Landlord and Tenant (Ground Rents) (Amendment) Bill, 1983: Second Stage.

Minister for Justice (Mr. Noonan,

Limerick East): I move: “That the Bill be now read a Second Time.”

The purpose of the Bill is to extend, for a period of 12 months and subject to an increase in the fees, the special ground rent purchase scheme that is provided by Part III of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, and that would otherwise expire on 31 July next.

This scheme was introduced for the benefit of ground rent tenants of dwelling houses who wish to buy out their ground rents. The declared purpose of the scheme was to bring about the abolition by purchase of existing ground rents on dwelling houses following the enactment of legislation, earlier in the same year, which in effect prevented the creation of any new ground rents of that kind.

Under the scheme the Land Registry does the legal work involved — up to the present for merely nominal fees. The scheme was given a life of five years from its introduction on 1 August 1978 and this was written into the Act. That period of five years is now almost spent and up to the present purchases under the scheme total approximately 22,000. While no one knows just how many ground rents on dwelling houses existed at the time the creation of new rents was stopped, a tentative estimate at that time suggested that there might have been as many as ten times that number of purchases under the scheme.

Why a bigger proportion of houseowners did not avail themselves of the scheme is largely a matter for conjecture. The surge of applications which the Land Registry are getting in recent weeks suggests that many people just put the matter on the long finger. I am also aware that many householders are perfectly happy to hold their homes under long leases and see no advantage in purchasing the fee simple. Nevertheless, there may be a third and still more important reason. I think it is beyond doubt that one of the main reasons why the response to the 1978 No. 2 Act purchase scheme was not greater has been the public campaign to induce ground rent tenants of dwelling houses neither to pay their ground rents nor to buy out the ground landlord. One effect of that campaign seems to have been to create a not-too-clearly formulated expectation, or hope, that houseowners would have their ground rents abolished for them without their having to buy out. At least this has had the effect of encouraging people to delay their applications. Some months ago I drew attention to the pending termination of the special purchase scheme and I was careful to say nothing to encourage belief that any such hope or expectation could be fulfilled.

Let me again make plain what has been made plain many times already: if existing ground rents on dwelling houses are to be abolished, either the ground landlord's property must be confiscated, or he must be bought out. The Government will not initiate any move towards confiscation: I will deal later on with the reason. Accordingly, abolition implies purchase and, unless public funds are to foot the bill, the purchaser must be the ground rent tenant himself. I do not think that it can seriously be suggested that the purchase money should come from public funds and this point, I should add, is not simply a reflection of current efforts to curtail public expenditure. It would be equally valid in more normal times and equally difficult to justify spending taxpayers' money on such a service rather than on other more pressing social needs. This leaves it up to the ground rent tenant. Nevertheless, these plain issues have been obfuscated and it seems to me that this must be partly to blame for the fact that up to now, at almost the last moment, we have intending purchasers queueing up in the Land Registry.

What I have said is one of the reasons for introducing this Bill: that is, to give a further opportunity and encouragement to those who genuinely intend to abolish ground rent on their dwelling houses but who for one reason or another have so far failed to take effective action. The following consideration also has a bearing. It was reasonable to foresee, when some time ago I drew the public's attention to the pending termination of the present Land Registry scheme, that a rush of purchase applications would ensue, as indeed it has. Properly made applications received before 31 July will of course be dealt with and one consequence of this is that the Land Registry staff must continue to be employed in processing the inevitable arrears after the termination date. If the arrears turn out to be substantial, that employment may have to continue for a matter of months so that there might be little enough actual saving if the scheme were to be allowed to end on 31 July, as against proposing some extension. This brings up consideration of the financial aspect of the matter.

The fees that are payable under the scheme are set out both in the 1978 No. 2 Act itself and also in Regulations made under the Act. The Act itself prescribes in section 23 the fees that are payable by a purchaser who is in occupation of the relevant dwellinghouse, that is by an owner-occupier. The regulations prescribe the fees for non-owner-occupiers. The fees were purposely fixed at what, even in the year 1978, were little more than nominal levels. For an owner-occupier the fee is £5 in a "consent" case, with an additional fee of £12 if the case has to go to arbitration. For non-owner-occupiers the corresponding fees are £10 and £20. These fees do not cover the cost of providing the scheme. They cover just about one-third of that cost. Accordingly, the fees had to be looked at when the question arose of providing for some extension of the 1978 purchase scheme. Any extension of the scheme at the present level of fees must clearly be ruled out, if only because changes in money values since 1978 would call for an updating.

It was never the intention that the subsidy involved in this scheme should continue for longer than five years. Indeed, there was originally no intention that the purchase scheme itself should be continued in any form for longer than five years. If the scheme is to be continued at all, the fees must be pitched at a level that, at least in regard to new applications, matches costs. This implies revised fees for owner-occupiers of £15 on consent and £36 on arbitration as section 2 of the Bill proposes. Other fees under the scheme, such as for non-owner-occupiers will, it is proposed, be increased correspondingly in regulations. However, because of the anticipated carry-over in the Land Registry beyond 31 July next of purchase applications made at the present nominal fees, it appears to be inevitable that public funds must continue to bear a part of the cost involved, despite these new fees, perhaps until near the end of 1983 or even later.

The circumstance that purchase applications made after 31 July will be substantially self-financing may perhaps be taken to raise the inference that the scheme will be continued indefinitely on that basis and that the present proposals are to be either the first among successive extensions or the forerunner of a permanent extension. Any such inference would not be correct. While I do not rule out consideration of changes in the future, I should point out that other factors have a bearing. In the first place the 1978 scheme was explicitly introduced to bring about the abolition by purchase of ground rents on dwellinghouses. It may or may not substantially bring about that abolition during the period of extension that is proposed. Whether it does or does not, however, the very origin of the scheme would argue against its permanence rather than for it.

