I move: "That the Bill be now read a Second Time."
Private Members' Business. - Landlord and Tenant (Ground Rent Abolition) Bill, 1997: Second Stage.
The House will recollect that the order of the House today provided that Members must be called at specific times. I am obliged to call a Government spokesperson at 7.30 p.m. Unfortunately, the effect of the division is that the time available to the opening speaker has been shortened. He must now bring his contribution to an end at 7.30 p.m. unless the House decides an alternative course of action.
All the Deputy has to say is "thank you".
Some 15 minutes were lost.
I planned to share my time with Deputy Cullen. If that is possible, I will still do so with the agreement of the House.
That is in order.
This is an important occasion on which householders and groups such as ACRA in particular, which led a campaign for many years for the abolition of ground rents, must be happy. The Government informed us today that it will accept the legislation, which is a Fianna Fáil Private Members' Bill. That is a welcome development and I congratulate ACRA on its work over the years. I am happy the Government is prepared to accept the Bill.
Since its foundation, Fianna Fáil has been committed to ensuring that householders, as far as possible, own their homes. As a result, Ireland has one of highest rates — 80 per cent — of home ownership in the EU. Grants, loan facilities and tax incentives have been used to encourage and assist home purchases. For many thousands of families, the family home is their only major capital holding. The family is the cornerstone of society and the family home is the physical focal point for the family. This is why we want to shelter and safeguard homes and to ensure outright and unfettered home ownership. In pursuing this principle, Fianna Fáil introduced the Landlord and Tenant (Ground Rents) Act in 1967, which, for the first time, provided the right to householders to buy out their ground rents. The Act benefited many householders and the scheme introduced in 1967 was greatly improved in 1978 when the Landlord and Tenant (Ground Rents) (No. 2) Act was passed. This Act enabled householders to buy out the ground rent at minimal cost.
The security of the family or householder in his or her home was greatly enhanced by the Landlord and Tenant (Ground Rents) (No. 1) Act, 1978, which prohibited the creation of new ground rents. The Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, removed the right of landlords to repossess for non-payment of a ground rent. These were important developments and since 1978 all new house purchasers were able to enjoy a position where no ground rent was attached to their homes. The developments ensured that a householder has the right to buy out his or her ground rent and can do so at low cost. They also ensured that a ground rent landlord can no longer repossess a home for non-payment of a ground rent and no new ground rents can be created since the 1978 Act became law.
Fianna Fáil is convinced that the time has come for the historic reform of home ownership by the final abolition of ground rents and the introduction of a simple system of registration in the Land Registry. This is why we prepared the Bill, which will bring all ground rents to an end while at the same time protecting the legitimate interest under the Constitution of the landlord by providing for the payment of compensation which would be secured by a charge on the house until the householder pays it. Fianna Fáil also believes, in the light of the abolition of ground rents, that the time is right to move forward to a position where titles to urban dwellings become registered titles as has been the case for titles to rural dwellings since the Land Purchase Acts of the late 19th century and early 20th century, which resulted from the Land League movement.
The key features of the Bill are, first, that on the appointed day, the interest of the ground rent tenant will be enlarged into a freehold interest or fee simple. This is the final step in the abolition of ground rents. Second, the ground rent landlord will receive a right to compensation. Payment of this compensation will be secured by a charge on the new freehold premises. Third, the compensation due will be paid on the same basis as already applies to the purchase price under the Landlord and Tenant (Ground Rents) Acts, 1967 to 1989.
Each householder will receive a freehold certificate which will show that he or she is the absolute freeholder of the house. Where a local authority is involved, the transfer document will become a freehold certificate. A system of simple compulsory registration will be introduced. This will simplify subsequent conveyancing when a house is sold again. For leases which have expired or have less than 20 years to run, the householder will be entitled to the freehold on a similar basis without having to pay a portion of the value of the house as was the case heretofore. There have been some tragic cases where that occurred.
Fianna Fáil is convinced that the time has come for the reform of home ownership by the complete abolition of ground rents and the introduction of a simple system of home registration in the Land Registry. In proposing the final abolition of ground rents, Fianna Fáil is continuing a process of reform over many years. The two 1978 Acts introduced three crucial reforms — the prohibition on the creation of new ground rent leases for private dwelling houses, the prohibition on the forfeiture of the house for the non-payment of a ground rent and the purchase scheme at minimal cost for ground rents of dwelling houses. Many thousands of home owners benefited from these reforms. However, a large number of active pre-1978 ground rents are still in existence. ACRA, the national body of residents' associations, estimate there are some 250,000 houses to which ground rents still apply. The time is now right for the historic reform of home ownership through the final abolition of these ground rents, a relic of feudal times which have no place as we approach the new millennium.
We have introduced this Bill with this objective while simultaneously protecting landlords' legitimate interests under the Constitution by providing for the payment of compensation which will be secured by a charge on the house until the householder pays the compensation.
