the poorer tenants are concerned, that is to say, those who need the Rent Acts most, this great remedial code is a dead letter".
Few will, I think, be found to quarrel with this conclusion of the tribunal. Through poverty or ignorance of the law, or because of a reluctance or inability to initiate legal proceedings with their attendant formalities, or through a combination of all three factors, many tenants fail to secure for themselves the relief which the law provides for them. I think I may say that the conclusions of the tribunal in this regard are borne out by the experience of social workers who move among the poorer sections of the people.
The tribunal's proposal for the appointment of special officers with specified functions as a solution of the problem was very carefully examined and it was only after the fullest consideration that it was decided not to act on it. The main objection that was seen to the scheme was that the interposing of an officer with powers to conduct what would amount to a preliminary investigation of the case between the tenant and the court would only make for more protracted proceedings. This would certainly be so in the case where the landlord proved "difficult"—the very kind of case in which the tenant would be most in need of relief. It was felt that the best solution lay in securing for the tenant a cheap and informal means of access to the court and prompt adjudication upon his application for a review of his rent. Under such a scheme, it might be hoped that tenants would not be deterred by the cost and formalities that court proceedings normally involve.
The provisions of Part III of the Bill have been designed to achieve this object. All that a tenant will be required to do is to approach the district court clerk informally and furnish the necessary particulars to him. There will be no formal court proceedings and no formal proofs will be required. The justice will have the assistance of an expert valuer in arriving at his decision. When the justice fixes a provisional rent, it becomes operative immediately and the onus is thrown on the landlord of taking proceedings within one month if he wants to upset that rent.
It was felt that the scheme would fail to achieve its full purpose if it stopped short at merely enabling the tenant to have a provisional rent fixed cheaply and easily. Obviously, the landlord must have a right to appeal to the court against the provisional order, but if much of the benefit of the scheme is not to be lost to tenants, they must be put in a position to defend their case. I think that a particular merit of the scheme is that it endeavours to provide for this, in so far as it is possible and practicable to do so. Thus it is provided (sub-section (2) of Section 31) that no costs may be awarded against a tenant in any case in which the rent which the tenant had been paying is higher than the lawful rent. This means, in effect, that even though the landlord might succeed in having the provisional rent increased, he will not be entitled to any costs against the tenant so long as the rent as finally settled is anything less than the rent the tenant had been paying. Moreover, and more important still, if the landlord wants to take the case on appeal to the Circuit Court, the tenant, if he has a genuine case, need not be deterred by the prospect of being involved in heavy costs. The Bill provides that the circuit judge may certify in any such case that the tenant's costs of the appeal (including any costs that may be awarded against him) should be defrayed out of public funds. If a certificate is given, the amount of the costs must be paid out of public funds. Finally, the tenant is relieved of any liability to pay court fees in any proceedings under Part III, whether on his original application for a provisional order or on any further proceedings resulting therefrom.
The core of the problem with which Part III is intended to deal is centred mainly in Dublin and, to lesser extent, in a few of the other larger centres of population. For this reason, the scheme will apply in the first instance only to the four county boroughs (Dublin, Cork, Limerick and Waterford) and the borough of Dun Laoghaire. Power is vested in the Minister for Justice, however, to extend the application of the scheme to any other area. Tenants of any premises of a poor law valuation not exceeding £10 will be qualified to avail themselves of the benefit of the scheme. Thus, for example, the large body of tenement dwellers in Dublin will be able to reap the advantages.
There are only a few other points that I think it necessary to refer to at this stage. The Bill brings the law as regards recoverability of excess payments of rents in 1923 Act cases into line with the position that has obtained under the Emergency Powers Order. The technical aspect of this matter has been explained at some length in paragraph 14 of the explanatory memorandum on the Bill. It may be well that I should say something about the reasons for the change. In cases coming within Section 8 of the Bill, the basic rent is the standard rent already fixed under the 1923 Act by the court, plus the permitted increase of 20 or 25 per cent. These facts are known, or at least should be known, to the landlord and, if he deliberately charges the tenant a rent in excess of the lawful rent, it is only right that the tenant should be entitled to recover the amount of any rent he may have paid in excess of the lawful rent before he became aware of the true facts as regards the basic rent. The Bill so provides, subject only to the proviso that the tenant may not recover more than six years' overpayments.