In the second place the size of the public sector is already a matter for national concern and the need to control and where possible reduce numbers in the public service again argues against a further permanent purchase scheme beyond the 1967 Act scheme even if it is self-financing. In the third place, any proposal for a permanent Land Registry scheme would involve re-examination of the 1978 scheme on a fundamental basis: its strengths, its weaknesses if any, the changes that might be made. Indeed, I am aware of calls for specific changes in the scheme which would have to be considered if there were any question of having an indefinite scheme. All in all, those who have any serious intention of buying out the ground rent on their dwellinghouses would be well advised not to count on further legislation beyond the Bill now before the House.

It may be well for me to mention that the right to buy out ground rent is something quite distinct from the operation of the purchase scheme we are discussing. That right was originally given by the 1967 Ground Rents Act and, while it has since been extended to cover various new classes of ground rent tenants that were identified from time to time, the purchase scheme provided by the 1967 Act stands and survives the expiration both of the present Land Registry scheme and also of its extension that this Bill proposes. Of course, under the 1967 Act scheme the purchaser is liable for all the legal costs, provided they are reasonable and necessary, including the ground landlord's legal costs. Viewed against that option, the proposals in the Bill might still be taken to represent a bargain for houseowners who wish to abolish their ground rents.

I have already said that the Government will not initiate confiscation. In fairly recent times the organisers of the ground rents campaign appear to have come round to admitting that what they were seeking — that is, abolition of ground rent without compensation to the ground landlord — did indeed amount to confiscation and would indeed be unconstitutional. They now call for a referendum on a proposal for a constitutional amendment to enable that kind of abolition to be secured by legislation. This brings me to the final matter I wish to mention: that demand cannot be conceded. The Government cannot concede it, the previous Government could not concede it. It would be wrong in principle to concede it. It is not simply a question of a constitutional obstacle to be overcome. It would raise a question of the security of houseowners themselves in the possession of their own properties, were it once conceded that the law could deprive one class of citizens — ground landlords — of their property and hand it over to others. It would be wrong in principle, and I leave it at that.

I commend the Bill to the House. I ask that it be given a Second Reading.

Dr. Woods

The purpose of this Bill is to extend the special purchase scheme which Fianna Fáil introduced in 1978 for dwelling houses for a further year and to increase the charges three-fold, as the Minister has told us here this afternoon. Indeed, I was taken by the whole orientation of the Minister's speech and I was somewhat disappointed in it in that a great deal of what he said was about the onus on the householders and the responsibility of the householders. There is also an onus and responsibility on the landowner and those who exercise rights under land ownership. Indeed, it was to facilitate the householders that a scheme was introduced in the first instance. Let us be quite clear about that. It was introduced to facilitate householders and for this reason this would have a bearing on some of the other steps which might be taken at this stage. The vesting of the fee simple in dwelling houses is provided for in Part III of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978. All the Minister is doing here is extending this section of the Act for just one further year.

The Minister has given us all sorts of reasons why he should not allow tenants and householders to be led astray by thinking that the scheme might be there for little longer than a year. Why should we say that to householders? The Minister has said that he tried to press people into taking advantage of the scheme up to this date, now up to the expiry of the first five years. I appreciate that he wanted to encourage as many as possible, as all of us would, to purchase under the existing scheme if they can get reasonable agreements from the landlords. Part of the difficulty that has arisen is in relation to landlords who will not make reasonable agreements. You may say that we have arbitration to sort out what is a reasonable agreement, but that is a different situation. Landlords have come forward and made settlements of three, four, five and six times the value of the ground rent. There are also landlords who say that they want the ultimate pound of flesh and are not prepared to move unless the matter goes to arbitration. It is not quite as simple as it may have sounded in the Minister's speech. Co-operation from landlords in a practicable commercial way was not always forthcoming. I know of cases where people have appealed to the landlords who are fairly well at a distance from the situation. The people who ultimately control the ground rent are not really interested in even responding to correspondence from individuals. Therefore, it is not all on the side of the householder.

The 1967 Act gave the right to purchase freehold. This was a very important development. The 1978 Act then abolished all future ground rents on dwelling houses. This was a major step, a major improvement. Mind you, the sky did not fall in since then. We have had the full term since 1978 up to this time. Before that happened all sorts of dire consequences would follow. Houses would escalate in price and people would not be able to buy them. All sorts of things were suggested. They are gone because people wanted them to go, quite rightly, and, of course, house prices settled down to the market price, which is the price that even the Minister himself and his Government use when they come to determine the residential property tax. Therefore, first and foremost, in 1978 all future ground rents on dwelling houses were abolished and they are gone.

Another important step taken at that time was the removal of the right of the landlord to evict for non-payment and take possession of the house. There was great argument about that before it went also, but that went in the 1978 Act and again the sky did not fall. That major step had very important consequences for the householders. The third major development in that Act was the introduction of a simple non-expensive purchase scheme to facilitate the buying out without the very heavy legal fees which were current at the time. The Minister has made quite clear that the charge which was introduced at that time as part of that Act was a nominal charge for merely nominal fees. The scheme was purposely based on a nominal fee and we contend it should still be based on a nominal fee. That was the principle under which the scheme was introduced.