In the light of the abolition of ground rents we believe it opportune to move forward to circumstances in which titles to urban homes become registered titles, as has been the case in titles to rural holdings since the Land Purchase Acts of the late 19th and early 20th centuries born out of the Land League movement. The comparison with the Land League movement is not inappropriate since the right to hold the freehold title to rural holdings was established only after long and bitter conflict and civil strife in a period in which many ordinary, decent families were evicted and suffered great hardship. Similar resistance and conflict were demonstrated in the campaign to abolish ground rents on domestic dwellings. Some families have made great sacrifices to establish their right to the freehold ownership of their homes in perpetuity and achieved the abolition of all ground rents on homes since 1978. All new homes being freehold, those who purchase new homes today owe them a debt of gratitude.
However, there remains the legacy of pre-1978. We learn from the Land Registry that up to January last only some 65,000 homeowners had availed of the ground rents purchase scheme, comprising approximately 18.5 per cent of those involved. This means that four out of every five homes, or some 250,000, are still liable to pay ground rents. Some 16,300 residents have been taken to court since 1974, some 300 to 400 householders annually are still being dragged through the courts.
To our shame as a nation, 200 families were given sentences and five incarcerated in jail for their resistance to this feudal legacy. As a modern, independent nation we must put an end to this civil strife. The onus is on us, as legislators, to repeal these outdated ground rents and ensure that from a given date in 1997 every home will be freehold and every family will have the security of knowing it owns the land on which its home is built.
This Bill will abolish ground rent leases on an appointed day, its central purpose being stipulated in section 7 which provides that, on a day to be appointed by the Minister for Equality and Law Reform, or the Minister for Justice, the interests of a person holding property under ground rent lease will be extended to freehold or fee simple and all intermediate interests abolished. The various strata of subleases, so common in titles in the case of urban property, will be wiped out leaving the homeowner under the ground rent lease with freehold interest. All family homes will be freehold from the appointed day.
Sections 8 to 17, inclusive, specify those entitled to have freehold interest. The categories of people entitled to freehold interest under this Bill are broadly similar to those entitled to purchase the fee simple under the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978. In the case of leases which have expired or have less than 20 years to run the householder will be entitled to freehold on a similar basis to home owners whose leases have not expired, without having to pay a portion of the value of the house, as had been the case heretofore.
On the termination of all ground rents, in order to comply with the constitutional rights of former owners of freehold and intermediate interests, it is necessary to provide for the payment of adequate compensation in respect of the interests to be abolished. The Bill provides that this compensation will be paid by the person who becomes the new freeholder. In effect the provisions of this Bill reverse the process stipulated in the Landlord and Tenant (Ground Rents) Acts, 1967 and Landlord and Tenant (Ground Rents) (No. 2) Act, 1978 under which a ground rent could be purchased.
Section 18 sets out the method of calculating the compensation to be paid. The method adopted is similar to that used previously, one important difference being that used for calculating the value of the landlord's interest, where a lease has expired or has less than 20 years to run, will be abandoned. The compensation to be paid by people in these circumstances will be calculated on the same basis as that for other categories.
Because the abolition of ground rents on a certain day will deprive former owners of freehold and intermediate interests of their respective assets, in order to ensure they actually receive the compensation due to them vindicating their constitutional rights, a reliable, legal protection must be put in place. Section 19 provides for the creation of a charge or mortgage on the new freehold to secure payment of compensation due which will take effect on the appointed day.
I will have another opportunity to make some further comments but I should now like to allow my colleague, Deputy Cullen, to contribute.
I welcome the fact that the Government has accepted this important Bill proposed by me on behalf of my party. While it will be given a Second Reading this evening there is an onus on the Government to join us in ensuring it passes all remaining Stages without delay.
In accordance with an order of the Dáil of this day, I will be obliged to call the Minister for Justice in less than five minutes, at 7.30 p.m.
I congratulate my colleague, Deputy Woods, on introducing this Bill, wisely accepted by the Government, the implementation of whose provisions will represent a significant moment in the lives of many of our citizens. It should be noted that this Bill was not hastily prepared or published. All Members accept that its preparation involved an enormous amount of teasing out and discussion to ensure its provisions were justified on constitutional grounds. Those of us who have been involved know how complicated it has been to find a way round the system which would restore full rights to homeowners still burdened with pre-1978 ground rents.
Without the involvement of ACRA nationwide I very much doubt we would have reached that objective this evening, so that association can take great pride in its efforts. Over the years this issue waxed and waned as difficulties arose, were resolved and additional ones came to the fore. Throughout those years within the Fianna Fáil Party there was always a commitment to find a means of justifying people's rights in this respect.
It would be remiss of me not to mention Waterford where, when a specific issue arose, ACRA put an enormous amount of work into the preparation of this Bill. Views expressed at the many public meetings I attended voiced homeowner's dissatisfaction at politicians of all persuasions having been unable to deliver their just requirements to date.
