Landlord and Tenant (Amendment) Bill, 1979 [Seanad]: Committee Stage (Resumed).
Question again proposed: "That section 34, as amended, stand part of the Bill"
(Cavan-Monaghan): Subsection (6), to which the Minister resisted an amendment of mine to spell out whether the premises should be insured for their market value or for their re-instatement value, reads:
If the Court fixes the convenants of the lease, the lessee shall be made liable to pay all rates and taxes in respect of the land and to insure against fire and keep premises in repair.
Since Thursday last I have been checking up on this matter and I am told by practitioners that the question of whether a premises should be insured for their market value or for their re-instatement value gives rise to considerable argument between landlord and tenant and that it is one of these convenants that is found very difficult to agree on. The Minister, even at this late stage, should think again about this question so that the matter, if possible, can be put beyond doubt. Naturally, it is not my intention to endeavour to reargue the amendment but what I proposed was that premises should be insured against loss or damage as a result of fire either at their market value or at their re-instatement value, at the option of the landlord. Such provision would remove much of the uncertainty and of the argument. That is why I am asking the Minister to think again about my proposal between now and Report Stage.
I am prepared to consider the points raised by the Deputy. I am confident that both he and I have the same aims and objectives and, if it is found possible to adopt the Deputy's suggestion, we shall endeavour to do so.
Section, as amended, agreed to.
SECTION 35.
Question proposed: "That section 35 stand part of the Bill".
(Cavan-Monaghan): This is the section which provides the machinery for fixing the rent reserved by a reversionary lease. In blunt language, it is the section which fixes the new ground rents. It contains the machinery for fixing a new ground rent where the old lease has expired. Consequently, it would seem to perpetuate ground rents and to render it possible to increase ground rents very substantially.
I am advised that the basis for determination of the rent is unsatisfactory and that the provisions of subsection (2) may be difficult to interpret. The fraction of the one-eighth of the gross rent has remained constant since 1967 and could result in a very substantial rent where the letting value of buildings is taken into consideration. Perhaps we could spend a short time spelling out the sort of lease with which we are dealing. If a lease is granted for 50 years or for 99 years on a plot of land and is subject to a convenant that the lessee will build a premises on it in accordance with plans and specifications and of a certain value, that is what we know as a building lease. The rent reserved in that lease is what is commonly called a ground rent.
What we are doing here is creating the machinery for fixing the rent of that plot of land when the lease expires. We are saying that although the plot of land was leased as virgin land, with an obligation on the tenant to build a dwelling on it, when we come to fix the rent we will say that the ground rent may be increased from, say, £10 to £100. In the city of Dublin this figure could very easily be increased from £10 to £200 because £1,600 a year would be little enough for the letting value of many premises and I am sure these figures could be increased even further; it could even be doubled. What we are doing here is conferring on the court the right to fix new ground rents very much higher than those which exist at present.
This has not been a political debate so far because we are dealing with technical matters, but I am bound to draw the attention of the House and the people to the fact that the Minister solemnly undertook in the 1977 election manifesto introduced by Fianna Fáil to provide a scheme which would lead to the abolition of existing residential ground rents. In this section he is putting through the Oireachtas a section which will have the direct opposite effect, that will perpetuate and very substantially increase ground rents.
Deputy Leydon is on record in the early days of the life of this Dáil as referring to the Fianna Fáil manifesto as an historic document. He was much more accurate than he realised at the time, and it is becoming more historic every day.
I wonder will it be as historic as the 15-point plan?
Neither the plan nor the document arises on this section.
(Cavan-Monaghan): It has led to many more striking eruptions than the 14-point plan.
I think it was a 15-point plan.
(Cavan-Monaghan): No, it was a 14-point plan. Section 35 will determine the rent to be charged for a new reversionary lease which in effect is a ground rent lease. The formula set out in this section is that the rent to be reserved by the reversionary lease, the terms of which are settled by the court, shall be one-eighth of the gross rent, that is, the gross rent of the plot of land, plus the building erected by the lessee at his own expense and without any expense to the landlord, 99 years earlier. In order to find the rent to be reserved valuers will go into a residential house in this city or in any place in Ireland, value the premises, including the plot of land and the dwelling house which has been built by the tenant or his predecessors at his own expense, but the important thing is that it is without any expense to the landlord, and which has been maintained throughout the term of the lease by the lessee at his own expense. If the valuer decides that the rent would be £800 a year, then the new rent will be £100, notwithstanding the fact that the original ground rent was probably £5 or £10.
It would be a very modest house in this city the rent of which would be put at £800. It would not be a very exciting house if the rent was put at £1,600 a year. Modest one-bedroomed flats are being valued at almost £200 a month at present. Therefore, a three or four bedroomed house on a nice plot of land could be valued at £3,000, £4,000 or £5,000 a year. We are fixing the ground rent at one-eight. I fear that in drafting this legislation the Minister overlooked the undertaking he gave in the Fianna Fáil manifesto before the last general election to introduce a scheme that would lead to the abolition of ground rents.
We could have a long complicated argument on how far he has gone with the machinery he introduced—and I do not believe that it has been availed of to any great extent—but that is another day's work. Even if the Minister argues that that machinery has been availed of and has wound its way through the Land Registry and other Government agencies, he is going in the opposite direction here. Instead of increasing this divider of eight which has been in operation since 1967, he should be raising it to 12 or 20, or any figure that would keep the ground rents low, and only having regard to the land which is included in the lease and which would disregard the buildings. It is unfair to include the letting value of the buildings with the land in fixing a gross rent. It is a complete right-about turn on the manifesto promises. It is an indication that the promise in regard to ground rents was never taken seriously as a promise that the Government felt obliged to implement.
I should like to hear the Minister's views on my remarks to date. How can he justify including the letting value of buildings, which were put there by the tenant at no expense to the landlord in the rent to be charged to the leasee on the renewal of the lease?
I fully understand the political obligations of Deputy Fitzpatrick about the Fianna Fáil election manifesto. The Deputy was sufficiently gracious to say that we have had a lot of debate on the contents of the manifesto, particularly in regard to ground rents, during discussions on a number of Bills on this subject. I believe sincerely that my efforts in this area have been outstandingly successful. Indeed I know they have been successful, and those not involved in either promoting or decrying the manifesto should know that the solemn promise which I gave to provide a scheme for the buying out of ground rents is working successfully. There have been tens of thousands of inquiries to date, thousands of vesting certificates have been issued and a number of applications are in hand at the present time.
I will give the figures: the number of inquiries received to date has been 19,582; applications for vesting certificates, 5,662; and the number of vesting certificates issued, 3,912. That is positive proof that those who were meant to benefit from ground rent legislation are benefiting. I ask the House to take every opportunity to encourage the use of the scheme. Efforts have been made by others outside the House to decry the scheme.
On the section before us, it represents the re-enactment, with drafting changes and one change of substance in subsection (1) and (2), of the provisions of section 18 (4) of the 1958 Act and section 26 of the 1967 Ground Rents Act, which amended and extended the provisions of section 18 (4) of the 1958 Act. Subsection (1) of this section represents in part the re-enactment, with drafting changes, of section 18 (4) of the 1958 Act as amended by the 1967 Act. The subsection also includes a new provision concerning the rent to be reserved in a reversionary lease. Under the new provision conthat rent will be not one-eight of the gross rent but one-eight of the gross rent reduced by the special allowance for the tenant's improvements defined in subsection (2).
This new provision taken in conjunction with subsection (2) is designed to bring the law concerning the amount of the rent and the renewal of the ground rent lease into line with the law concerning the rent on the renewal of an occupational tenancy in that improvements carried out by the tenant will be taken into account, which means that any increased letting value is attributable to the tenant's improvements and that increased value will not be reckoned in the rent fixed on renewal of the lease. Subsection (2) defines the special allowance for the purpose of the new provisions in the previous subsection. The allowance covers increased letting value attributable to works of construction, reconstruction and alteration carried out by the lessee or his predecessors. It does not include repairs and maintenance. Any work carried out in consideration or part consideration for the grant of the lease is also excluded.