We now have the experience of the original scheme and we know a good deal more about it. We have advanced considerably. I was aware of the situation in 1976 and 1977 and the arguments which took place at that time. These arguments have all been passed by because this House was prepared to take action in a case which it believed was genuine. We now have an opportunity to revise the 1978 Act, but what is the Minister doing? He is discouraging householders from purchasing by trebling the legal fees. I know in the short term he will be giving some encouragement by saying there could be a higher fee from 1 July on the expiry of this scheme. However, trebling legal fees is a positive discouragement to purchase. That is totally against the principle on which the 1978 Act was introduced and against the principle for which we stand in relation to ground rents. We should be encouraging the buying out of ground rents. There is no constitutional problem in relation to trebling the fees. That is something which will affect everyone immediately when the Bill goes through and the new scheme is introduced. I am afraid it will have a very serious impact on the purchase of ground rents. The Minister cannot claim that the Constitution is pushing him in that direction. He should be committed to the principle of removing as early as possible the ground rents which exist at present. We are talking about people who have been paying ground rent for 20 or 30 years and perhaps whose families have been paying it for 100 years. These people should be encouraged and assisted to purchase their ground rent outright.

The Minister is also indicating his displeasure and lack of support for the scheme, which admittedly was introduced by Fianna Fáil, by extending it for only one year. It may well be that he wants to encourage people to avail of the opportunity to purchase within the next year, but when a new scheme like this is introduced it takes time to get off the ground. For that reason I am not too discouraged by the numbers of people who applied to purchase their ground rent. I asked a parliamentary question on 23 March 1983 about the number of people who wished to purchase ground rent. In the year ended 31 July 1979, there were 3,090 applications lodged from people who wished to take the opportunity to gain freehold; in the year ended 31 July 1980 there were 5,181 applications; in 1981 there were 5,838 applications and in 1982 there were 6,128 applications. In the seven months to 28 February 1983 there were 4,174 applications. If we judged that on an equivalent of 12 months there would be 7,158 applications.

Undoubtedly, that figure will increase because of the scheme coming to an end. However, even taking it as running at the same rate and without any increase, a total of 27,395 householders have lodged applications to purchase under the scheme. The Minister said that approximately 22,000 people have purchased under this scheme and, obviously, in any of these cases the time to complete the purchase is a little after the time of the application. In that sense it is satisfactory progress. There has been a campaign to seek the total abolition of ground rent but some of the landlords have held out for the last penny. In quite a number of cases this has delayed householders coming forward to make use of the Minister's scheme. Therefore, those householders should be facilitated rather than discouraged and this scheme should be allowed to continue.

We should also be looking at other aspects of the scheme. I am slightly concerned at the haste with which it is proposed to end this scheme in one year. The Minister has said, fairly strongly, that there will be no further extension. He said it was never the intention that the subsidy involved in this scheme should continue for longer than five years. I do not know how the Minister can say that because it was originally a Fianna Fáil Bill and, naturally, anyone introducing such a scheme has to set an initial time limit. The Minister is now in a position to revise that time limit if he wants to. We have seen how the five year scheme has worked. I notice that the Minister is smiling wryly, but I know what Fianna Fáil thought about it in 1978 and there is no point in going back over the arguments.

We have now seen the operation of the scheme for five years and revision should take into consideration what has happened in between. That is what we should be basing our policy on now. Why has the Minister not come forward with any new proposals in relation to the revision of this Act? He has introduced very limited proposals and it makes one wonder in whose interest he is operating. Is he operating in the interest of householders?

If we stick to what the Minister suggests and there is a very strict finishing time after a further year, what is the position then? There will be the old situation where there will be a bonanza for the legal profession. If we take legal fees of about £100 on, say, 300,000 houses that is £30 million for a start. This was one of the considerations in the first instance and one of the main inhibiting factors when the scheme was introduced initially. This makes it prohibitive for many people to purchase. If we extend the scheme for just one year, it will help to perpetuate this feudal system.

Work has been done by our predecessors in this contentious and difficult constitutional area. Let us continue that work. I have mentioned some of the steps taken. Great fear and trepidation were experienced in taking those steps, not the least of which related to this special scheme which would leave the legal profession, by and large, out of the arrangements. Let us put an end to ground rents on dwellings as soon as possible. This House of Parliament has already had the courage to prevent the introduction of new ground rents on dwellings since 1978 and that stands now as part of our social order. We took this stand because ground rents are repugnant to the majority of our people. The Minister has said that some people are quite happy to continue paying these rents indefinitely and that is true. However, many who have been paying ground rents for 20 and 30 years believe that they should not have to pay them in the future. They question the right of the ground landlord to exact this payment each year.

We should see how much further we can go in relation to ground rents at this stage. The Minister should be positively encouraging householders to purchase and in this connection he should continue the present nominal fees. The question of reducing the size of the public sector is not at issue. It was a rather heavy topic to bring into this debate, because very little would be involved and this is a very important matter. The Minister states:

In the second place, the size of the public sector is already a matter for national concern and the need to control and, where possible, reduce numbers in the public service again argues against a further permanent purchase scheme beyond the 1967 Act scheme even if it is self-financing.

I am sure that reference should be to the 1978 Act scheme. The burdens falling on the public sector will not be affected very much. If the Minister, while now giving a further year's extension, is open to extending the scheme for a further year or two, I would agree with that. However if his intention is to give only one year in which people can avail of the scheme, I would not agree and hope that the Minister will bear that in mind. While encouraging householders to purchase, the Minister should also be discouraging ground landlords from seeking to exact the ultimate pound of flesh from the householders by demanding the maximum settlement and not being prepared to enter into a reasonable agreement as many landlords have been prepared to do.

I would prefer the scheme to be extended for at least a further three years but if the Minister will consider this in the years ahead that would be satisfactory. The Minister should get a termination date for all remaining local authority ground rents, preferably within three years. This would very clearly show the Government's will and the will of this House to bring ground rents to an end. There may be some minor legal complications, in that some controls are built into some local authority tenant purchase houses and some arrangement might be necessary there. For Dublin County Council, the figures for 1980 show the annual rent payable as £11,000. There is a lot of collecting on that, apart from anything else. There is a great burden on the public purse but those figures give the rentals payable and it would be interesting to know the amount actually collected.

