Dáil Éireann debate -
Tuesday, 14 Jun 1983

Vol. 343 No. 6

Landlord and Tenant (Ground Rents) (Amendment) Bill, 1983: Committee and Final Stages.

SECTION 1.

Mr. De Rossa

I move amendment No. 1:

In page 2, line 16, to delete "six years" and substitute "ten years".

Our amendment seeks to extend the period over which the £5 land registration fee would apply from five years to ten years. The Minister seeks to extend it for six years — in other words, an additional year.

I have already made the point — and the Minister sought to refute it in replying to Second Stage — that by extending it for a mere 12 months the pressure will then be on householders to purchase. The Minister made the point that most landlords are anxious to sell. The facts are that most landlords are not anxious to sell and those who do try to get the best possible price. While the maximum amount applicable, when one applies under the Act, is seven-and-a-half times there is a record of landlords who have sought greater amounts than seven-and-a-half times the annual ground rent and they are legally entitled to do so. It is a question of whether or not the tenant wants to pay it. The fact that I or any other tenant has managed to get or been offered, as a result of the ACRA campaign, a much lower figure is to the credit of ACRA and not to the provisions of this Bill.

The reason we are seeking to have this fee extended for a further five years is to enable the situation to develop in which ground rents become virtually worthless, which is what they ought to be. For that reason I am pressing the amendment.

Mr. Noonan

(Limerick East): The amendment is not acceptable. It would extend the 1978 purchase scheme, not for 12 months, but for five years. The 12-month extension of the 1978 purchase scheme that section 1 proposes is being proposed for two main reasons. One is to afford another opportunity to buy out under the scheme to those houseowners who genuinely want to terminate their liability to pay ground rent but who have so far failed to act, whether influenced by the ground rents abolition campaign or perhaps some other reason. The 12-month extension should be quite enough to cater for such persons. The other reason is that the Land Registry staff concerned with the operation of the purchase scheme are likely to be kept busy for a matter of months in any event dealing with the relatively large and increasing number of purchase applications being made at present. Since the staff concerned must continue to be employed on that work for some considerable time in any event after 31 July next, there was also a case for postponing the termination date.

However, these arguments afford no support for an extension of the scheme for a further five years. If a further five year extension were to be regarded as acceptable there would be no evident ground for refusing an indefinite extension, that is for refusing to make the scheme permanent. Yet at its very origin this scheme was deemed to be a temporary measure. It was introduced so as to bring about the abolition by purchase of existing ground rents on dwelling houses and its five-year life was set accordingly. It would now be pointless to say in effect: well, the first five years did not work so let us try another five years. I would like people to be quite clear about it — termination of the 1978 purchase scheme does not terminate the right to buy out ground rent. So that there be no misunderstanding, I shall repeat what I have already explained: the right to buy out ground rent is something quite distinct from the operation of the 1978 scheme. Even if the scheme were to be terminated next month, as it would so terminate apart from the proposals we are now discussing, the right to buy out would remain unaffected. Ground rent tenants would retain their full entitlement to buy out under the 1967 Ground Rents Act, although of course they might have to pay more in legal fees under the 1967 Act arrangements. There is no question of any discontinuation of the right to purchase in 12 months' time. That right derives from the 1967 Act. It is just the benefit of the reduced fee which is all that would be affected if and when the scheme terminates.

Dr. Woods

As I said on Second Stage, by and large I would favour an extension for a further three years in line with the general principle on which the five years was given in the first instance. I accept that by extending it at this stage for one year the Minister is affording people the opportunity to go ahead with purchase and encouraging all concerned to do so at this time or within the next year and a month approximately. I should like to do anything we could to facilitate that. I would not like it to be felt that we were trying to discourage householders rather than encouraging them to purchase as soon as possible and, at the same time, to encourage ground landlords to engage in reasonable deals. I have a good deal of experience of groups who have been involved and I know that a lot of landlords are not prepared to be helpful in this respect.