With regard to Deputy Fitzpatrick's comments on the residential ground rent, although residential ground rent tenants can now buy out very easily, this is hardly a reason for taking away an existing right, that is, the right in the alternative to a reversionary lease. The renewal right could remain important to nonresidential ground rent tenants who for any reason do not want to buy out. New ground rents under reversionary leases are a minor consideration because a tenant can already buy out under his existing lease. If he does not buy out before hand, the renewal rent will be one-eighth of the gross rent, a fraction which has stood since 1967.
(Cavan-Monaghan): To round off the bit about the manifesto, the Minister said they have had 19,000 applications——
The Chair allowed the Minister to deal with that because the Deputy had raised it. We will not go back to the manifesto now.
(Cavan-Monaghan): It is a document that will take some little time to get away from.
It is only a small point, and perhaps I invited it.
(Cavan-Monaghan): The Minister said that 19,000 applications had been made, but a lot of them stopped at the inquiry stage because only 3,000 vesting orders have been made. The important thing about it is that ACRA are on the warpath. They believe they were left out, that the Minister reneged on them, that he let them down. They are demanding that the Minister carry out his promises.
ACRA have been used politically by particular parties. They should not be on the warpath.
Would the Minister and the Deputy come back to section 35?
(Cavan-Monaghan): This is about ground rents and reversionary leases. ACRA find themselves in a difficult position. Believing the manifesto was a bona fide document, they advised thousands of their members to vote for Fianna Fáil on the understanding that ground rents would be abolished. Now they find that ground rents are not only not being abolished but are being perpetuated. They are in an awkward position and they must campaign for the protection of their members and the implementation of the promises. The Minister has told us that the new rent is to be one-eighth of the gross rent reduced. He then read subsection (2) and I think he felt like stopping half way through it because it states:
The special allowance for the purpose of subsection (1) shall be such proportion of the gross rent as, in the opinion of the Court, is attributable to works of construction, reconstruction or alteration carried out by the lessee or any of his predecessors in title which add to the letting value of the land as compared with its letting value when it was last in the possession of the lessor or any of his predecessors in title, other than works carried out wholly or partly in consideration of the grant of a lease or repairs and maintenance during the currency of the lease.
In other words, the house he built and repairs carried out to it in accordance with the lease will be valued and all that will be excluded will be something like a greenhouse put up with the consent of the landlord or extra rooms added with his consent. That will not be charged against him but the original house he built under the building convenant in the lease will be charged. If under the building convenant he built a three-bedroomed house with two reception, kitchen and loft the rent will be based on the grounds plus his three-bedroomed house and the better the repair he kept it in during the term of the lease the more he will have to pay. That is unfair.
The Minister points to subsection (3) (a) which states that another fraction may be included instead of one-eighth, but in putting one-eighth into the section the Minister is showing his own thinking. As of now he is saying that he thinks that the fair rent for a plot of ground is one-eighth of the letting value of the ground plus the letting value of the house which did not cost the landlord a brass farthing. That is the strangest way of introducing a scheme to lead to the abolition of existing ground rents that I have ever heard of. It is nothing more than perpetuating them. It shows the Minister is in bad faith if he has studied the measure and understands it as I presume he does.
The Minister told us by way of argument in favour of this formula for fixing the new rent that the fraction of one-eighth has existed since 1967. With all respect that is an excellent argument against it. Since then we have had considerable inflation and, above all, the 1977 manifesto which pledge the Government and the Minister to introduce a scheme to lead to the abolition of ground rents. Taking that promise at its very weakest it meant the Government were going to discourage ground rents but if one had said before the last election that a promise to abolish ground rents meant a promise only to discourage them one would have been accused of completely misrepresenting that goody in the manifesto. One would expect the Minister to lean heavily against ground rents but we find him supporting them because there is the same formula for fixing ground rents in 1980 as was written in by his predecessor in 1967. That is going back on the promise given by the Minister and by the Government. A fraction of one-twentieth would be more realistic. The premises should be completely disregarded.
There is no point in the Minister saying that section 35 (2) in some way introduces a more favourable formula than was there before. It includes the letting value of the house which was built by the tenant under the convenant in the lease and the repairs which were carried out to it in accordance with the lease. All it does not include are some extras over and above the original house which are carried out subsequently. Why does the Minister plant back in a fraction of one-eighth which was fixed as far back as 1967 and perhaps earlier? There has been a similar fraction since 1931. Did the Minister realise the implications of the section when he introduced the legislation? Did he realise that it was in strange conflict with the philosophy enunciated in the manifesto which was to introduce a scheme to lead to abolition of ground rents? The man in the street believed that meant that all ground rents would be abolished free of charge. I know the Minister protests loudly that that was not what he meant but he did not say anything else. He said he would abolish ground rents and a person learned or unlearned in law, could be excused for thinking that was what he meant.
There is this very strange contrast which is a departure from the policy the Minister professes, which was written into the manifesto and shouted from the rooftops, and from ACRA's understanding of it they in good faith urged their members to support Fianna Fáil and see the end of ground rents once and for all. Less than three years later the Minister brings in a Bill which contains this section. I suppose he will tell me that it was in the Bill before he got it but he is peddling it through the House after he undertook to introduce a scheme which would lead to the abolition of ground rents. This is intolerable and inexcusable. I shall deal further with it on the next stage.
When Deputy Fitzpatrick began on this section he prefaced his remarks by saying that up to now he kept the political side of this problem out of the debate. I thank him for that. As I said a few minutes ago I do not deny him the right to score what political points he can, whenever he can. That is his responsibility and it is obligatory for him to do so.
I also have an obligation to endeavour to defend myself. Sometimes it is not easy, particularly when Deputy Fitzpatrick takes it upon himself to tell me what is meant by what was in our election manifesto, when he endeavours to take away from me arguments I would use to rebut the charges made. I want to say quite categorically, for the umpteenth time, in answer to the same charge that has been made for the umpteenth time, that there never was a promise given by anybody in this party to the effect that ground rents were going to be wiped out, full stop. That promise was never given; never given by anybody in this party. If Deputy Fitzpatrick wants to say that the letter which I sent to the ACRA people prior to the election contains what I am denying, then Deputy Fitzpatrick is very wrong. Honestly I believe that he knows that also. But, fair enough, he is at present in the point-scoring business.
I want to say also that there was no question of anybody misleading ACRA. What was in the letter was fully discussed with ACRA at that time and was fully understood by them. Indeed not alone at that time but also during the course of discussions in this House of the legislation I introduced within six months of our coming into office statements were made by people with whom I had had discussions during the preparation of the letter leading up to what was contained in the manifesto concerning ground rents, statements by people involved in ACRA that even a request was never made by them that existing ground rents should be wiped out. There never was. That is there in black and white. All I can do is confirm that for the umpteenth time.
However, for political purposes, I know that it does not suit Deputy Fitzpatrick to believe that that is so. I can say quite honestly that there was a clear, firm and definite understanding between myself and those people from ACRA with whom I had discussions on this subject. Even members of the Deputy's party, and probably himself also will remember that during the course of the discussion on the first and second Ground Rents Bills I introduced in this House there were statements made by ACRA representatives to the effect that I had implemented or had done what I said I would do. I have heard about the other ACRA campaign brewing. Indeed I understand that certain members prefer to do their business outside certain political parties very much behind the scenes, whipping it up, and good luck to them; I do not mind that.
I can quite honestly say that the scheme I introduced is proving to be tremendously successful. At present there are on hand applications to the tune of 560 for vesting certificates; out of 4,000, 3,912 have been issued and there are on hand something of the order of 19,500 inquiries. That constitutes a success in itself, and that was within only 18 months despite the fact that certain elements, some political, some in the ACRA organisation, have been urging their members not to avail of this scheme.
With regard to the suggestion by Deputy Fitzpatrick that the fraction should be extended to one-twentieth, at present it is one-eighth and has been since 1967. Up to 1958 the fraction was a quarter, which was extended to one-sixth in 1958 and stood at one-sixth from 1958 to 1967. It stands at present at one-eighth and I do not propose to do anything about it at the moment. If somebody is afraid that a renewal rent will be too high under a reversionary lease, there is nothing to prevent that person from buying out.