Nonetheless, at long last a Bill has been produced whose provisions recognise the constitutional rights of those holding a leasehold or freehold interest, encompassed within some titles, and balances those rights with the rights of those who have purchased houses, see their home as their own and want the ground rents controversy resolved once and for all.
The introduction of this Bill is proof that if one persists and works hard at an issue, Private Members' time can be valuable. Whenever a Member introduces a Bill of substance, it is very difficult for a Government to ignore its legitimate provisions, the work involved in its preparation and, in this case, the justice and validity of the national campaign fought by ACRA. My colleague has outlined how the issues will be dealt with in protecting the rights of the freeholder and creating a situation where title can be purchased to create the fee simple on a said date by the Minister, at minimum cost. I commend my colleague on his effort in bringing forward the Bill.
I propose to share my time with Minister of State, Deputy Gay Mitchell.
I am sure that is satisfactory and agreed.
I thank Deputy Woods for the explanation he has given about the contents of the Bill and, in particular, for the explanatory memorandum which he published with it. I, too, acknowledge the work which ACRA has done during the years on this issue.
In our Programme for Government we are committed to taking action on ground rents and in this context we will not oppose Second Stage of the Bill. In taking this approach, we recognise there are many problems with this Bill which will have to be remedied. We would be a good deal further down the road of dealing with the issue of ground rents if Deputy Woods' party, when in Government in 1994, had done what this Government is doing now — accepted, without opposition, the Bill brought forward by my colleague, Deputy Gay Mitchell. I trust the Opposition will recognise the action the Government is taking tonight is one of openness and generosity to the work which Deputy Woods has done. It shows a spirit of generosity which Fianna Fáil in Government did not show to us when we produced Private Members' Bills.
Particular aspects of the Bill as drafted would considerably worsen the position of tenants liable to pay ground rents. In effect, it seeks to achieve the abolition of ground rents through forcing people to buy them out. In practice this would mean that a tenant who has to pay a ground rent of £50 per year would be obliged, under the Bill, to make a once off payment of about £650 to buy out the ground rent if the landlord so demanded. That £650 is aside altogether from legal and registration costs which may arise. In addition, if arrears of grounds rent were due these would have to be paid. Under the existing scheme a person has a right to buy out a ground rent. In effect this Bill would replace that right with an obligation. It would be difficult to explain to people who are concerned about having to pay ground rents how this would improve their situation.
I will explain how the figure of £650 arises. According to the explanatory memorandum the compensation due to the landlord will be on the same basis as already applies to the purchase price under the Landlord and Tenant (Ground Rent) Acts, 1967 to 1989. Under that legislation, where agreement is not reached between the landlord and tenant on the amount to be paid a "multiplier" is used based on the yield from Government securities. The multiplier is 13 and is applied to the existing annual ground rent.
The Bill is virtually identical to a draft Bill which Deputy Woods, when Minister for Social Welfare, passed on to his colleague the then Minister for Justice, Mr. Gerry Collins, in May 1987. That Deputy Collins or any of his successors as Minister for Justice — Deputy Ray Burke, Deputy Geoghegan-Quinn and Deputy Padraig Flynn — did not bring it forward is a clear indication there are problems with it.
In the context of the commitment in the Programme for Government I have been carrying out an examination of ground rents. The House will appreciate that because of the complex issues involved and the unprecedented programme of law reform particularly in the criminal law area which I have been bringing forward, it has not proved possible yet to complete that examination. In the context of not opposing Second Stage, the Government will have no hesitation in bringing forward any proposals for change in this area which may emerge which would — unlike some of the provisions of the Bill — represent a genuine improvement in the position of ground rent tenants.
There have been many Private Members' Bills dealing with the issue. Any Deputy would like to be in a position to say he or she had brought about the abolition of ground rents. The reality is that under the Constitution we must have regard to the fact that both ground rent tenants and ground rent landlords have rights. Deputy Woods' Bill specifically recognises this through its provisions on compensation — provisions which would worsen considerably the position of ground rent tenants.
There is a long legislative history associated with ground rents, to which Deputy Woods has referred, and I do not propose to go over it again. Under the two Acts of 1978 and the 1987 Act, 65,000 householders have availed of the scheme to buy out their ground rents, many at a rate agreed with the ground rent landlord well below what they would pay under this Bill. It is worth mentioning that the No. 2 Act of 1978 deprived a ground rent landlord of the right to repossess a dwellinghouse for non-payment of ground rent on foot of a covenant in the lease, leaving the landlord simply with the right to sue for any arrears as a civil debt.