Dublin Corporation give an estimate of £120,000. This, of course, concerns householders and does not refer to the very considerable income from the commercial side. I made some inquiries but have not yet received information on the amount collected last year with regard to householders. It is unlikely to vary very greatly from the £120,000. The Dublin Corporation figure covers 34,400 residential privately built homes. This includes areas like Tallaght, Blanchardstown, Donaghmede, Priorswood, the Tonlegee area and various other areas around the city where schemes were built by private builders on land owned by Dublin Corporation. Added to the 34,400, there are 20,380 under the sales scheme for which there is a charge of something like 5p per annum and 6,700 on tenant purchase schemes, giving a total of approximately 63,480 houses involved in that relatively small annual income which, if collected, must constitute a very considerable administrative expense. I am sure that the situation is somewhat similar for all local authorities around the country. We should be prepared to set a termination date for all remaining local authority ground rents within three years. That would mean that a further three years ground rents would be payable and that, after that period, payment would be terminated.

Anyone who had not paid at that time would owe the ground rent. That kind of action would indicate the Government's clear commitment to the termination of ground rents. It does not involve any constitutional question. The Minister made a great deal of the constitutional issue in his speech, and that is one of the problems which has had to be tackled over the years. However, such an approach would indicate the Government's concern that ground rents be terminated in the near future and that they would do what they could to ensure the termination of the system which has operated for existing ones which go back before 1978. The Government should also indicate that it is their intention to examine the termination of existing ground rents on dwellings after a further period even if this necessitates a review of the Constitution.

If the Government wished they could introduce a special tax on ground rents after a certain period. After all they introduced a residential property tax. We should consider the options which are open to us to bring about a termination of the old ground rents.

The Minister mentioned the constitutional question and this needs to be examined in a special way. Those in receipt of ground rents over the years have, in most instances, been well rewarded for whatever interest they originally had in the property and whatever notional interest they may have retained. In these circumstances, it must be contrary to social justice and the common good that such people and their successors in title should continue to exact a benefit from the true owners of the property for 99 or 999 years, when nothing further is given in return. Many of the things which had to be given have been taken away from this right. The right has been circumscribed in many other ways by the actions of this House.

The Government should consider providing for the total abolition of ground rents at some specified date, whether five years or whatever, people being liable for the period in between. It is said such a proposal might be unconstitutional but it could be considered in the context of reconciling rights over property with the principles of social justice and the common good. If the article in the Constitution which guarantees property rights was to be interpreted so as to prevent the abolition of ground rents without wholesale compensation we should examine that article with a view to amending it. The purpose of such an amendment would be to provide the Oireachtas with a greater degree of discreation and flexibility in controlling property rights in the interest of social justice and the common good.

There are other reasons for looking at this. The question of land, its development and use is one in which the absolute right and the way this right is interpreted will have to be looked at. I know the parties to the Government have made it clear that they plan in the near future to examine this question. In the context of that examination the exercise of this right could be looked at. I know the Minister made it clear that the question of compensation should not arise and I agree with him. I would like to see practical commercial agreement to terminate. The ground landlord as well as the householder has had that opportunity for the past five years. I know of many instances where the ground landlord has refused to make any kind of reasonable agreement. There is also that side as well as the case of householders who are holding out.

There is general concern about this question of what is happening in relation to it. The failure of some landlords to make reasonable agreements has led to the appearance in court of 4,500 to 5,000 people. Of that number 31 have received jail sentences ranging from three to 14 days. These included sentences imposed on three housewives. It is not possible for ground landlords to evict people and we did away with that obnoxious situation without all the upsets which were suggested in relation to the Constitution. Now we have the position where landlords can have people committed to jail. At least 31 people have received jail sentences. The ground landlord can exercise these orders at will when he so desires. A number of these cases are in my constituency.

If we do not have a reasonable approach to this problem we could end up with people refusing to pay anything and the system falling into disrepute. This would be regrettable. It would be preferable to have a scheme which would encourage people to purchase and ground landlords to come to reasonable agreements with their tenants.

There is a loophole which has appeared since the 1978 Act. A problem has arisen following a Supreme Court decision in settling new ground rents payable if a lease has expired. The problem relates to determining a new lease or the purchase of the fee simple. Some landlords have become avaricious in their demands in such circumstances. This loophole must be closed and it must be done in the context of the present revision. The Minister must bring forward a suitable amendment at an early date. I would have preferred to see the Minister put down amendments rather than just have a simple one-year extension and a three-fold increase in the nominal fees. These nominal fees were intended to encourage all and sundry to purchase the land which is under their own house and so do away with the system, the termination of which is long overdue.

I am glad that the Minister is extending the scheme for a further year but I am opposed to the trebling of these fees. They were nominal and consequently these arguments about the burden on the public purse are not tenable. They should continue to be nominal fees and on that basis people should be encouraged in so far as possible to buy out their ground rents. I am disappointed also that the Minister has not taken the opportunity of dealing with the important and urgent matter of new ground rents being settled after leases expire.

I ask the Minister to direct his attention immediately to the question of the termination of local authority ground rents and to bring forward an appropriate amendment to the Bill. That is a clear cut situation which does not involve the Constitution. It is a matter that could have been dealt with today without any difficulty but with our full support. In this respect the homework has not been done.