I am doing my utmost to resist the temptation to get into a sort of Second Stage debate on what was or was not said, who said what, when, where and why. That danger exists——
We should forget that now because both sides have had a good innings in that respect. We must endeavour to dispose of section 35.
I accept that. I do not deny ACRA—whoever may be in the forefront of that organisation at present—the right to do what they like on behalf of their members. I can certainly tell them they are not right in breaking the law. Neither do I think that Deputy Fitzpatrick would agree with any effort to flout the law any more than would I or any other Member of this House. I do not deny them the right to mount any campaign they want if they think they should, as long as that is within the law. But, on the political side, it is my job to defend myself and the Government as best I can and that I shall endeavour to do.
Deputy Fitzpatrick on section 35.
(Cavan-Monaghan): I shall refer to the manifesto only in so far as it is related directly to a change in policy.
Yes, but what we have been doing for most of this section is dealing with legislation that has already been passed by the House.
(Cavan-Monaghan): Exactly, even 1977 and 1978. The undertaking the Minister gave was to abolish ground rents. Anybody would understand that as action coming from somebody other than the tenant. Abolition is something that takes places from outside. If the Minister had meant to tell tenants that he would introduce a scheme—such as he did in fact introduce —he would have told them, “I will make it easier, or cheaper for you to purchase your ground rents.” That would have been the honest thing to do, just as it might have been more honest only to derate modest houses instead of mansions, but then that would have been more complicated. What the Minister should have told tenants was, “I will make it simpler and cheaper for you to buy out your ground rents.” There would have been no votes whatever in that. That would have been fired back in the Minister's face and he would have been told to get lost. But, of course, the Minister is a good politician and he said, “We will introduce a scheme that will lead to the abolition of ground rents.” Even had he said that he would introduce a scheme leading to an end to ground rents it might not have been confusing. But to say that the scheme would lead to the abolition of ground rents was very misleading, to use the most polite words I can think about it.
ACRA are in a rage at present. They are on the warpath again. They feel they have been let down, misled and conned. I can well understand their mood. But the further this debate continues——
The Chair must insist that we get back to the section before the House. For the past half hour we have been discussing something that has very little to do with the section. The Chair has exercised enormous patience on this occasion.
(Cavan-Monaghan): I could not be getting nearer the core than the fraction. The further this debate progresses the more difficult it becomes to understand the Minister's approach to this matter. We know now—out of the Minister's own mouth—that each time this formula was considered before, with the exception of this time, the fraction was increased. It was increased from a quarter to a sixth in 1958 and then to an eighth. This is the first occasion on which a Bill of this type has been introduced in which a fraction of 13 years standing is allowed remain at one-eighth—from 1967 to 1980, 13 years. It was originally, we know now from the Minister, one-fourth, and on the first revision became one-sixth. Then it was one-eighth and now the Minister— notwithstanding the manifesto and notwithstanding his undertaking to encourage the abolition of ground rents—says that the fraction settled in 1967 of one-eighth is good enough for now and that he is going to leave it so. Did he think about this? Did the Government think about it? I honestly do not think they did. If the Minister had thought about it, I am certain that he would at least——
May I interrupt to try to clarify the matter? Not alone did the Minister think about it when deciding on the fraction, but so also did the Minister's Government.
(Cavan-Monaghan): That was pre-manifesto and pre the solemn pledge to lead to the abolition of ground rents. The Minister did not think about this at all. He finds himself having to argue in favour of the impossible.
Obviously, as the years went on, thinking was against ground rents. If it was not, why was the fraction raised from one-fourth—the probable figure in 1931? The figure of one-sixth was introduced, I think the Minister said, in 1956 or 1957 and we know for certain that it became one-eighth in 1967. There times since 1931, the fraction has been raised and the Minister will not raise it now—the same Minister who peddled the policy of getting rid of ground rents—the policy, even according to him, of introducing a scheme to lead to the abolition of ground rents but who sold the promise that he would abolish ground rents. These are the facts. It is no use endlessly repeating the matter. We have dealt sufficiently with it at this stage to get an amendment in on Report Stage, and in an amendment will go. I hope the Minister will join me in putting his name to an amendment, as, indeed, he did to some of the amendments which are on the Order Paper, so that he will have made some sort of restitution to the people who were so sorely fooled in 1977.
Section 35 agreed to.
SECTION 36.
I move amendment No. 40:
In page 19, lines 37 and 38, to delete all words from and including "in such circumstances" in line 37 down to and including "normal" in line 38.
This was already discussed with amendment No. 26.
(Cavan-Monaghan): This worsens the position—or does it?
We cannot debate the amendment. We can debate the section.
(Cavan-Monaghan): What is being cut out?
On page 19, lines 37 and 38, to delete all words from and including "in such circumstances" in line 37 down to and including "normal" in line 38.
(Cavan-Monaghan): I shall deal with that in the section.
Amendment agreed to.
Question proposed: "That section 36, as amended, stand part of the Bill."
(Cavan-Monaghan): Now I can say that this worsens the position considerably. As I pointed out on section 23 (5), we are taking away the safeguard written into section 23 which provided that the court must assume that there is a sufficient number of similar houses to meet the demand—in other words, that there is no scarcity. That safeguard has now been removed from section 23 and the rent there can now be fixed on what I call a scarce commodity basis.
On what you call black market.
(Cavan-Monaghan): I know that the Minister has said that he will look into that situation. We are now fixing the rent on residential houses, not building leases. We are now fixing reversionary leases, which are essentially leases on ground rent, but they are becoming residential leases now because we are taking into consideration the letting value of the house as well as the land. As this legislation stood down the years, the court was obliged to assume that the supply of similar land was sufficient to meet the demand and that the competition for it was normal. Even if there was not enough land to meet the demand and even if there was abnormal competition for it, the court was bound to assume the contrary. By accepting the Minister's amendment, we are reversing that and saying that the court may fix—in fact, must fix—the value of the land on a scarce commodity basis. We hear a lot of talk about the Kenny Report. We blame Fianna Fáil for not acting on it; Fianna Fáil blame us for not acting on it. It has not been acted upon.
And the general public blame the two sides.
(Cavan-Monaghan): That is the position. This, again, is going against the theme in the Kenny Report. It is directing the court to fix the letting value of land on a scarce commodity basis. The Minister's eyebrows went up when I referred to it as a black market basis. That is the worst of having practised throughout the last war, when we were familiar with the black market. A scarce commodity basis is a nicer phrase. We are here directing the court to fix the letting value of this land on a scarce commodity basis and on a basis that there is abnormal competition for it. It is a wrong move and a retrograde step that we should encourage scarce commodity prices for things as precious as building land. It would be open, at present, for an auctioneer to tell the court that he sold, in Cavan town, a building site the other day for £8,000, £9,000 or £10,000 and the court, with this phrase deleted, would be obliged to have regard to that. There is no letting to be made now. The Minister did prevent that from happening. It would not be done at present, but they are being sold and the auctioneer will not be very long capitalising on that, working out a rent on the basis of a capital of £10,000 for a site. That is what we are telling him to do if we do not change that amendment, notwithstanding the views of the learned Mr. Justice Kenny. I used to think this phraseology was difficult to follow but, as I said the last day, whatever else it means or does not mean, it means that the court could not take into account a scarce commodity basis or abnormal competition. This is now being reversed.
I want to do the Minister the credit of thinking that if he had understood the implications of these amendments he would not have moved them. Sometimes it is only in discussion on Committee Stage, and very often, on one's feet, that one sees what is involved and that it becomes clear. If the Minister is to have any credibility at all with ACRA or anybody else on the manifesto promise, he had better change the fraction and put in words which would say that in no way must the court be obliged to fix the ground rent—because that is what we are doing—on the basis of a scarce commodity and abnormal competition.
During the course of Deputy Fitzpatrick's contributions on amendment No. 26, dealing with section 23, he raised the same points as he has done here and I gave him an undertaking that I would consider them on Report Stage. I am quite prepared to do that and will do it as they are worthy of consideration, except the political points, of course.