I was amused to hear Deputy De Rossa mention the three times because I would regard that as very reasonable and, with the scheme in operation, that is the kind of scale we would be looking for. I knew immediately that the Minister would latch on to that and bring it back, which he did subsequently.

For those reasons we are supporting the Minister in extending the period for a further year and we shall see how it goes within that period.

An Ceann Comhairle

Is the amendment withdrawn?

Mr. De Rossa

No, it is not.

I might take up one or two points with the Minister. The question of the number of times I have been offered by my benevolent ground landlord arises directly from the fact that over the years I have refused to purchase, as have a number of other people on the estate on which I live, and have gone to the bother of going to court, being threatened with eviction, prison and so on. It is not through any great love for us that the landlord offered us the three-year purchase. Another landlord has pleaded with his ground rent tenants to take them off his hands for nothing. It is because landlords recognise there is no market for ground rents that these offers are being made. Because this section is being extended for only one year the value of ground rents will increase. Ground rent landlords see clearly that once this scheme ends or is extended for only one further year the value of their rents will rise on the market. In the letter I read out the landlord made it quite clear that the offer of three years will end. He realises that the market value of the rents will rise if this scheme is terminated or is extended for only a further 12 months.

The Minister stated that the right to buy out arises from the 1967 Act. I recognise that but I think he should explain that to some ground rent landlords who have sent circulars to people trying to confuse them by saying their right to buy out will end on 31 July. I welcome the fact that the Minister has said here that is not the case. By extending this £5 land registration fee for a further five years, landlords will terminate the ground rents themselves because it will not be worth the bother of trying to sell them.

Question: "That the words proposed be deleted stand" put and declared carried.

Amendment declared lost.

Question proposed: "That section 1 stand part of the Bill."

Dr. Woods

I have stated our position on the section. We are in favour of anything that will facilitate the purchase of ground rents. We are supporting the Minister on this section on the ground that he is extending the provision for a further 12 months. We hope that more sales can be arranged during that time.

The Minister said the rate was 13 times the annual ground rent in 1978 and that this was in the formula of the 1967 Act. He said that the amount is now down to 7½ times. However, the same income is going to the ground landlord. The principle of the 1967 Act was that the income would remain the same. The change does not represent any concession on the part of the ground landlord. We are maintaining the same position.

Mr. Noonan

(Limerick East): It will be a lot cheaper for the purchaser.

Dr. Woods

That may be but I was afraid it might be thought there was some concession on the part of the ground landlord. It is the maximum he can get in the present circumstances. With regard to the question of the trial period, the Minister mentioned that 22,000 people had purchased. From information from his own Department it appears the number is in the region of 27,000 and if one excludes the last few months it is about 24,000.

Mr. Noonan

(Limerick East): I said that 22,000 cases were actually completed.

Dr. Woods

I appreciate that but in terms of people who have actually applied the number is in the region of 27,000 and I agree with the Minister that that number will increase somewhat. When I spoke of a trial period I meant it in the sense of what could be done during that time. An extension of a few years would be in the spirit in which the measure was introduced.

Question put and agreed to.

SECTION 2.

Question proposed: "That section 2 stand part of the Bill."

Dr. Woods

We are opposed to this because of the nature of the fee charged. We think that the fee of £5 should remain. We are very anxious to see householders buying out ground rents and we want to facilitate them in every way possible. The Minister has made the point that the fee is as nominal as it was in 1978, presumably applying the rate of inflation to bring it to £15. My understanding of the inflation rates is that it would bring it to £9 and one might consider that going to £10 and doubling the amount might maintain that relationship. However, trebling the amount is going beyond that. Initially I thought we should consider doubling the amount. My party are anxious to facilitate the arrangements and we wish to keep the matter as simple as possible. We think the amount should remain the same as the existing nominal fee.