In relation to the general question of ground rents in the private sector, the Minister should make it known clearly that we in this House wish to see an end to the ground rent system in respect of domestic dwellings. In that regard the people concerned should be brought to the table for the purpose of negotiating and agreeing reasonable terms. The Minister should consider also as a matter of urgency the requirements for terminating the overall ground rent system within a reasonable period.

Mr. De Rossa

The Minister says that the Government cannot concede and that the previous Government could not concede on this question because to do so would be wrong in principle. He says that the matter is not simply one of the overcoming of a constitutional obstacle but that it would raise the question of the security of home owners in respect of the position of their properties. In saying that the Minister does not seem to realise the extraordinary nature of ground rents. A householder having bought a home is asked for a rent for the duration of the lease on the property and on the expiration of the lease is asked to hand up the piece of ground together with anything that may have been built on it in the meantime.

The ground rent system is described as feudal. It is a rent that has been in existence for centuries, from the time of the Norman conquest and during times when private property rights were absolute and held by a small number of people. The Minister misrepresents the aims of the combined residents' associations when he says that they are seeking abolition but without compensation being paid. From the beginning of that campaign it was made clear that the associations were seeking the abolition of ground rents with compensation being paid to agreed parties. There may well be situations in which people who innocently purchased ground rents on the open market would be at risk of loss in the event of ground rents being abolished. There may be people who invested pension funds and so on in ground rents, but equally there is a clear case to be made that people who for generations have been paying ground rent to landlords are just as likely to be aggrieved and to be entitled to compensation from the landlords as are these other people. Therefore, the question of the residents' associations seeking abolition without compensation does not arise.

With perhaps one or two exceptions I am not aware of anybody here who defends ground rents publicly. Most Deputies in Fianna Fáil as well as most of those who form the Coalition have attacked the ground rents system as being unfair and a relic of the past. However, the parties in Government have been slow in relation to terminating ground rents. They have not been as committed to the principle as they seemed to be while in Opposition.

Various statements have been made by party representatives on this issue. On 10 November 1982 — that was just before the general election — the then General Secretary of Fine Gael, Mr. Finbarr Fitzpatrick, wrote to the Chairman of the Ground Rents Sub Committee as follows:

...In the June 81 Programme Fine Gael undertook to see if action could be taken to end ground rents. Our Minister for Justice began such a review but it was not completed by the time we left office. We will immediately continue this review on our return to office.

It is our intention that the Pro-Life Amendment to the Constitution will not be delayed beyond 31st March and I doubt if an amendment on ground rents could be developed and cleared by that time. However we do intend to proceed urgently with our overall review of the Constitution and we will include the problem of ground rents as an urgent item in this review.

On the same date Mr. Tony Browne, writing on behalf of Deputy Spring, leader of the Labour Party, wrote to the Chairman of the Ground Rents Sub Committee as follows:

In response to your letter of the 5th November I can state that the position of the Labour Party on the question of the termination of existing residential Ground Rents is unchanged. Labour's commitment to termination is reaffirmed in our Election Programme "Where Labour Stands".

It is not possible to indicate a precise timetable for the achievement of this particular policy. It is clear that the drafting and passage through the Oireachtas of a relevant Constitutional Amendment could occupy some time.

However, the Labour Party is in full sympathy with your view that the protracted argument about Ground Rents must be brought to a speedy close. What is needed is the clear political will to act and Labour does possess that.

The Minister indicates clearly that Fine Gael do not have the will to act and whatever will Labour may have in that regard they have not been able to impress it on the Minister for Justice. The payment of ground rent does not entitle one to any services. There was a time when there was a right to restrict developments of one kind or another but all of that has been taken over by way of the Planning Acts. No service is provided by landlords for the rent they collect.

The landlord is entitled to recover everything that stands on the grounds for which he is collecting rent once the lease ends, and some examples of that have come to light recently. An old age pensioner with £40 per week has been asked for £4,000 to renew the lease on a two-bedroomed detached house in which he is living with his wife. Another person has been asked for £30,000 to buy back the house he has already bought on a mortgage. A Dublin house owner who bought his home 48 years ago and paid off his mortgage was shocked when his ground landlord, the Earl of Pembroke, offered him a second opportunity to purchase the house and the land on which it stood for £30,000. These are the kinds of anomalies which exist under the ground rent system. There is nothing in what the Minister said today to justify such a feudal system.

The Minister said that to interfere with ground rents and the rights of ground landlords could bring into question the security of houseowners in the possession of their properties. One would imagine that the law had never made any attempt to restrict the right to private property but this is far from being the case. The Land Commission have powers in relation to taking over property, as have local authorities. Even if the Minister is correct in saying that interference with the ground rents system could bring into question the security of houseowners the Constitution should be examined to see where exactly the right to private property begins and ends. We are told that the section of the Constitution which prevents the abolition of ground rents also prevents us from dealing with land speculation. This is the section which resulted in the rent restriction legislation being struck down by the courts. People who live in houses which were formerly rent restricted are now facing court cases because landlords are looking for huge increases in rent, the result being that the State is subsidising the landlords because the unfortunate tenants cannot afford the rents. This section of the Constitution results in the waste of the State's resources and the misuse of taxpayers' money because millions of pounds are being paid to landlords of private property by way of subsidy.

It is not good enough for the Minister to argue that because the Constitution is likely to be interpreted in a certain way we should retain the system as it stands. It is high time that the Constitution in relation to private property was examined to eliminate the grave anomalies that exist whereby social justice and the rights of the community are subjected to the rights of the private landlord, the speculator and the ground landlord.

The campaign on this issue has had a number of notable successes. It has succeeded in preventing the creation of new ground rents and this is to the credit of the Fianna Fáil Government who introduced this legislation. The situation whereby people who refused or failed to pay ground rent could be evicted by the ground landlord has also been abolished. It was only through long years of struggle by various people who opposed the system that this was achieved.