(Cavan-Monaghan): What was that?
I said the points raised by the Deputy, excepting the political ones, are worthy of consideration on Report Stage.
Question put and agreed to.
Sections 37 to 39, inclusive, agreed to.
SECTION 40.
Question proposed: "That section 40 stand part of the Bill".
(Cavan-Monaghan): Would the Minister explain the purpose of the section?
The section deals with the right of the lessee to continue in occupation. It provides for the re-enactment, with the drafting changes only, of section 23 of the 1958 Act. It caters for the case where the lessee does not apply for a reversionary lease until after his lease has expired or where his lease expires before his application is determined and provides that he may, in either case, hold the premises on the terms, so far as applicable, of the expired lease, subject to any recoupments or adjustments that may be made under the reversionary lease.
(Cavan-Monaghan): Does it mean that the lessee may continue in possession pending the decision of the court?
Question put and agreed to.
Sections 41 to 47, inclusive, agreed to.
SECTION 48.
I move amendment No. 41:
In page 23, to delete lines 1 to 12 and substitute:
"(a) in every case—
(i) a statement of the works proposed for making the improvement, and
(ii) an estimate, verified by an architect, surveyor or building contractor, of the cost of making the improvement, and
(b) if the improvement is development for which planning permission is required, a copy of the permission."
Under the corresponding 1931 Act provision in section 12 (1) of that Act, plans and a specification must accompany every improvement notice. The Landlord and Tenant Commission recommended that this requirement should be continued in cases where planning permission is not required for the improvement. In their recommendation concerning cases where planning approval has been obtained the commission do not mention the requirement concerning plans and a specification. Their recommendation concerning planning approval cases is that the tenant should serve, together with his improvement notice, a copy of the relevant planning approval together with, of course, the estimate of cost that must in every case be furnished. Section 48 (1) in the Bill as it stands proposes therefore that, where planning permission is required for the improvement, the tenant should serve simply a copy of the planning permission and an estimate of cost together with his improvement notice.
In paragraph 108 (2) of their first report the Commission make it clear that in their view, the copy of the planning approval that is served on the landlord should be accompanied by a copy of the estimates and plans that were submitted in order to obtain that planning approval.
The need to make this kind of provision has since been confirmed, inasmuch as that it has been ascertained that a copy of a planning permission would not normally include details such as plans or a complete statement of the works.
Under the proposals in section 48 (2) of the Bill a landlord has only one month in which to respond to an improvement notice, for example, be serving on the tenant within that month an improvement undertaking in which the landlord would himself undertake to do the work in return for an increase in rent. Accordingly, it is only reasonable that the improvement notice should show the landlord exactly what works are proposed—which is what the Landlord and Tenant Commission have actually recommended.
Amendment agreed to.
Section 48, as amended, agreed to.
SECTION 49.
Question proposed: "That section 49 stand part of the Bill".
(Cavan-Monaghan): This section deals with work that is required by a sanitary authority to be done under the Local Government (Sanitary Services) Acts 1878-1964, or by a housing authority under the Housing Act, 1966. I notice—this appears to be new—that where a notice is served on the tenant he has only three days in which to serve on the landlord a notice in writing as required in section 44 (1). Section 49 (2) says that where a work notice is served on the landlord he may within three days serve on the tenant a notice in the prescribed form undertaking to execute the work. What strikes me about those time limits is that they are very short. I fully appreciate that notices under the Sanitary Acts could be urgent and the work required to be done in a hurry but apparently if the tenant serves a notice on the landlord he must serve it, if he is going to do so at all, within three days of getting the notice. The landlord then has three days to serve another notice and if he does not do so within three days the tenant can go ahead and do the work himself and presumably charge it to the landlord.
Either the landlord or the tenant could be elderly people as very often happens. Many landlords are elderly and living on rents from houses, for instance, a widow who has got the house under the husband's will and so on. Also, very often not very good relations exist between landlord and tenant. Differences about repairs and one thing or another can lead to a breakdown in communication and result in bad will. In such a case the tenant could serve the notice and if there was no response from the landlord within three days the tenant could go ahead and get the most expensive contractor to do the work and present the landlord with a huge bill. That needs consideration.
Subsections (1) and (2) of section 49 are already in the 1931 Act and section 49 as a whole provides for the re-enactment with drafting changes only of section 13 of the 1931 Act. I appreciate what the Deputy says regarding what appears to be a very short time of three days but those three days have been there since the 1931 Act. Probably both parties know very well what is involved, what the dispute may be about, before any of them would involve the public authority and they would know the consequences of such actions, so that there might not be the apparent urgency or great need to extend that three-day period. I believe, and the parties might agree with me, that when it comes to that stage both of them are very much on guard, probably knowing well what is involved and what the consequences are. It could be a very serious matter if we extend the period to five, seven or nine days; you might make things much more difficult.
(Cavan-Monaghan): I am not so sure they would appreciate their rights and obligations.
Question put and agreed to.
Sections 52 to 54, inclusive, agreed to.
SECTION 55.
I move amendment No. 42:
In page 27, line 47, to delete "to whom the certificate is given".
This is a drafting amendment that is designed to remove a possible doubt as to the effect of subsection (3). It is possible that an improvement that is initiated by one person as tenant may be completed by another person as tenant. The second person will then be the person applying for an improvement certificate. In such a case a doubt may arise as to whether the improvement certificate is obtainable since the improvement could have been executed in part by a previous tenant. The deletion that is proposed in the amendment removes this doubt.
The improvement certificate will cover any improvement that has been fully executed and completed by the tenant. Since "tenant" is defined as "the person for the time being entitled to the occupation of a tenement..." the amendment means that an improvement certificate will be obtainable wherever improvements have been carried out in compliance with the procedure as to notice that is provided in Part IV of the Bill.
Amendment agreed to.
Section, as amended, agreed to.
SECTION 36.
Question proposed: "That section 56 stand part of the Bill."
(Cavan-Monaghan): I would like to repeat the point I made earlier in the Bill that the service of a notice claiming a new tenancy within one month is too short. This section re-enacts that time limit for a claim for compensation for improvements. Would the Minister look at that when he is considering other matters for Report Stage?
I already assured Deputy Fitzpatrick during the course of the debate on section 20 that I would have a look at this point, which he has again raised, for the Report Stage.
Question put and agreed to.
Section 57 agreed to.
SECTION 58.
Question proposed: "That section 58 stand part of the Bill."
(Cavan-Monaghan): This section is related to section 4 because this is the section that provides that where a landlord in ordinary circumstances is obliged to grant a new lease, he is excused from granting a new lease because he wants to redevelop his property, because he wants to pull down his property and rebuild it or because he wants the property to operate a scheme of development. He is excused from granting the lessee a new lease but he is obliged to compensate the lessee for disturbance and for the loss or damage he may sustain by being refused a new lease. I argued fairly strongly that, if this State were to claim for itself the right to refuse to grant a new lease because it required the property for State purposes, then the State should be obliged to pay compensation. If the State were ordered to pay compensation this section would need to be amended to provide for payment of compensation.
I have no doubt that this is the section in which the machinery should be provided for payment of compensation to a tenant of the State who is refused a new lease just because the State happens to be the landlord and because the State wants the property. I cannot argue too strongly in favour of that. The more I think about it the more merit I see in putting the State, as a landlord, in the same position as any other landlord and giving the tenant of the State or the lessee of the State the same rights to a new tenancy or to compensation in lieu of a new tenancy against the State, as a landlord, as that particular tenant or lessee would have against any other landlord.
I feel there is great merit in the proposition I have put forward. We should be moving away from the position where the State is to be treated in a preferential manner. I believe the State should not be hindered or obstructed in the discharge of its duties to the community in general. On the other hand, I do not believe that one member of the community should be penalised or should have to become a public benefactor because the State wants vacant possession of the property for the rest of the community. There is no reason why the tenant, as a citizen, should have to shoulder a heavy burden and be at a big loss just for the benefit of all his neighbours. That is not reasonable. It would be far more reasonable if the State in general and the citizens of the country in general compensated the one tenant suffering a loss on behalf of the rest. That is a more logical and reasonable approach than the old approach which just says that when one is dealing with the State one is in trouble. A very logical and very convincing argument can be made in favour of not asking an individual citizen to carry a big burden or suffer a big loss for the convenience of the community in general.