As part of my examination of this issue I will consider whether any improvements may be made to the present arrangements and will be happy to further examine the contents of this Bill, particularly in conjunction with the Attorney General, regarding the constitutionality of any proposals. Equally I will take into account suggestions made by Deputies during the course of this debate. While we are not opposing Second Stage, there are major problems with the approach taken in parts of the Bill. The explanatory memorandum states:
The central purpose of this Bill is achieved by section 7, which is the key section of the Bill. The section provides that on a day to be appointed by the Minister for Equality and Law Reform [or Justice as the Deputy has said] the interest of a person holding property under a ground rent lease is enlarged to the freehold (fee simple)...
This is not actually what section 7 does. Section 7 states:
From the appointed day a person to whom this Part applies shall have the right as incident to his existing interest in land, to have that interest enlarged into the fee simple, and for that purpose any intermediate interests in the land shall be extinguished.
The key phrase is "have the right" where the explanatory memorandum suggests the enlargement into the fee simple would take place automatically. There is a difference between the explanatory memorandum and what is in the Bill.
It may be that what is intended is the approach set out in the explanatory memorandum. This would seem to be borne out by the fact that section 18 provides that, from the appointed day, the compensation to the landlord shall be deemed to be charged upon the interest which has been enlarged to the fee simple. This would suggest that from the appointed day, the interest has actually been enlarged but section 7 creates a right to a fee simple, a right which a ground rent tenant already has, rather than a fee simple. It would make no sense in section 18 to provide for the charging of compensation against an interest in land that has not come into being.
Inconsistencies of this kind are riddled throughout the Bill and considerable work will be required to remedy them. I hope in his reply Deputy Woods will clarify some of the conflicting approaches I have mentioned.
Leaving aside the technicalities — crucially important though they would be in practice — I ask Deputy Woods to reconsider the approach which is taken in the Bill which would, in effect, enable a landlord to force a tenant to buy out his or her ground rent. That this is the effect of the Bill is clear from the explanatory memorandum which provides that the ground rent landlord will, not might, receive a right to compensation and that payment of this compensation will be secured by a charge on the new freehold premises.
Under the present system, a tenant has the right to buy out a ground rent. Under this Bill that right would be an obligation. Obviously no one likes to have to pay ground rents but it seems odd to suggest to people who are concerned about the issue that their concerns will be addressed by imposing an obligation on them to pay 13 times their annual ground rent in one payment.
There must be great doubts about the constitutionality of that proposal in terms of the rights of a tenant. It would be most unfair to tenants — many of whom are hard pressed to keep up with their normal payment of bills — to impose on them a legally enforceable obligation to pay 13 times the amount of their ground rents all at once. Incidentally, the proposal may also be unconstitutional in terms of a landlord's rights as well in as much as the legislation does not provide for interest to be payable on the compensation charge against the property.
There is another major difficulty with the proposal which would work against the interests of tenants. In the past many tenants using the special scheme have been able to negotiate buying out their ground rents at less than the "multiplier" rate which is used where agreement could not be reached. Any incentive for a landlord to negotiate a lesser rate would be likely to disappear given the proposals in the Bill which would oblige the tenant to pay the full amount. Clearly this aspect will have to be fundamentally considered and in accepting Second Stage I emphasise that the approach which the Bill takes on this issue is not acceptable to the Government.
In approaching the question of improvements which may be possible in relation to ground rents it is important that we are honest with people about the parameters which will govern any changes. It is the ground rent tenant who will have to pay the fair compensation to which a landlord will have a constitutional entitlement. Successive Governments have taken the view that there would be no question of using Exchequer funds to provide that compensation. Such an approach would be inequitable to those who have used the existing scheme to buy out their ground rents. People will have to accept that it is not open to the House to introduce legislation which will make ground rents disappear into thin air. I am not suggesting that improvements are not possible but it is only fair to emphasise the constraints which will arise in bringing about change in this area.
There are four criteria against which any proposals for change must be judged. They must be constitutional, workable, involve no cost to the Exchequer and represent a real improvement in the position for ground rent tenants. One of the reasons it is important to emphasise the constraints involved is to avoid a situation where people, because of unrealistic expectations as to what might be achieved under future legislation, do not take action in relation to their ground rents and find themselves in difficult circumstances subsequently.
As regards tenants who may shortly find that their lease has less than 15 years to run, the explanatory memorandum mentions that one of the proposals in the Bill is "for leases which have expired or have less than 20 years to run, the householder will be entitled to the freehold on a similar basis, without having to pay a portion of the value of the house as was the case heretofore". I assume the reference to 20 years should be to 15 years.
The arrangements for buying out ground rents which have less than 15 years to run differ from the position in relation to other ground rents in terms of the calculation of the amount payable to the landlord. Instead of a multiplier of the annual ground rent, the amount payable is based on the value of the house up to a maximum of one eighth. This is a difficult position for a tenant to be in. I have been advised that this provision arises because the value of a lease to a landlord increases the closer the lease is to expiry and, in terms of vindicating the landlord's constitutional right to fair compensation, the formula relating to the value of the house was included in legislation. In those circumstances it would follow that there would be constitutional problems with what Deputy Woods proposes. The obvious advice to give to tenants whose leases could be affected by the 15 year provision is to buy out their ground rents in good time to avoid this.