The Minister kept talking about £5. Between 800 and 900 cases come to arbitration each year. The fee was £5 plus £12. It will become three times the £5 which makes £15 plus three times £12 which makes £36, giving a total of £51. In terms of any arbitration on the rent to be agreed the amount is increased from £17 to £51 which is much more than the rate of inflation. That would be a substantial increase in relation to the purchase price of the ground rent.

Deputy De Rossa has covered the point of ground landlords being anxious to sell at keen prices. So far that approach has not been too widespread. Following this debate on these measures and the intentions which we would disclose in relation to them, we want to see an end to these ground rents. We want to facilitate their purchase in every way possible. We want to keep this nominal fee at £5 and £12 and correspondingly £17 if the two are involved. We want to see people coming to agreement while this scheme is available. I will not comment about what may be happening otherwise. Increasing numbers of people are completely disenchanted with the whole situation and are not prepared to pay at all. The numbers who are going to court and are prepared to go to court are increasing. I would like the Minister to keep it at a very simple, nominal fee. That is why our party are opposed to this section.

Mr. De Rossa

Deputy Mac Giolla and I have also put down an amendment to the effect that we oppose this section primarily because we feel it is a breach of a commitment given by a previous administration to the Association of Combined Residents' Associations that the fee would be kept at an nominal level. ACRA and I have always held that those householders who choose to buy out are entitled to do so. I have never advised anyone that he ought not to buy out. That is purely a personal decision to be made by every individual householder taking into account his own personal situation. I have not bought out, nor do I intend to do so, but because it is the right of everybody who chooses to do so and because of the commitment given by a previous administration that the registration fee that would be charged would be very nominal, we oppose this section which is seeking to increase that nominal fee.

I accept that my party are not on the same wavelength as the Minister for Justice in relation to this question of ground rent. We see it as an anomaly in modern Ireland and a relic of feudal times while the Minister sees it as the right of those who have to hold, regardless of injustice to the common people.

Mr. Noonan

(Limerick East): A number of issues arise here. Anybody who wants to avail of the lower fee as in the 1978 Act can do so over the next six weeks. When the purchase scheme was introduced in 1978 it had a duration of five years and those who availed of it were to benefit from nominal fees. Obviously the express purpose of the nominal fee was to encourage people to purchase within the five years. That five years will be up on 31 July and anybody who wants to avail of the nominal fees has until 31 July to do so. After that when this Bill goes through the fees will increase.

As Deputy Woods pointed out, if we were simply to allow for the consumer price index we would be approximately doubling the fees from £5 to £10 and £17 to £34. Instead of that we are bringing it up to try to cover the administrative costs involved and that brings it up to three times, £51 and £15, whether it is by consent or by arbitration.

A second point arises. It must be one of the great phenomena of this House and our time to see a coalition between The Workers' Party and the Fianna Fáil Party trying here to make a public charge on administrative fees so that the poor would subsidise the relatively well off. People who own their houses are relatively well off in this society. People who owned their own houses before 1978 — who must have done so to be availing of this because there have been no new ground rents since 1978 — certainly are relatively well off, generally speaking, because their mortgage repayments are low if they are on mortgages at all. Deputy Woods and Deputy De Rossa are proposing here that people in local authority houses who pay tax, people who are unemployed and who pay tax, whether in VAT or in any other form, would subsidise people who want the fee simple on an asset which at a minimum ranges between £30,000 and £40,000 in any of our cities.

I remember in 1975, 1976 and 1977 in my city ground landlords were offering purchase schemes at four, four-and-a-half and five times the ground rent, depending on how long somebody owned a house. I am glad that Deputy De Rossa has now an offer to purchase at three times. The normal ground rent is £15 or £20. Taken at even five times that amount, five times £15 is £75 plus a fiver which brings it up to £80. Five times £15 plus £15 which is the new fee equals £90. When somebody who wants the fee simple of an asset worth between £30,000 and £40,000 and can get it at a rate like £90, why should that be a charge on the less well off? Why should that be a charge on local authority tenants? Why should that be a charge on the unemployed and on people with large families? It is ludicrous on the part of the two Deputies and the parties they represent that they are opposing what is a correct administrative charge on this Bill so that the less well off, the poor, should subsidise the relatively wealthy. I am not accepting this amendment.