During the course of the discussion on section 4 Deputy Fitzpatrick made a very strong case more or less on the same lines as he is now making on section 58. In regard to section 4, I tried to deal with it as well as I could. In fairness to Deputy Fitzpatrick, I have to say that his argument is one which merits further examination and consideration. That will be given in relation to the argument on section 4, and also in relation to this section, for Report Stage.
Question put and agreed to.
Section 59 agreed to.
SECTION 60.
Question proposed: "That section 60 stand part of the Bill."
(Cavan-Monaghan): Will the Minister give an explanation of section 60?
This is a new provision. It is designed to give effect, with some precautions, to recommendations made by the commission in their first report. The section provides that a landlord of a tenement should, in certain circumstances and before the lease or contract of tenancy expires, be enabled to obtain from the court an order terminating the tenancy of that tenement in a building which in itself is obsolete or is situated in an obsolete area provided that he pays compensation to the tenant at a specially high level as prescribed in subsection (5). The section does not apply when a person holds either an obsolete building or a building which is situated in an obsolete area as a ground renting tenant. In this connection it may be noted that, under section 33 (1) of the Bill, if a ground landlord satisfies the court that he has development plans for which he has obtained planning permission, he may not be required to grant a reversionary lease although he will have to pay compensation to the ground rent tenant under section 59 of the Bill. Compensation, however, will be at a lower level than that prescribed in subsection (5) of this section.
The commission, in their first report, described representations that were made to them to the effect that sitting tenants who either will not give up possession except for exorbitant compensation or who cannot be induced to move at all are able to hold up development or reconstruction projects and in fact hold up the redevelopment and modernisation of cities and towns. The commission accepted that there was a problem which required attention but they concluded that the giving of a general power to terminate tenancies prematurely in order to carry out a scheme of development or reconstruction could be open to abuse. Speculators could acquire a building with a reasonable period of use or life and oust tenants who might not be adequately compensated for leaving by a money payment. The commission were satisfied that a general power of this nature should not be given but considered that a limited right to terminate a tenancy prematurely, subject to the most stringent conditions, should be given and these conditions are set out in paragraphs 216 to 222 of their report and with certain modifications such a limited right, subject to stringent conditions, as recommended by the commission is provided for in the Bill.
(Cavan-Monaghan): I understand the object of this section and as long as it is not abused it is a reasonable section. But it could be abused. I am only hoping that subsections (5) (a) and (5) (b) are strong enough to discourage a landlord from abusing it. A speculator could buy a block of property—and this is going on—consisting of five or six houses of which one or two are kept in a reasonable state by the tenants over the years; they may be residing there or carrying on a business. The landlord can deliberately let the remainder of the property become run down by not minding it himself, by letting vandals take over control and by making it a thoroughly undesirable place. In that way he can bring himself within this section and get possession of the remaining couple of bits of property, which he had his eye on when he bought the whole property, and make a very handsome profit on it. There were abuses in regard to this and for that reason we have to look at the compensation that a tenant who is going to be ejected under this section will get.
Subsection (5) says:
Where the Court awards compensation for the termination of a tenancy under this section, the measure of the compensation shall primarily be the pecuniary loss, damage or expense which the tenant sustains or incurs or will sustain or incur by reason of his quitting the tenement and which is the direct consequence of such quitting, but——
I must concede that that is fairly wide. It covers any loss that the tenant will incur as a result of quitting the premises then or in the future. But it goes on to say:
(a) such an amount as the Court considers reasonable shall be added for the pecuniary benefit accruing to the landlord which is referable to his getting possession of the tenement earlier than he was entitled to under the lease or other contract of tenancy,
or at all. He might not be entitled, except for this section, to get possession at any time because he might be obliged to give a new tenancy. That is fairly wide too.
(b) such amount as the Court considers reasonable shall be added for any further hardship which the tenant sustains through the making of the order terminating the tenancy.
The compensation provisions there are fairly wide. I take it that the Minister has been fully advised on the adequacy of those because otherwise it could lead to major scandals which none of us would want to be associated with either as legislators or otherwise. I would ask the Minister for an assurance that he is satisfied that the compensation provisions of this all-embracing section are adequate to protect the tenant.
I would like to give the Deputy a very definite assurance that I was so advised and I appreciate the fears Members would have in relation to this section. I am assured that the court has a very wide discretion on the question of compensation.
With regard to possible abuses under this section, I am satisfied that the various safeguards which are incorporated in the section are considered adequate to ensure that it can be availed of only in very rare cases where it would be in the interests of the community generally that it should be availed of and where the tenants concerned are adequately compensated. An overriding requirement which is contained in subsection (2) is that, even though all the other requirements are satisfied, the court is not to make an order terminating a tenancy unless it considers it reasonable to do so. I am satisfied that the commission are satisfied that the various safeguards which are definitely required are there.
(Cavan-Monaghan): I would just like to say that there are reasons for and against here. In certain circumstances this section is necessary because otherwise one could have a whole neighbourhood permanently disfigured just because one person is not prepared to be reasonable or not prepared to accept reasonable compensation sation. I would be against that. Indeed, one sees it very often throughout the country. But on the other hand, I would be very anxious to see that a speculator or builder or whatever who buys a block of property and who is going to oust somebody who is making a good living there would compensate that person handsomely. I accept the Minister's assurance and I believe that the section is wide enough to do that.
Question put and agreed to.
Sections 61 to 63, inclusive, agreed to.
SECTION 64.
I move amendment No. 43:
In page 32, line 14, to delete "which reserves a yearly rent".
Section 64 makes it clear that the reliefs against covenants which are given to lessees of tenements by sections 65 to 69 of the Bill extend to covenants carried over into a yearly tenancy arising on the expiration of the lease and this includes a statutory tenancy implied by holding over the premises on the expiration of the lease.
The extension of the reliefs in Part V of the Bill to statutory tenancies is, in the Bill as it stands, linked with their extension to yearly tenancies. This means a statutory tenancy on a yearly basis. A yearly tenancy can arise "by operation of law or by inference" on the expiration of a lease and the scope of the section is correctly restricted to such yearly tenancies. However, a lessee of premises that are controlled by the Rent Restrictions Acts may hold over on the expiration of his lease whether or not that lease was on a yearly basis. It is to be noted that "lease" as defined in section 3 (1) of the Bill simply indicates a contract of tenancy in writing and is not restricted to cases where that tenancy is for a term of years. Accordingly, a statutory tenancy on less than a yearly basis may follow on the expiration of a lease.
Furthermore, a statutory tenant may be bound by the covenants in the expired lease—section 32 (1) of the Rent Restrictions Act, 1960—whether or not that lease was on a yearly basis and, therefore, it is reasonable to provide that it should have the same reliefs against covenants as are being given to nonstatutory yearly tenants who are also bound by the covenants in an expired lease. Accordingly, the amendment proposes to extend the benefit of Part V of the Bill to statutory tenants who hold over on the expiration of the lease whether or not that lease was on a yearly basis.
Amendment agreed to.
Section 64, as amended, agreed to.
Section 65 agreed to.
SECTION 66.
Question proposed: "That section 66 stand part of the Bill".
(Cavan-Monaghan): There are no changes?
There are no changes. It provides for the re-enactment of drafting changes only of section 56 of the 1931 Act.
Question put and agreed to.
Sections 67 to 69, inclusive, agreed to.
SECTION 70.
Question proposed: "That section 70 stand part of the Bill".
(Cavan-Monaghan): Will the Minister tell the House what is involved here?
This is a new provision that is designed to modify the application of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, for ground rent tenants of dwelling-houses whose landlord is a State authority defined in section 3 (1) of the Bill. The Commissioners of Irish Lights or a harbour authority shall have the right to acquire the fee simple except where the State authority concerned—or in the case of the Commissioners of Irish Lights or a harbour authority the Minister for Tourism and Transport—is satisfied that acquisition of the fee simple would not be in the public interest and so certifies. It limits the application of sections 4 and 16 (2) (d) and (e) of the 1978 (No. 2) Act in so far as the acquisition of the fee simple of a dwelling-house is concerned.