In Section 9 cases the position is somewhat different. Here the basic rent is an unknown quantity until it has actually been determined by the court. Until there is such a determination, there may be room for a legitimate difference of opinion as to the correct amount of the basic rent. It is considered that it would not be just to render the landlord liable to repay any rent to the tenant in such cases in respect of any period prior to the date on which the court determines the basic rent. The tenant has the remedy in his own hands by making early application to the court to determine the basic rent. The reasons I have given for distinguishing between Section 8 and Section 9 cases apply equally to Section 14 and Section 16 cases in Chapter 2 of Part II. There is no actual change here, however, as compared with the position under the Emergency Powers Order.
The repeal of the proviso to Section 2 (1) (b) of the 1923 Act, with retrospective effect as from the date of the passing of that Act, has been dealt with in paragraph 16 of the explanatory memorandum. It will, I am sure, be agreed that a position could not be allowed to continue under which a tenant could take advantage of what was really a technical flaw in the drafting of the 1923 Act to establish a claim against the landlord for the recovery of a large sum of money to which the tenant had no moral right whatsoever. It is preposterous, for example, that a rent, which was purely a ground rent fixed under an old and long lease, should be set up as a fair occupation rent and that a tenant should try to establish a claim to be repaid by the landlord the difference between that absurdly low rent and the rent he had actually paid. This matter was referred to in the Agreed Report of the Town Tenants' Tribunal and it was strongly recommended that the position should be remedied. The only way in which this can be effectively done is, as Section 5 (2) of the Bill proposes, by the retrospective repeal of the proviso to Section 2 (1) (b) of the 1923 Act. This repeal will not, however, operate to upset any case that might have already been finally decided by the courts on the basis of the existing law or to compel a tenant to repay to his landlord any moneys he might have already recovered from the latter by virtue of the proviso.
The omission from the Bill of any provision, on the lines of Section 5 of the 1926 Act, for the decontrol of premises over a specified rateable valuation on the landlord obtaining vacant possession represents an important change in the law and one which may excite some comment. The question was discussed at length by the chairman of the Town Tenants' Tribunal in the separate report which he furnished. He strongly criticised the provisions for decontrol on vacancies and recommended that Section 5 of the 1926 Act should be repealed, thus, as he put it, getting rid of the arbitrary notion that only a "sitting" tenant deserves relief from having to pay an exorbitant rent and that the landlord should be free to exact the best rent he can obtain from an incoming tenant. The chairman's report, moreover, pointed out that in the British Act of 1923 a somewhat similar provision for decontrol on vacancies was included but that subsequently the policy was gradually repudiated, until finally the British Rent Acts of 1938 and 1939 abolished this form of decontrol altogether. The chairman suggested that no logical mind could reconcile such a form of decontrol with any rational principles.
In marked contrast to the chairman's views, two other members of the tribunal recommended an extension of the decontrol on vacancies provision by a reduction in the valuation limits above which that provision would apply. These conflicting viewpoints on an important aspect of the law of rent restriction did not make it easy to arrive at a decision in the matter. The extension of rent control under Emergency Powers (No. 313) Order put a somewhat different complexion on the problem, however, because a premises now escapes from control under Section 5 of the 1926 Act only to be brought at once within the scope of Emergency Powers Order control. It is true, of course, that the landlord would have a more favourable basis for the assessment of the rent, but, except for this, the change would make no difference whatsoever. With the incorporation of the Emergency Powers Order in the Bill, it would have been quite illogical, I think, to re-enact the provision for decontrol on vacancies and, furthermore, to do so would have been open to the objections that I have already mentioned in another connection to permitting variations in the basic rent of premises during the period of control.
I think I have dealt now with most of the important features of the Bill. It is, as I have said, a complex and difficult measure, widespread in its application, and will require careful consideration on Committee and Report Stages.