Dr. Woods

I was afraid that after the British general election we would have a rash of this kind of Thatcherism and right-wing approach to charges. When the Minister says that an increase in line with inflation would be roughly slightly under £10 in the case of this and that he would recommend trebling instead of leaving it as a nominal charge as it was, he is departing entirely from the principle which he stated at the beginning of his Second Stage speech that under the scheme the Land Registry have done the legal work involved up to the present for merely nominal fees. This was introduced as a nominal fee for very good reasons. The Minister says that we are talking about the relatively well off. I ask him to come out with me to Donaghmede, Tallaght, Blanchardstown and Tonlegee and all these estates around the suburbs of Dublin to see the people who he says are relatively well off, who cannot at present——

Mr. Noonan

(Limerick East): The date is 1978.

Dr. Woods

These were built around 1968, 1969 and 1970. Those people have been paying the ground rent since that time, for that number of years, but the Minister says that the people we are talking about are relatively well off. We are talking about them finding the money to buy out, in addition to all the other charges, the ground rent and we are saying that the State will have a very simple system with a nominal charge. I will take the Minister out to part of that area and show him that 26 per cent of these people are unemployed and the Taoiseach and the Minister's colleagues in Cabinet are telling them that not only is it bad, it is going to get worse over the next year. Because of the British general election, Members here, particularly those in Government, might feel that they can run riot——

Mr. Carey

How relevant is that?

Dr. Woods

It is highly relevant. The Minister is saying that these people in Donaghmede——

Mr. Noonan

(Limerick East): They are corporation estates, council estates.

Dr. Woods

The Minister talked about them having an asset. If we are to have that kind of talk then let us have it out.

(Interruptions.)

Dr. Woods

We are talking about people's homes. The building societies are having increasing problems with people who cannot maintain the mortgage repayments on their homes. These people did not take homes out of the sky. They are paying off substantial mortgages in very difficult circumstances to maintain these homes, and that will be the case particularly over the next year. In these circumstances the continuation of a nominal charge is very reasonable. I would exclude this kind of charge from all the others that we are talking about because it was not introduced as a charge for work done. It has not existed on that basis up to this time and the Minister in principle is changing the basis on which the charge is made. That is what we are talking about. In the event of arbitration he has gone up from £17 to £51, which in the circumstances is a very substantial increase. The Minister, therefore, is not encouraging people to purchase ground rents. In that event, as Deputy De Rossa said, people will not bother paying ever again and the Minister will not need to argue then whether there are 250,000, 300,000 or 400,000 people involved. He does not have room in his jails at present even for serious criminals who should be there and he has made that quite clear. He said that 1,200 prisoners had to be let out last year. Is he seriously suggesting——

Mr. Noonan

(Limerick East): I do not think the Deputy should use the House to encourage social disorder.

Dr. Woods

I am only pointing out the dangers which will arise after 31 July if the fees are too high. I advise Deputy De Rossa to buy under the present cheap scheme and I encourage people to try to come to agreement with landlords to do this. Of course I respect the right of Deputy De Rossa to make his own decision. We are opposed to the proposed increase by the Minister. I am also concerned that the Minister is trying to suggest that there will be a substantial charge on the community as a whole as a result of leaving a nominal fee in this case. The Minister also suggests that we are only dealing with the relatively well off but many of the people we are talking about are not rich and even the combined cost of purchasing at the sort of prices offered would be difficult for many of them.