Section 4 of the No. 2 Act exempts the State authority as landlord from the provisions of that Act. Section 16 (2) (d) and (e) of the same Act excludes the right to acquire the fee simple in the case of leases made by the Commissioners of Irish Lights or by harbour authorities. The exclusion in section 16 (2) (d) and (e) of the No. 2 Act applies only where the Commissioner or a harbour authority are the immediate ground landlord. However, the exemption of the State under section 4 of that Act applies wherever the State would be a party to any conveyance of the fee simple, whether as ground landlord or as superior landlord.
(Cavan-Monaghan): In a nutshell, this is modifying the provisions of the Bill which exempts the State as landlord. It is modifying it only in favour of other State or semi-State bodies.
(Cavan-Monaghan): I know that the Minister can certify that it is not in the public interest and then the section does not apply. I think it somewhat strengthens my argument in favour of giving the lessee of the State a fairer deal.
Question put and agreed to.
NEW SECTION.
I move amendment No. 44:
In page 34, before section 71, to insert a new section as follows:
"Condition 5 in section 10 of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, is hereby amended by the deletion of `expired or was surrendered before the 31st day of March, 1931 and that it', and the said condition 5 as so amended is set out in the Table to this section.
TABLE
5. that the lease was granted, either at the time of the expiration or surrender of a previous lease or subsequent to such expiration or surrender—
(a) at a rent less than the rateable valuation of the property at the date of the grant of the lease, or
(b) to the person entitled to the lessee's interest under the previous lease,
provided that the previous lease would have been a lease to which this Part would have applied had this Act then been in force and provided that it shall be presumed, until the contrary is proved, that the person to whom the lease was granted was so entitled;"
The Landlord and Tenants (Ground Rents) (No. 2) Act, 1978, extends the right to acquire the fee simple to new classes of ground rent lessees and yearly tenants. The purpose of this amendment is to extend that right to a further new category of such lessees which has only recently come to notice. The Landlord and Tenant Commission have been consulted in relation to this matter and they recommended amendment of condition 5 of section 10 of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, so as to extend recognition to this new class of ground rent lessee.
The background to the amendment is as follows. The restriction of the scope of condition 5, of section 10 to cases where the previous lease expired or was surrendered before 31 March 1931 originated in section 50 (1) of the 1931 Act. That section which was repealed by the 1958 Reversionary Leases Act provided that where a lease reversionary to a building lease had been granted before 1931 there should be no further entitlement to a further reversionary lease. The reason for this provision appears to have been that such reversionary leases granted before 1931 had in cases been assigned on the basis that they were merely occupational leases and that such assignees had no claim to be treated as building lessees.
Nevertheless, the requirement stands that the original lease should have ended before 1931. In the new category of lease with which the amendment is concerned, what is in question is the renewal of a lease that expired after 1931. In the category in question the expired lease would have been a ground rent lease, that is, it would have come within Part II of the 1978 No. 2 Ground Rents Act. The renewal of that lease may not taken by itself similarly come within Part II of the 1978 Act. However, if the requirements of condition 5 of section 10 of that Act were met other than the requirement concerning the date of expiration of the previous lease, that renewal is clearly a continuation of a ground rent lease and the lessee should as clearly have rights of purchase and of renewal as a ground rent lessee. That is the view taken by the Landlord and Tenant Commission and that is what is proposed in the amendment.
(Cavan-Monaghan): Were all the leases which we are dealing with under this amendment originally building leases? Were they building leases at one time? When I say “originally building leases” I mean were they leases which started off by being building leases and then perhaps were renewed and then expired?
Only because renewal was got after 1931.
(Cavan-Monaghan): They must at one time have come within the definition of building leases.
The original lease might have come within the No. 2 Act but the renewal of that lease might not come within the No. 2 Act.
(Cavan-Monaghan): Because it expired after 1931?
That is quite right, because the previous lease expired after 1931.
(Cavan-Monaghan): Are the people who would get the benefit of this now tenants in occupation?
In the cases that came to our notice the answer is yes.
(Cavan-Monaghan): Could they be otherwise?
We do not know really. They are there at the moment.
(Cavan-Monaghan): It is a highly technical and complicated amendment.
When we got it we sent it to the commission because of the technicality of it.
(Cavan-Monaghan): Apparently for some reason or other the provision that the lease must have expired before 1931 was carried over into Act after Act and leases which expired after 1931 did not get the benefit of any other subsequent amendment.
Amendment agreed to.
NEW SECTION.
I move amendment No. 45:
In page 34, before section 71, to insert a new section as follows:
"Condition 7 in section 10 of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, and section 12 of that Act shall extend to a lease made for a term of less than fifty years if
(a) the lease is a sublease (whether mediate or immediate) under a lease (in this section referred to as the superior lease) to which Part II of that Act applies,
(b) the land demised by the lease is the whole or part of the land comprised in the superior lease, and
(c) the lease is made for a term which equals or exceeds the lesser of the following periods, namely twenty years or two-thirds of the term of the superior lease, and in any case expires at the same time as or not more than fifteen years before the expiration of the superior lease,
and the other requirements of the condition are fulfilled.".
The purpose of this amendment is to give a right of purchase under Part II of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978 to an additional category of ground rent lessees, that is, the holders of other classes of ground rent leases with terms of from 20 to 50 years. The need for the amendment arises from the circumstance that not all leases that would be proprietory leases under the Landlord and Tenant (Reversionary Leases) Act, 1958 attract the right to acquire the fee simple under the 1978 Act. In particular a proprietory lessee would not have the right to acquire the fee simple under the 1978 No. 2 Act unless the lease under which he holds was for a term of not less than 50 years. The reason for this is that the No. 2 Act, in abandoning the extremely complicated concept of building and proprietory leases, adopted instead a list of the types of leases known to establish a ground rents relationship. The essential requirement of such leases is that the tenant should own the bricks and mortar interest while the list comprises other elements which could go on to establish this.
One element affecting the particular category of lease in question, which is covered by condition 7 of section 10 of the 1978 No. 2 Act, is that the lease should be for a minimum term of 50 years, this being taken to be the minimum period that anybody acquiring a bricks and mortar interest would be likely to accept in the category of lease in question. Nevertheless, the existence of proprietory leases for terms of less than 50 years has now been established. The Landlord and Tenant Commission, who were consulted in the matter, have recommended that the lessees in question should be given rights under the 1978 No. 2 Act. The amendment accordingly proposes that a lease should not be excluded from the scope of condition 7 of section 10 of the 1978 No. 2 Act by reason only of the terms of the lease being less than 50 years provided it complies with the other requirements of the category of lease in question. These requirements, which are set out in section 7 of the 1958 Reversionary Leases Act, are included in the proposed amendment.
(Cavan-Monaghan): Could the Minister give any idea of how many cases would fall under this amendment?
We know of only one. When we got it we felt obliged to refer it to the commission and they dealt with it.
(Cavan-Monaghan): I suppose there is no reason in the world why one person should be victimised or should fall outside the intention of the Act in general. I do not want to be misunderstood. I am not suggesting any improper motives, but one is always fearful when an amendment of an Act is made just to facilitate one person. I did not know that only one person was involved; I just asked that question. In a country as small as this one is fearful of amendments being made to meet one person. One is fearful lest it would lead to abuse.
I appreciate fully what the Deputy is saying. I am advised now that the one case was a person who communicated directly with the Department and who has a small terraced house in a village in the south of Ireland, in County Cork.
(Cavan-Monaghan): The result of the amendment will be to give that person the right to purchase the fee simple under one of the Acts of 1977?
That is right. I fully appreciate the Deputy's point.
(Cavan-Monaghan): In a country the size of Ireland where so many people know each other and where so many political and other pressures can be brought to bear, as a general principle, one would have to be very careful.