The Bill raises a host of technical issues, only some of which I have outlined. Great tracts of the Bill are borrowed from existing legislation and refer to dates which made sense in the context of when that legislation was originally introduced but would not always be appropriate in the context of this Bill. Equally, there are provisions in the Bill dealing with registration which would need to be examined in detail in consultation with the Registrar of Titles and Deeds who would have to advise on the practicalities of what is being proposed.
It will be clear from what I have said that there are serious problems with aspects of the Bill but because of the Government's commitment to taking action on ground rents we will not be opposing it on Second Stage. In the meantime, I will proceed with the examination to which I referred with a view to bringing forward proposals which would meet the criteria mentioned and which, unlike some of what this Bill proposes, would represent a real improvement in the position of ground rent tenants. I will take into account all the points made during the course of the debate. I am sure Deputy Woods whom I have asked to reconsider the approach taken in the Bill, particularly in relation to forcing people to buy out their ground rents, will be prepared to do likewise.
I thank my colleague, the Minister for Justice, for sharing her time with me. As the House will be aware, this is a matter in which I have had an interest for some time. The Programme for Government contains a commitment to take action in relation to ground rents. As the Minister for Justice said, her Department is studying how this commitment can best be given effect while being mindful of the constitutional problems which arise when one tries to legislate in this area.
The Landlord and Tenant (Ground Rents) Bill, 1994 which I introduced was voted down by Fianna Fáil, the champion of ground rent tenants, without making any attempt to accept or amend it or produce any proposals of its own. The Programme for Government contains a commitment, based on the Bill I introduced, to deal with the problems encountered in this area. The Government's decision not to oppose this Bill on Second Stage is a clear indication of its determination to deal with the matter and of the Minister's open-minded approach to it. This is in contrast with the response I received when I introduced the Landlord and Tenant (Ground Rents) Bill, 1994.
If we are to solve this problem, we need to be imaginative in our approach. If the Landlord and Tenant (Ground Rents) Bill, 1994 had been accepted, the following four proposals would have been implemented: the transfer of the fee simple to all lessees of dwelling houses who are entitled to purchase the freehold; the landlord would be allowed to pursue moneys due as a contract debt; the removal of the remedy of seeking a court order directing committal to prison for non-payment of arrears and ground rent, and providing for persons whose leases have expired and who could be exposed to enormous penalties to be treated as if the lease had not expired.
The Minister for Justice will judge these proposals against the four criteria mentioned — they must be constitutional, workable, involve no cost to the Exchequer and represent a real improvement in the position for ground rent tenants. It is political chicanery of the highest order to introduce a Bill sent to a Fianna Fáil Minister for Justice in 1987 as a Private Member's Bill when a Bill into which I put much effort was voted down by Fianna Fáil in 1994 without making any attempt to allay the serious concerns of those affected.
The Landlord and Tenant (Ground Rents) Bill, 1994 proposed to establish a statutory fee simple for every leaseholder of a dwelling house entitled to redeem the freehold interest and to convert the fee simple without prejudice to the rights or equities of existing landlords. The landlord would have been able to continue to sue for payment as a debt. The advantage from the homeowner's point of view would have been that, on the sale of a house, a solicitor would not have to hold up the sale while awaiting details of the title. Since many of these landlords have disappeared they would not sue for the debt. These issues can be teased out on Committee Stage.
Although the proposals I have put forward may have flaws — this is a far better approach than the one proposed by Deputy Woods — they form the basis for a real solution to this problem. This is a complex issue and has been left on the back burner for too long by successive Governments. I congratulate this Minister on meeting the commitment in the programme for Government. She will give this issue a high priority. I look forward to the results of the examination currently under way in the Department as well as the legislation that will follow it as soon as possible. There are other Ministers who have had proposals put to them but this is the first time in recent years that a Minister has accepted an Opposition Bill, though it badly needs to be amended. The Minister for Justice is to be greatly admired for doing so; if I had received the same courtesy on introducing my Bill in 1994 we would have dealt with this problem three years ago.
I wish to share my time with Deputy Joe Walsh.
Is that agreed? Agreed.
I compliment Deputy Woods on introducing this Bill. Over the past two years, the Opposition Front Bench has introduced a number of very important Bills, some of which were accepted by the Minister. I commend her for accepting the Bill before us.
An important Bill on this matter was introduced in 1967 by Fianna Fáil and two Bills in 1978 dealt with the abolition of ground rent and the compensation for landlords. This Bill would abolish ground rent and register lands with the Land Registry. Many people benefited under the previous Bills but approximately 250,000 people could benefit under this one.