The Minister estimated that there are at least ten times the number of lease holders as there are people who have bought out their ground rents to date and I have no doubt that a sizeable proportion of them will continue to oppose this form of feudal rent. The fact that people who have recently appeared in court are prepared to go to prison is an indication of the opposition felt by most people to this imposition.

The only substantial issue remaining is the question of the termination or abolition of existing ground rents, apart from the various anomalies to which I have referred. People with leases of less than 50 years to run have no right to buy out, even under existing legislation. It has also been brought to my notice that under the existing Act a person whose fee simple is less than the rateable valuation has no right to buy out. In one case the fee simple was £8 and the rateable valuation was also £8; the rateable valuation was reduced by 50p to £7.50, the result being that the person concerned was not allowed under the Act to buy out the fee simple of his property.

The proposal to extend the scheme for the purchase of ground rents by another 12 months will give some relief but it plays into the hands of the ground landlord. They depend on the worries of householders and the pressures they feel in order to get the best possible price. The failure of the Minister to extend the registration period for at least another five years will enable landlords to put greater pressure on those who up to now have refused to buy out. As an example, I received a letter from my own ground landlord a few days ago. The name of the firm is Clonmel Securities Limited. The letter stated:

This is the last notice to advise of the opportunity to avail of the special purchase scheme in the present three-year purchase term to buy out your ground rent. After 31st July, 1983, the cost of buying out your ground rent will be substantially higher — see attached Government notice. Also, after 31st July, 1983, the three-year purchase term will not be available.

Here is a landlord using the situation to put pressure on householders, including me, to buy out their ground rents. This company are threatening that they will transfer their interest to another company. The letter continues:

Immediately after 31st July, 1983, all ground rent contracts which have not been bought out will be assigned to a separate limited company. This new owner will be entitled to enforce payment of the rent assigned to it, including arrears, in the same manner as the present landlord. Enforcement will be the subject of court proceedings, if necessary.

That does not have very much effect on me because on a number of times on this issue I have had eviction notices and eviction orders made against me but I still refuse to buy out a ground rent.

That situation is being allowed to develop because first of all the Minister refused to announce that he would extend the scheme and when he announced that he would extend it he said he would do so for only one year at treble the registration fee. In my view the Minister is interfering with the free play of the market which is so beloved of our landlords and which is guaranteed by the Constitution.

For that reason we have put down two amendments, one to oppose the section increasing the registration fee and the other to extend the availability of registration for a further five years rather than 12 months. It might be of interest to note who are the ground landlords. It may be there may be a number of institutions or individuals involved in these rents. There is a Landowners' Convention. The directors of the Irish Landowners Convention are the Earl of Meath, the Earl of Ross, the Viscount de Vesci, Lord Fingal, Lord Inchiquin, Lord Powerscourt, one of the Saint Lawrences, Sir Cecil Stafford King-Harman, Major J.W.R. Madden, Colonel J.E.D. Silcox, Captain P.H. Coyle. They are people who own vast areas of the country. The Government are paying ground rent to some of them. They are the people the Minister is protecting under the Constitution.

The Minister would do well if he decided to ignore the vast vested interests involved. We are talking about something in the region of £10 million per year in ground rents. The Government should ignore those interests and accept the right of the common people of the country and abolish these ground rents. If the Government introduced a Bill terminating ground rents within 24 months or some such time they would get the unanimous support of the House.

Mr. Enright

This is the first occasion since his appointment that I have had an opportunity to speak in the House on a Bill promoted by the Minister for Justice. I extend my good wishes to him in his onerous and important task. Because of the dedication he has shown up to now I wish him a happy and rewarding term of office.

When the first of these Bills came before the House five or six years ago I spoke on it and forecast that the five years period was insufficient because many people, for one reason or another, would delay their applications to purchase their ground rents. This Bill will extend the period by one year and although I welcome the extension I think it would have been much wiser in the circumstances to extend the period by five years, making the entire period one of ten years. I do not know if the Minister has a firm view on that question but I suggest that he and his advisers should consider what I have been saying.

The Minister has told us that there has been a vast number of applications for the purchase of ground rents. Up to the present, purchases under the scheme have totalled approximately 22,000. We are all aware that that is only the tip of the iceberg. I suggest there are many more thousands, possibly between three and four times that number, who want to purchase. I do not have statistics on the matter and perhaps if the Minister has such statistics in his Department he might let us know.

I welcome this move but I am suggesting that the period be extended. I suppose that next year we will have to extend the period once more. I hope this item will not just be covered in tomorrow morning's newspapers. I hope the media avail of the opportunity of highlighting the fact that this offer expires on 31 July 1984. It is desirable that there should be extensive media coverage about the extension of time. I accept that when the original legislation was introduced in 1978 there was extensive media coverage given to it but although many had good intentions about buying out their ground rent they left it on the long finger.

Unfortunately, I was not present for all of Deputy De Rossa's contribution but I noted some of the points he made. Before planning laws were introduced the ground rent system proved advantageous because of the covenants inserted in leases. It was always desirable that in housing estates people should be prevented from creating nuisances such as starting a forge, a garage or a factory and under covenants in leases ground landlords had the power to stop tenants carrying on any business in their houses. This meant that residential areas were protected and that the occupants of houses were confined in the use they could make of their premises. If any lessee was in breach of that covenant the ground landlord could take action against him. However, now that we have our planning laws the only valid reason for the retention of ground rents has gone. Local authorities and An Bord Pleanála now deal with planning matters and as a result the necessity for covenants in ground rent leases does not arise. In fact, our planning laws ensure that residents do not ruin their localities by establishing a business.