I fully appreciate the Deputy's point although it really has nothing to do with this section. During the course of legislation dealing with the landlord we met quite a number of people who had problems. During the course of the Landlord (No. 2) Bill a group from Cappoquin and people from the midlands had problems which only came to light as discussion progressed, and we tried to cater for them. I appreciate the pressures that could be on any Minister for an amendment if it were wrongly motivated.
(Cavan-Monaghan): This forcefully demonstrates in what a piecemeal manner the Minister is implementing the manifesto even according to his own interpretation.
Can we come back to the amendment?
(Cavan-Monaghan): It would have been much better had the Minister abolished ground rents as he told the people he would do. The Minister would have been honoured his promise and would not be coming in this mickey mouse way with one solitary case per section.
If we had done that we would never have known that this case existed.
Amendment agreed to.
NEW SECTION.
I move amendment No. 46:
In page 34, before section 71, to insert a new section as follows:
A person entitled to an interest in land the title to which interest originated under a lease for lives renewable forever which was created prior to the 1st day of August, 1849, and was not converted into a fee farm grant under the Renewable Leasehold Conversion Act, 1849, shall from the commencement of this Act hold the land for an estate in fee simple. The said estate shall be deemed to be a graft upon the previous interest and shall be subject to any rights or equities arising from its being such graft.".
The purpose of this amendment is to regularise the position concerning certain interests in land which originated prior to the passing of the Renewable Leasehold Conversion Act, 1849. A common method of leasing property in Ireland up to the middle of the 19th century was the creation of a lease for the term of the duration of the life or lives of usually three named persons subject to a rent and convenants including a covenant by the lessor for the perpetual renewal of the lease for further lives. The Renewable Leasehold Conversion Act of 1849 declared that any further such leases should operate as a fee farm grant of the fee simple. It also gave to persons then holding under such a lease the right to obtain a fee farm grant in lieu of the lease.
While many such leases were converted in accordance with the Act it appears that a number were not converted. The lessees under such leases have continued in possession and in many cases have continued to pay rent on the expiry of the terms of their leases. Their interest may have become that of yearly tenants with a right to obtain a renewal or conversion grant. A yearly tenancy is not registerable in any of the registers of the Land Registry and although the persons in question have complete security of possession their titles may not be readily marketable as they may not be acceptable to lending institutions or to purchasers who may be depending on such institutions to finance the purchase because of the prospect of the costs involved in renewal proceedings. The only course of action open to such a person at present would be to require the owners of the lessors' interest to execute a deed of grant or petition the court. Either course could be expensive and prolonged.
The amendment seeks to regularise this position by putting the parties to the lease on the same footing as if the lease had been converted under the Act of 1849. It concerns only a lessee who has continued in possession without either conversion or renewal of his lease. Such a person has an interest in the land and not an estate. The new fee simple is deemed to be a graft on the previous interest and to be subject to any rights or equities arising from its being such a graft. This means that the fee simple is subject to the rents and the covenants in the previous lease in the same manner as if the conversion had been effected under the Act of 1849.
(Cavan-Monaghan): The rents will continue?
(Cavan-Monaghan): There are a great many of these unconverted leases for lives but I was under the impression that they were accepted as fee simple. The unconverted lease for life interest has been accepted as a fee simple interest over the years.
The problem arises in the Land Registry where they could not be registered as fee simple.
(Cavan-Monaghan): I did not know that they got as far as the Land Registry. In conveyancing practice this sort of title has been accepted as a fee farm grant. Would the Minister confirm or deny this?
I am advised that some people have accepted that that is so but we are trying to clear it up.
(Cavan-Monaghan): When the Minister says that they will be treated as fee simple am I correct in thinking that he really means that they will be treated as a fee farm grant and that a rent that was charged in the last lease for life will continue to be payable?
It will not be quite a fee farm grant. It will be subject to a graft of the previous interest.
(Cavan-Monaghan): Yes, and subject to the rent?
(Cavan-Monaghan): As time went on the Minister found that it was not as easy to abolish ground rents as was thought.
Amendment agreed to.
NEW SECTION.
I move amendment No. 47:
In page 34, before section 71, to insert a new section as follows:
"(1) This section applies to a house which was erected by a public utility society within the meaning of section 2 (1) of the Housing Act, 1966, and in relation to which erection a grant was made under the Housing (Financial and Miscellaneous Provisions) Acts, 1932 to 1962, and there is a subsisting undertaking, given by the public utility society in consideration of the grant, that the house would not be sold.
(2) The Minister for the Environment (in this section referred to as the Minister) may grant his consent to the sale of a house to which this section applies.
(3) Where the Minister grants his consent to the sale of a house to which this section applies, then, notwithstanding any undertaking of the kind described in subsection (1) or any limitation which may apply by virtue of section 121 of the Housing Act, 1966, the house may be sold and the sale shall operate to vest the premises in the purchaser freed and discharged from any such undertaking.
(4) The Minister may, in relation to the sale of a house to which this section applies which was effected prior to the commencement of this section, grant his consent to such sale and where the Minister so grants his consent the fact that the sale was effected prior to the commencement of this section shall not affect and shall be deemed never to have affected the validity of the sale and such sale shall be deemed for all purposes to have been effected in accordance with subsection (3).
(5) In this section, `grant', in relation to a house, means a grant of land as a site for such house or a grant of money in respect of such house or a grant made partly in one such way and partly in the other such way.".
Grants were paid under the Housing (Financial and Miscellaneous Provisions) Acts, 1932 to 1962, to a small number of public utility societies in respect of the erection of houses for letting. The grants, generally known as "public utility society letting grants", were paid subject to a statutory condition that an undertaking would be given by the recipient society that the houses would not be sold but would be let on a monthly or lesser tenancy to persons of the working classes or agricultural labourers. The tenants of the houses in question are, therefore, precluded from purchasing the landlord's rights in their houses even where the landlord is willing to sell. The general purpose of the amendment is to remove this disability and to bring the rights of the tenants in question more into line with the rights enjoyed by occupational tenants generally.
Subsection (1) defines the houses to which the section applies. The houses in question are houses which were erected by public utility societies and in relation to which erection a grant was paid under the Housing (Financial and Miscellaneous Provisions) Acts, 1932 to 1962, and there is a subsisting undertaking, given by the society in consideration of the grant, that the houses would not be sold.
Public utility society letting grants were paid under section 5 (1) (i) of the Housing (Financial and Miscellaneous Provisions) Act, 1932 and section 20 of the Housing (Amendment) Act, 1948. The purpose of the grants was to promote the provision of houses for letting to members of the working classes and agricultural labourers as a supplement to the then limited provision of houses for letting by local authorities. The grants were on foot of an undertaking given by societies that the houses would not be sold but would be let.
Similar grants were paid to individual landlords but the law enabled undertakings given by individual landlords to expire after 15 years. There was no similar provision in relation to public utility societies. High Court proceedings are pending in certain cases as to whether or not undertakings given by a public utility society in Cork in conjunction with the making of grants under section 20 of the 1948 Act are still operative. For this reason, the subsection is deliberately expressed to apply only to those houses in relation to which an undertaking still subsists, so as to avoid conflict with or in any way prejudging the court proceedings.
Subsection (2) provides that the Minister for the Environment may grant his consent to the sale of a house to which the section applies. The reason for requiring the consent of the Minister for the Environment as opposed to giving the landlords a free hand as to the disposal of the houses is to provide some safeguards for tenants. The conferral of complete freedom to sell on the landlords might be too sudden and too adverse a change in the situation of the tenants. It is envisaged that the consent of the Minister would not be unreasonably withheld and that consent would certainly be granted in all cases of agreement to a sale between the landlord and all the tenants in a particular development.
Subsection (3) provides that where the Minister for the Environment grants his consent under subsection (2) to the sale of a house, the undertaking given by the society that the house would not be sold will be discharged and the house may be sold. The purpose of the subsection is to enable clear title to be transferred to the purchaser. The Housing (Financial and Miscellaneous Provisions) Act, 1932 was repealed by the Housing Act, 1966. Section 121 of the 1966 Act continued in operation any undertakings given under the repealed Act. Section 20 of the 1948 Act was repealed by the Housing (Loans and Grants) Act, 1962, but the 1962 Act did not contain a provision similar to section 121 of the 1966 Act.