This is a comprehensive Bill and when one acknowledges that the Opposition does not have the Government's resources, further credit is due to Deputy Woods. The Bill deals with extinct ground rent leases on an appointed day and it specifies those entitled to the freehold. It deals with expired leases, ensures compliance with the Constitution and calculates how the payment of compensation will be made. According to the Bill, the freehold owner will receive a special freehold certificate; it also deals with the arbitration procedures, local authority dwellings, the registration of new freehold titles and the costs involved. However, the Bill does not go far enough.
The Minister referred to the good work done by the Land League for rural householders. A situation involving occupational leasehold in my hometown of Carrickmacross also applies to other towns. The west side of the main street in Carrickmacross is owned by an absentee landlord, Mr. Shirley, who lives in Britain. Many retail traders are obliged to pay occupational leasehold rent on 99 year leases which expired recently. They are now being charged exorbitant rents that amount to usury on the part of the landlord. People who were paying £20 a year are now paying £200 a week. Recently, a person who was paying £65 a year is now paying £600 a week. That is intolerable.
Ground rent?
No, occupational leasehold. It is not covered in this Bill and legislation should address this. Those involved are citizens of the State. I respect the rights of landlords and their constitutional position, but this issue should be addressed on behalf of the retailers. I will ask Deputy Woods to address this in his legislation when he occupies a seat on the other side of the House.
That will be a while yet.
It is totally unacceptable that someone who used to pay £1.25 is now paying £600 a week. How can that be justified? There has been much agitation in the town about this and rightly so. When the urban district council wanted ground for a car park, the landlord objected and a compulsory purchase order was issued, which is also unacceptable.
The Minister should change the law. It may be necessary to have a constitutional referendum as the matter dates from the foundation of the State. It is unacceptable as we approach the third milennium. If a constitutional referendum is necessary, it might be held in conjunction with another referendum.
The retailers should also have the right to purchase the leasehold and the necessary legislation for this should be introduced. In the meantime, there should be equitable occupational leasehold rents. It is unacceptable that someone who was paying £65 a year should now have to pay £600 a week when the 99 year lease runs out. The retailers' right are being trampled on.
I welcome the Government's acceptance of the Bill. As Deputy Woods pointed out, it will end the outdated feudal ground rents system which still applies to approximately 250,000 homes. This will be good news and a major breakthrough for thousands of families and homeowners. When Second Stage passes, the Government should ensure that the Bill passes Committee and Final Stages without delay. The Minister might look at the issue of occupational leasehold rents.
I support this Bill and it is satisfying that the Government has accepted it. There is useful legislation that should not be part of the political cut and thrust.
The Deputy is learning. He should have thought of that in 1994.
There is a job to be done and the Minister could sort this out. That will not be done by making smart remarks.
I am just reminding the Deputy.
I support this Bill in good faith because it is necessary that the matter be tidied up. Many householders look at the democratic system and say surely there is enough ingenuity and common sense both in Government and Opposition to agree on providing time for debate on this issue. Reasoned debate will allow amendments to the Bill to be proposed to seek modifications to it. There is general desire to have this issue dealt with finally and in an equitable fashion.
There is a great tradition of home ownership in Ireland. In my travels abroad I always reflect on the superb condition of homes in Ireland in urban and rural areas. Many people take great pride in their homes because they own them. It is a tradition worth supporting and facilitating. This Bill indicates Fianna Fáil's support for home ownership. A simple system for home ownership registration should be provided so that the scourge of ground rents might be dealt with once and for all. There are about 250,000 homes to which ground rent applies. It is an anachronism, an old fashioned landlord system. However, landlords are entitled to equity and the Bill provides for compensation to be provided in an equitable manner.
Many families make great sacrifices to own their homes. There have been a number of buy out schemes over the years and they have been supported to a large extent. People save money, pay mortgages and deprive themselves of holidays and other luxuries to own their homes. The right to freehold ownership is dearly held. This Bill addresses the issue. If Second Stage is agreed it will allow the Government to prepare whatever amendments it feels are needed.
Deputy O'Hanlon referred to a specific problem in his area. A similar problem with expired leases exists in a number of towns in my constituency. There are also difficulties with some public buildings, for example, schools which have ground rent problems. The Bill addresses those problems in section 7. Sections 35 to 40 set out a procedure for arbitration in disputes concerning any matters which may arise. It is important to regularise matters through arbitration to achieve equity. Sections 42 and 43 deal with the registration of new freehold titles.
I commend Deputy Woods for his diligence in the preparation of this Bill. A feature of this session of the Dáil has been the number of Bills which have been brought forward by the Opposition. I commend the Bill to the House.
Acting Chairman
I call Deputy Eric Byrne who has ten minutes.
May I have an extra few minutes as the last speaker did not use his full allocation of time? I wish to share time with Deputy Costello.