Mr. De Rossa

It is difficult to take the Minister for Justice seriously when he talks about taxing the poor in relation to ground rents because ground rent is a tax by the rich on the poor. I also find it difficult to take that from a member of a Government who have imposed a 1 per cent levy on all incomes, which will be paid largely by those in the PAYE net. The Government have also failed to provide social welfare increases in line with inflation and have taken medical cards from old age pensioners and yet the Minister says we are trying to tax the poor. The vast majority of people who are liable for ground rent are poor and have to earn their living if they are fortunate enough to have a job.

I made the point earlier that I do not expect the Minister to be on the same wavelength as The Workers' Party on this issue but it misrepresents the position when he talks about getting the fee simple of an asset worth £60,000 for £48. Most of us who are liable for ground rent are already paying mortgages for the houses we are buying and it is an additional surcharge by a person or group of persons who provide no service for that rent. If the lease is not bought out or terminated, at the end of the term of the lease the land reverts to the landlord, plus the house on it. That is the kind of property we are talking about and it is nonsense for the Minister to be talking about the fee simple of an asset worth £60,000. My house is worth about £25,000 or £30,000. It is a three-bedroomed semi-detached house and the ground rent is £16 per year which is buttons. Have ground landlords the right to impose a rent on thousands like me for no service, on ground for which they have already been paid and to which they have no right? That is the basic principle.

Mr. Noonan

(Limerick East): I am proposing that these fees will cover the administrative costs. That is the change I am making and to make it a charge on the public purse is simply a euphemism for saying that the taxpayer will pay for it. People who live in three and four bedroomed detached and semi-detached houses are better off than those who have no houses or people in local authority houses. Since everybody pays tax, I cannot see how anyone can justify the taxpayers at large subsidising a particular group of taxpayers who at least have their own houses.

Mr. De Rossa

Why only subsidise private landlords?

Mr. Noonan

(Limerick East): We have many schemes which organise transfer payments where we are not transferring from the better off to the less well off. Quite frequently we are transferring in straight lines and sometimes transferring upwards rather than downwards. I cannot see, from an ideological point of view, why Deputy De Rossa's party are adopting their present line when what I am suggesting is reasonable by any standards and involves a very small increase in fees which will be paid by the people to whom the major benefit accrues, that they will have the fee simple of their own property when they purchase. I cannot see the argument for saying that that should be a charge on the taxpayer, the unemployed, on the person who has no house or the person in a local authority house rather than on the person who is purchasing. I ask the Deputy to withdraw his amendment.

Question put.

The Committee divided: Tá, 69; Níl, 62.

Tá

• Barnes, Monica.
• Barrett, Seán
• Barry, Myra.
• Bell, Michael.
• Boland, John.
• Bruton, John.
• Bruton, Richard.
• Burke, Liam.
• Carey, Donal.
• Cluskey, Frank.
• Collins, Edward.
• Conlon, John F.
• Connaughton, Paul.
• Coogan, Fintan.
• Cooney, Patrick Mark.
• Cosgrave, Liam T.
• Cosgrave, Michael Joe.
• Creed, Donal.
• Crotty, Kieran.
• Crowley, Frank.
• D'Arcy, Michael.
• Desmond, Barry. Donnellan, John.
• Doyle, Avril.
• Doyle, Joe.
• Durkan, Bernard J.
• Enright, Thomas W.
• Farrelly, John V.
• Fennell, Nuala.
• FitzGerald, Garret.
• Ryan, John.
• Shatter, Alan.
• Skelly, Liam.
• Spring, Dick.
• Taylor, Mervyn.
• Flaherty, Mary.
• Glenn, Alice.
• Griffin, Brendan.
• Harte, Patrick D.
• Hegarty, Paddy.
• Hussey, Gemma.
• Kavanagh, Liam.
• Keating, Michael.
• Kelly, John.
• Kenny, Enda.
• L'Estrange, Gerry.
• McCartin, Joe.
• McGahon, Brendan.
• McGinley, Dinny.
• McLoughlin, Frank.
• Manning, Maurice.
• Mitchell, Gay.
• Mitchell, Jim.
• Molony, David.
• Naughten, Liam.
• Nealon, Ted.
• Noonan, Michael. (Limerick East).
• O'Brien, Fergus.
• O'Brien, Willie.
• O'Leary, Michael.
• O'Sullivan, Toddy.
• O'Toole, Paddy.
• Owen, Nora.
• Prendergast, Frank.
• Quinn, Ruairí.
• Taylor-Quinn, Madeline.
• Timmins, Godfrey.
• Treacy, Seán.
• Treacy, Seán.
• Yates, Ivan.