The view has been expressed that ground leases should be compulsorily acquired without the owners being compensated. It has been said that the Minister should introduce legislation under which he could by the stroke of a pen eliminate ground rents totally. It may be unpopular for me to say that most of the ground rents were lawfully established and that it would be unfair in many instances for the Government to compulsorily acquire them. In some cases ground rents were purchased lawfully for investment purposes with the intention of getting a fixed income for a family. Legally binding contracts were made and for that reason an interference by the State would not be justified.

Irrespective of one's view about ground rents the State must be seen to be fair and it would not be justified in acting in an arbitrary fashion in regard to the abolition of them. I exhort those who have not bought out their ground rents to do so as soon as possible. People now have a reasonable way of purchasing their ground rent. The cost is not excessive and we should encourage everybody concerned to avail of the extension of time. The method of purchasing the ground rent is relatively simple involving the submission of an application to the Land Registry. As I said, some people may not read tomorrow's paper, listen to the radio or watch television tonight and they may not realise that this further time extension has been granted. The Minister should circulate this information to all the local authorities so that public representatives will have the opportunity of bringing it to everybody's attention, and if it is discussed at local meetings it will be highlighted in provincial papers. The Minister might also consider placing advertisements in some local provincial papers.

The responsibility for proving the title is in order rests with the landlord and the tenant obtains the certificate. The scheme as drafted has been well prepared and is working well. The Minister mentioned the numbers employed in the Land Registry. How many staff are in that office? How are they coping? Have they sufficient staff to administer this scheme? I imagine some titles could be very complicated. Deputy De Rossa mentioned a number of people and I am sure some large estates are involved and there may be some problems about the titles to these very old estates.

Mr. De Rossa

Would the Deputy believe 800 years?

Mr. Enright

I can well believe it, and it is very interesting to read through those titles if one has the time. Some of those titles are very tricky and complicated. I can visualise some senior officials in the Land Registry spending weeks trying to clear titles, get in touch with the solicitors who lodged the applications and so on.

This is a very worth while and desirable scheme which I heartily endorse and I am pleased the Minister is taking the opportunity to extend it. The number of cases being dealt with by the Land Registry are immense and the staff have coped very well. I want to put on the record that as a public representative and a solicitor I have received every courtesy from these officials. All members of the public who call at this office have always been treated with the highest courtesy. I would not like to see the Land Registry having to deal with so many cases that they could not deal with them efficiently. I would not like to see a senior official being transferred from very important matters to deal with this scheme. Such a move would be very undesirable. Perhaps the Minister will deal with these matters in his reply.

I congratulate the Minister on the extension of this scheme. If he had not done so, many thousands — in the region of 100,000 — of people would have been very disappointed next August or September when they realised the scheme had expired. This Bill was originally introduced by the then Minister for Justice, Deputy Collins. I remember recommending that the scheme should be for ten years, but he went for five, and this Minister is going for six. I still think my figure of ten years is more realistic. Perhaps the Minister would consider that suggestion.

Minister for Justice (Mr. Noonan,

Limerick East): It is important with the wide-ranging contributions made today to point out what the Bill is doing: it is extending the terms of the 1978 Act for 12 months and increasing the fees. It is not purporting to deal with a substantive issue. Only those two aspects of the 1978 Act are being amended. As Deputy Woods pointed out it was my predecessor in the Fianna Fáil Administration, Deputy Collins, who introduced this legislation. In 1978 there was a commitment by the Fianna Fáil Party in the previous general election to abolish ground rents. On foot of that, this Bill was introduced which does not abolish ground rents per se but enables people to abolish ground rents by purchasing the ground rents. It does not interfere with the terms of the 1967 Act in so far as one already had the right to purchase ground rents, but what it did was to give more beneficial legal fees to people who were purchasing ground rent.

Under the 1967 Act somebody could purchase a building lease by using a formula which applied a certain amount of capital to the most recent national loan. The amount of money which accrued from that was the formula which gave rise to the purchase of ground rent. At that time the multiplier was something over 13 times the ground rent, but at present the multiplier is about seven-and-a-half times the ground rent. As Deputy De Rossa and others pointed out, the actual arrangements were made between landlords and those seeking to purchase their ground rent. The 1978 No.2 Act arrangements were far more beneficial than that. Deputy De Rossa is to be congratulated. He got a very good offer to purchase his ground rent for a multiplier of three, if I understood him correctly. I take it he could purchase his ground rent for something like £60 of £65 on an asset of I do not know what amount. I presume a private house is worth a certain amount even in Dublin.

The net issue arises from what Deputy De Rossa said, that if we are to compensate landlords — and he said the intention of any campaign for the abolition of ground rent would involve compensation — surely he does not expect the taxpayer to contribute the £60 to £70 to allow him the fee simple of a private asset when the scheme is available to himself to purchase?

Deputy Woods talked about the initial period of five years and said it was some kind of trial period to see what would happen during the five years of the scheme. Of course it was not. The idea was that if one were to abolish ground rent by purchase, it had to be a temporary period rather than a permanent period. A permanent special purchase scheme to secure the abolition of ground rent would be a contradiction if it was permanent. Probably one of the reasons why so many people did not avail of the terms of the 1978 scheme was that the period was too long. Out of an estimated 300,000 tenants who were in a position to avail of this scheme, to date only 22,000 have availed of it.

Since my announcement that the scheme was terminating on 31 July of this year there has been a large influx of applications to the Land Registry. I presume that will continue now that the Bill is before the House. Any application properly made out and received by the Land Registry before 31 July can benefit from the scheme under the old fees. Anybody who applies after 31 July will have to pay the new fees. That situation will pertain until 31 July 1984.