Acting Chairman
Is that agreed? Agreed.
It is ironic that the Fianna Fáil Party when in Opposition brings forward legislation to abolish ground rents. It is amazing what a spell in Opposition can do. When my party was in Opposition it proposed the abolition of ground rents but we could not get Fianna Fáil to accept the proposal. It is amazing how progressive it can appear in Opposition. Deputy Woods and others in his party are past masters at the strategy of opportunism.
That said, I congratulate Fianna Fáil on drafting this Bill. As drafted, it is imperfect although that is often the case with Opposition Bills because of the spontaneity with which it reacts to pressure. It is the first step in addressing the plight of thousands of householders caught in the ground rent trap. I regret that Fianna Fáil did not support Private Members' Bills introduced in the past by my colleagues the Minister, Deputy De Rossa, and the Minister of State, Deputy Gilmore, but I welcome this Bill.
Ground rents are an anachronism which have no place in a modern state. They represent the last vestige of absentee landlords. We are close to consigning them to history, where they should have been consigned long ago. It has long been an affront to the principles of natural justice that a householder does not own the freehold of the land on which his or her home is built. During the past 20 years as many as 17,000 people have been faced with court demands to pay their ground rents bills. Of those, 176 received custodial sentences of which five were served.
A ground rent landlord may claim one-eighth of the property's value when the lease expires. With property prices rising sharply, especially in urban areas, householders can find themselves faced with substantial bills. If they are unable to raise one-eighth of the property's value they have no option but to renew the ground rent lease for a further 99 years at a new rent which may be as much as 50 or 60 times the original rent.
As more and more householders reach the end of their leases they become increasingly concerned. Increasing numbers of them are facing demands which they cannot meet. Will the Minister for Justice indicate if this can be remedied by way of order? Under section 26 of the Landlord and Tenant (Ground Rents) Act, 1967, the Minister is entitled to amend, by way of order, section 18(4) of the Landlord and Tenant (Reversionary Leases) Act, 1958. This section stipulates the proportion of the property's value which reverts upon expiry of the lease. If it transpires after further research that relief is possible, the current fraction of one-eighth should be substantially reduced, even in advance of the enactment of the legislation.
Ground rent landlords never lose as they can either claim a lump sum of many thousands of pounds or impose a massive increase in ground rents. It is little wonder that the original ground rent landlords and their descendants are being bought out by companies. These companies buy ground rents in job lots in the hope of making a killing when the short-term leases expire. Democratic Left has consistently argued in favour of the abolition of ground rents. The programme, A Government of Renewal, contains a commitment to introduce legislation which will abolish ground rents as a specific lean on residential property and convert them instead into normal commercial debts.
The Bill proposes that the interest of the ground rent tenant should be enlarged to a statutory freehold interest and that whatever compensation is due to the landlord should be secured by a charge on freehold premises. One of my concerns about the Bill is that it provides for compensation for the ground rent landlord even though it is the aggrieved party, the householder, who has been denied the freehold of his or her land. Democratic Left believes that any legislation dealing with ground rents should set a date for the ending of the ground rent system, apply equally to all leases whether current or expired, address the alleged need to compensate the landlord, revise the draconian penalties and put in place a simple and inexpensive method of reregistering new freehold titles. I ask the Minister to take our views on board so that we can get rid of ground rents once and for all.
I thank Deputy Byrne for sharing his time with me. I welcome the legislation and compliment Deputy Woods on introducing it. The abolition of ground rents has been a long-term policy of all parties. It is also part of the programme, A Government of Renewal, which was agreed by this Government and its predecessor. I am glad the Government is accepting the legislation. When we have dealt with this part of our colonial past we should consider the relationship between landlords and tenants in private rented accommodation. Even though it is provided for in law, there is no registration system for landlords and there are no adequate structures in terms of standards and safety regulations. However, this is a matter for another day.
There is widespread political consensus on this issue. The anachronistic legislation in this area prevented us from dealing with this matter because of the danger of infringing the constitutional provisions on private property. It is clearly recognised that the legislation in this area belongs to a bygone era and should be dealt with effectively. This legacy from the past caused much pain and was a major bone of contention between our past rulers and the indigenous population. It is absurd that property owners should still be subjected to a charge based on archaic legislation.
We all agree with the thrust of the Bill but it requires radical surgery before it is acceptable. For example, if enacted as currently drafted tenants would be required to pay several hundreds of pounds to buy out ground rent of £40-£50. We are either talking about a substantial bill for many homeowners or an accumulated very substantial bill for the Government and we must ensure that neither is the case. We must not require the Government to pick up the tab or put homeowners in a position where they have to pay large amounts to buy out the ground rent on their property. These important issues need to be addressed. I urge the Minister for Justice, Deputy Owen, to ensure the Government carries out a thorough examination of all the complex issues involved in the abolition of ground rent, particularly the constitutional aspects, the entitlements of the owners of private property and the legal status guaranteed by property.