Níl

• Ahern, Bertie.
• Ahern, Michael.
• Andrews, David.
• Andrews, Niall.
• Aylward, Liam.
• Barrett, Michael.
• Barrett, Sylvester.
• Brady, Gerard.
• Brady, Vincent.
• Brennan, Paudge.
• Brennan, Séamus.
• Briscoe, Ben.
• Byrne, Hugh.
• Byrne, Séan.
• Calleary, Seán.
• Colley, George. Conaghan, Hugh.
• Cowen, Bernard.
• Daly, Brendan.
• De Rossa, Proinsias.
• Fahey, Francis.
• Fahey, Jackie.
• Faulkner, Pádraig.
• Fitzgerald, Gene.
• Fitzgerald, Liam Joseph.
• Fitzsimons, Jim.
• Flynn, Pádraig.
• Gallagher, Denis.
• Gallagher, Pat Cope.
• Geoghegan-Quinn, Máire.
• Gregory-Independent, Tony.
• Harney, Mary.
• Haughey, Charles J.
• Hilliard, Colm.
• Hyland, Liam.
• Kirk, Séamus.
• Kitt, Michael P.
• Lemass, Eileen.
• Lenihan, Brian.
• Leonard, Jimmy.
• Leyden, Terry.
• Lyons, Denis.
• McEllistrim, Tom.
• Mac Giolla, Tomás.
• MacSharry, Ray.
• Molloy, Robert.
• Morley, P. J.
• Noonan, Michael J. (Limerick West)
• O'Hanlon, Rory.
• O'Keeffe, Edmond.
• O'Kennedy, Michael.
• O'Malley, Desmond J.
• Ormonde, Donal.
• O'Rourke, Mary.
• Power, Paddy.
• Reynolds, Albert.
• Treacy, Noel.
• Tunney, Jim.
• Wallace, Dan.
• Walsh, Joe.
• Walsh, Seán.
• Wilson, John P.
• Woods, Michael.

Tellers: Tá, Deputies Barrett(Dún Laoghaire) and Taylor; Níl, Deputies B. Ahern and V. Brady.

Question declared carried.

Section 3 agreed to.

Title agreed to.

Bill reported without amendment.

Agreed to take Fifth Stage to day.

Question proposed: "That the Bill do now pass."

Minister for Justice (Mr. Noonan,

Limerick East): I should like to thank all Deputies who have contributed to the debate.

Dr. Woods

We welcome the extension for a further year and also the Minister's commitment to bring in a Bill soon to deal with the anomalies pointed out by the Supreme Court in relation to the situation that develops when a lease has expired and the difficulty of obtaining a new lease. I assume the Bill will be ready at the beginning of the autumn session.

An Ceann Comhairle

Order, please.

Dr. Woods

We made our position clear on the Bill. We hope people will take advantage of the extension for a further year, but as far as our party are concerned we are anxious to see pre-1978 ground rents being terminated. I hope the Minister will bear in mind the points we raised during the course of the debate.

Mr. De Rossa

The Bill will delay the termination of ground rents. The extension by 12 months is just a token gesture which will not improve the situation. I welcome the fact that the Minister intends to introduce a Bill dealing with the anomalies in existing legislation. When will it be possible to introduce that legislation?

Mr. Noonan

(Limerick East): I will introduce it as soon as it has been drafted and the House facilitates me.

Question put and agreed to.