Subsection (4) is included to validate, where necessary, sales which may have been effected in breach of an undertaking given to the Minister. A doubt exists as to whether or not undertakings given in relation to certain houses are still operative. Some of the houses in relation to which letting grants were paid have been sold by the landlords to the tenants in recent years. The purpose of the subsection is to validate any such sales where such validation is necessary so as to remove doubts as to purchasers' title to the property.
Subsection (5) defines the term "grant" to mean a grant of money or land or both.
(Cavan-Monaghan): How many houses are involved?
At the very most there are 63 houses and only two public utility societies involved.
(Cavan-Monaghan): Are the houses owned by the public utility societies?
(Cavan-Monaghan): They are precluded from selling to the tenants?
(Cavan-Monaghan): The real purpose of this section is to put tenants of public utility societies in the same position as tenants of local authorities.
(Cavan-Monaghan): Must the Minister for the Environment make an order in respect of each house?
It does not appear to be necessary that he should make an order for each house.
(Cavan-Monaghan): It is stated that the Minister for the Environment may grant his consent to the sale of a house.
The giving of consent, is a decision and may not have to be an order. Certainly the Minister must give his consent to the sale of a house.
(Cavan-Monaghan): The country is literally studded with these public utility societies, all of them having authority to build houses for letting but only two of these societies have exercised that right. The rest of them operate for a variety of reasons with a variety of objects in view, such as doing secretarial work for people looking for grants.
Amendment agreed to.
Section 71 agreed to.
SECTION 72.
Question proposed: "That section 72 stand part of the Bill".
(Cavan-Monaghan): Was this not the position before?
No, this is a new provision in so far as it concerns the Acts of 1931 and 1958. The parliamentary draftsman has advised that under existing law on the death of a person his personal representative may act in all matters consequential on a claim under this legislation which is outstanding at that time. The section puts it beyond doubt that a successor in title is similarly entitled to so act.
(Cavan-Monaghan): I would have thought that was the case and that a personal representative could act.
Question put and agreed to.
SECTION 73.
Question proposed: "That section 73 stand part of the Bill".
(Cavan-Monaghan): Perhaps the Minister would explain what is involved.
Section 73 proposes the re-enactment with drafting changes of section 20 and 21 of the Act of 1958 and also proposes to extend the scope of those provisions to leases or tenancies coming under any part of this Act.
Regarding tenancy of a tenement as defined in section 5(1) of the Bill, the proposals replace the provisions in section 34 of the 1931 Act which are concerned with the same kind of situation as this section. Sections 20 and 21 of the 1958 Act provide for the continuation of the building and proprietary leases in cases where the immediate lessor's interest is terminated for some reason before its normal expiration and where in consequence but for these provisions in the 1958 Act such leases would themselves be terminated. These provisions ensure that building and proprietary leases remain undisturbed even where the lessor's interest is terminated and that rights of renewal and so on are preserved.
Section 73 of the Bill makes the same kind of provision for leases and tenancies to which any of the provisions of the Bill may apply, that is, to any tenancy of a tenement and to any lease that attracts the right to a reversionary lease under Part III of the Bill.
Question put and agreed to.
Sections 74 and 75 agreed to.
SECTION 76.
Question proposed: "That section 76 stand part of the Bill".
(Cavan-Monaghan): Is this section ever availed of?
Question put and agreed to.
Section 77 agreed to.
SECTION 78.
Question proposed: "That section 78 stand part of the Bill."
(Cavan-Monaghan): We discussed this in conjunction with an earlier section and I put it forward as a reason why the Minister should extend the time in that earlier section to three months. The Minister gave an undertaking to look into the matter?
Question put and agreed to.
Section 79 to 81, inclusive, agreed to.
SECTION 82.
Question proposed: "That section 82 stand part of the Bill."
(Cavan-Monaghan): Will the Minister outline the provisions of this section?
It is the re-enactment of section 61 of the 1931 Act.
(Cavan-Monaghan): I should like to know if some new sections were inserted at this point in the Seanad.
Question put and agreed to.
SECTION 83.
Question proposed: "That section 83 stand part of the Bill."
(Cavan-Monaghan): Subsection (2) of this section states:
(2) Any notice or other document required or authorised by this Act to be served by a lessee on his lessor may be so served by sending it by registered post addressed to the person to whom the lessee pays the rent of the premises to which the notice or document relates at the place at or to which he pays or sends the rent.
I am advised that the method described in the section is not therefore mandatory and, presumably, other methods are open. It has been submitted to me that it would be more satisfactory to stipulate other methods such as personal service on the lessor or lessee or by delivery to the residence of a lessor or lessee or premises at which the rent is paid. All the section does is to state that the notice may be served by registered post. It regularises that method of service of a notice but leaves all other methods open?
(Cavan-Monaghan): In that case it is valueless. It is a boneless section, one which does not have any force.
I am advised that if for any reason a person wants to effect service of notice he can do so in any way he wishes. If he is not sure that the person is at home and serves is by registered post, he is assured that that person will get it. If a difficulty arose by reason of a landlord trying to avoid receiving any communication delivery by registered mail would pin him down.
(Cavan-Monaghan): I accept the Minister's explanation. It regularises one method of service.
Question put and agreed to.
Schedule agreed to.
TITLE.
I move amendment No. 48:
In page 5, lines 10 and 11, to delete "THE LANDLORD AND TENANT ACTS, 1931 TO 1978" and substitute "THE LAW OF LANDLORD AND TENANT AND TO PROVIDE FOR OTHER MATTERS CONNECTED WITH THE MATTERS AFORESAID".
The need for this official amendment arose from official amendments Nos. 46 and 47, assuming those amendments were accepted. Acceptance of official amendments Nos. 46 and 47 involved the insertion of new sections into the Bill dealing respectively with the position of persons who hold under leases for lives that may have lapsed and with the sale of houses for which letting grants were paid to public utility societies. While both of these new sections are within the ambit of landlord and tenant law, they do not relate to provisions that are at present contained in the Landlord and Tenant Acts, 1931 to 1978. Accordingly, the Title of the Bill as it stands is not quite wide enough in scope to cover the provisions of the Bill as thus amended. The substitution of a reference to "the Law of Landlord and Tenant" for "the Landlord and Tenant Acts, 1931 to 1978" overcomes the difficulty. The substituted portion of the Title is on the general lines of the corresponding portions of the titles of certain other Landlord and Tenant Acts—the 1967 Ground Rents Act, the 1971 Amendment Act and the 1978 No. 2 Act.
(Cavan-Monaghan): It is really an amendment of the Long Title to make it wide enough to cover such things as the amendment of the Renewable Leasehold Conversion Act, 1848?
Amendment agreed to.
Title, as amended, agreed to.
Bill is reported with amendments. Pursuant to Standing Order 95(3), I have to report specially to the Dáil that the Committee has amended the Title to read as follows:
An Act to amend the law relating to the renewal of leases and tenancies and to compensation for improvements and for disturbance or loss of title and for these and other purposes to amend the law of landlord and tenant and to provide for other matters connected with the matters aforesaid.
When is it proposed to take Report Stage?
(Cavan-Monaghan): This is a long Bill and during the course of the debate the Minister conceded that we put forward a number of points of substance in relation to a number of sections. As the Minister undertook to look into those points before Report Stage I suggest that a reasonable period of time should elapse between now and Report Stage and that the Minister, through his Secretary, notify me as to whether he proposes to take any action in relation to the points I raised. Otherwise, I will be tabling amendments.
I appreciate that we will need some time to give the matters of substance referred to by the Deputy the consideration they deserve. It could be a number of weeks but I should like to assure the Deputy that Report Stage will not take him by surprise. That would be unfair and wrong. We will have to consider the matters raised by the Deputy. If we can meet these points, we shall let the Deputy know; but we shall let him know, too, if it is not possible to meet them in order to give him the opportunity of putting down amendments.
Report Stage ordered for Tuesday, 25 March 1980.