As to the fees themselves, Deputy Woods made great play of the fact that the fees introduced in 1978 were nominal. The pertinent fee for most purchasers is the £5 fee with consent. That fee is being increased to £15. I suggest that £15 in 1983 is as nominal as £5 was in 1978. It is an attempt to cover the administrative costs of the purchase of the ground rent. There is no great leap in the real value of the fees. In real terms — after various Governments in office in between and particularly Fianna Fáil — £15 is now as nominal as £5 was in 1978.

Great play was made about the tripling of the fees but we are talking about £15 for the purchase of the ground rent. There is no change whatever in the actual terms of purchase in the 1967 Act. It is only the Land Registry legal fee which is being changed. As I pointed out already, the terms of the 1967 Act still apply. It is also true that landlords are offering terms which are far better than the 1967 Act. The multiplier is now 7½ times the ground rent, whereas Deputy De Rossa is able to purchase his ground rent for a multiplier of three which I suggest is a rather good bargain.

That brings me to my next point. This Bill does not favour the householder or the landlord. Obviously it is a further benefit to the householder to purchase, but it certainly does not favour the landlord. Any ground landlord if he has the asset of a ground rent is only too anxious to sell it as quickly as possible. They are selling at far below the statutory rate.

Up to 31 July householders can purchase the ground rent and pay the £5 fee only. For 12 months after that, they will have to pay a fee of £15 with consent and larger fees where there is no consent. There is equal pressure on the landlord who now wants to sell, especially if he is the holder of the right to collect ground rents which he is unable to collect, which is quite common now in housing estates all over the country, where there is resistance to the payment of ground rent. Consequently the ground landlord has a notional income from ground rent and in almost all cases he is anxious to sell and get rid of this notional asset which he cannot translate into liquidity. If he could sell it, it would become a desirable liquid asset.

I do not see the balance of advantage lying with the landlord by extending a scheme which favours householders. It continues the balance of advantage in favour of the householder. The vast majority of Deputies want to have the balance of advantage in favour of the householder. In statements inside and outside the House very few people have defended ground rent on private dwelling houses.

Deputy Woods and Deputy De Rossa talked about constitutional changes. Deputy Woods raised the question of whether the social order and the common good required that some changes might be made in the constitutional right to private property. I do not know what the Fianna Fáil attitude is on that. Recently my namesake, Deputy Noonan, who is the spokesman on agriculture, objected to the leasing of land and the Minister for Agriculture debated the issue with him.

Deputy Noonan did not talk about the social order and the common good when it came to the leasing of land. There was a rather heated debate on the point. Deputy Woods talked about regulating the ground landlord's income by taxation or by taxing ground rent. If ground rent accrues to a private individual obviously it is taxed as income. If it accrues to a company I am sure the company's tax takes care of that. I do not see what specific taxation measure the Deputy has in mind.

He also expressed disappointment that issues raised in recent court cases were not dealt with here. What is being dealt with here is simply a 12 months extension of the existing scheme and an increase in fees. We will have a separate Bill to deal with the specific points raised in those court cases and some other points as well. The Government have sanctioned proposals and the Bill is being drafted. It will be introduced when it is drafted.

Deputy De Rossa referred to the desirability of changing the Constitution. The net issue, as I understand it, is whether we can confiscate property without taking away rights which people would like to retain in connection with their own private property and private residences. If we abolish ground rent and compensate the landlords for the abolition of ground rent, the charge goes on to the taxpayer rather than the householder who is benefiting from the purchase. It is fairer that this scheme should be extended for a further 12 months and that the householder who will benefit by holding his residence in fee simple should pay the cost himself rather than making it a common charge on the taxpayer. If it is a common charge on the taxpayer many people who work and pay income tax and all sorts of other taxes and who have no property, no private residences, will be subsidising people who are buying out the ground rent on a private residence. That does not seem fair or equitable to me. I do not think it is a line the Government will follow.

Deputy Woods also asked about the situation of the local authorities. Section 26 of the 1978 Act which is being amended here deals with the position of the local authorities. I am not proposing any change whatsoever in that. While it was interesting to hear the rather philosophical points made by many Deputies, and while the debate was interesting, it ranged outside the simple proposals in this amending Bill. There is an extension of 12 months and the fees are being increased. That is all that is involved here.

I would hope that people would avail of the 12-months extension to purchase out their ground rents, to abolish ground rents by purchase. If they have a properly completed application form with the Land Registry by 31 July, then their applications will be processed and the old fees only will apply. However, if they apply after 31 July this year, right up to 31 July next year, the increased fees will apply.

I might make one final point in reply to Deputy Enright. He asked how the Land Registry were coping with the situation at present. Since the announcement that the scheme was terminating there has been an influx of applications. There are some arrears now — I have not actual figures for the arrears to hand — but I understand the time lag is not very significant, that they would be cleared in a number of months even if there were no further applications at this stage.

Mr. Prendergast

I commend the Minister on his approach to this question. A question has been brought to my attention by a member of the legal profession in my city of Limerick. I might pose the question this way: what is the position of somebody who is asked by an estate agency to pay ground rent or indeed rent on a property in respect of which no legal entitlement to establishment of title has been made? For example, if there was a situation in which an estate was so old there was no clear evidence of whether an estate agency was entitled to look for rent or ground rent, what is the position there? I understand that in a sizeable number of cases such estate agencies might not be legally entitled to exact that. In one particular case in Limerick recently it emerged that an estate went back to 1650. Could the Minister explain to me what is the situation in that regard? There will be people who will try to avail of the position obtaining between now and the extended period the Minister has brought in and who might like to be satisfied on that score.

Dáil Éireann debate -
Tuesday, 14 Jun 1983