Any legislation which makes a realistic attempt to reform the issue of ground rents must take cognisance of the provisions of the Constitution, must not give rise to excessive costs for tenants and must immediately ameliorate the current problem. It is almost 20 years since the 1978 legislation which made it legal to create new ground rents was introduced. It would be unsatisfactory if the Minister was to accept the legislation as presently drafted. However, I am sure Deputy Woods will give favourable consideration to amendments, as otherwise we could do an injustice to tenants who would have to pay the ground rent. It will not be easy to find a solution to this problem.
Ground rents are unacceptable to everyone and all parties examined the matter in the hope of bringing forward legislation to deal with the issue. While there is no easy solution to the problem, the Government must grasp this nettle. I am glad the Government has accepted the Bill and I look forward to teasing out on Committee Stage the various complex constitutional issues, the rights of homeowners and the burden on the Exchequer.
I thank Deputies who contributed to the debate. The time for the debate is, of necessity, restricted but I am very happy the Government has agreed to accept the Bill.
I want to refer to the freehold certificate. The end result of the process is that a new freehold owner will receive a document, to be known as a freehold certificate, which will become his or her primary document until registered in the Land Registry. This document will be in a prescribed form and will contain all the relevant information in simple language concerning the interests extinguished and the new freeholder. It must be completed by the parties to the transaction, or the arbitrator in the event of arbitration. Where the property is a dwelling house, this can be done through the Land Registry at minimal cost and without the necessity of employing lawyers. This procedure is broadly similar to that set up in the Act of 1978.
In her contribution the Minister said difficulties could arise with the Land Registry and that there would have to be discussions with it. What we are proposing is a major change which will involve simplification and several Deputies said they welcome that.
Section 41 deals with housing authority dwellings. These are dealt with on the same basis as all other dwellings. The special vesting procedure by way of transfer order contained in the 1978 Act cannot be retained because, in many instances, the local authority would not, on the appointed day, be the owner of the freehold and therefore would not have been in a position to vest the freehold. The interest of the former freeholder and any other former intermediate owners could not be adequately protected if the procedure used in relation to local authority dwellings was adhered to.
The Minister appeared to suggest there were good reasons nothing was done in this area over many years, but local authority dwellings belong to the State. There is no reason this could not have been done over those years. There is not the same degree of complexity that exists in some of the other cases. There is a clear case which affects a large number of houses and on which it would have been possible to proceed.
The registration of new freehold titles in the Land Registry is a key policy element in the Bill. The object of this is to simplify urban titles in a manner similar to that achieved with rural titles since the beginning of this century. This would make subsequent transfers of those properties simpler and cheaper. Sections 42 and 43 deal with the registration of the new freehold titles in the Land Registry. A system of compulsory registration is provided for but only becomes effective on the order of the Minister for Justice. Otherwise, the Act provides for registration on production in the Land Registry of a freehold certificate.
The question of costs was raised by the Minister. The whole basis of the costs is, as the Minister suggested, similar to that which applies under the 1978 Act and there is consequently only a minimal cost involved. The Minister gave an extreme example of this, and raised some other questions, but it is important to realise we are now in the position of firing the last shot. ACRA recently welcomed this last shot and the fact that we were resolving this problem. We are now at the stage where all parties in the House agree to the principle of the Bill. The Bill is complex, although some elements are simple such as the one dealing with local authority dwellings. We must balance the constitutional rights of landlords and their tenants, and that is what we are doing in the Bill.
The Minister said that, under the Bill, a tenant currently paying £50 per year would be obliged to make a one-off payment of £650 under the existing scheme, using a multiplier of 13. Ground rents are currently of the order of £10, £12, £15 or £18 per year. The Minister highlighted an exceptional case and then used the highest possible multiplier to frighten us. I do not know why she is doing that because she is accepting the Bill, subject to amendment on Committee Stage. That applies to Bills brought forward by the Government. By the time they are completed, 120, 150 or 300 amendments may have been made by committees of the House. I welcome the fact that the Government has agreed to accept the principle of the Bill.
The Minister referred to a charge. There will be a charge under the Bill but it can be allowed to run as a charge on the property. If the Minister has a better way of doing this, I will include it in the Bill, but this method is acceptable in the present circumstances.
We have left it to the Minister to fix, by regulations, a time in the Bill for the abolition of ground rents. That matter can be discussed on Committee Stage.
The Minister referred to the fact that I was involved in trying to get a Bill of this kind through the House in 1987 when I was Minister for Social Welfare. Prior to that I was a spokesperson on justice and had examined this question with a view to finding a solution. Until recently, I was spokesperson on equality and law reform. I have constantly raised this issue, as have ACRA and many Deputies in the House. We want this change implemented. I make no apologies for my interest in this matter and will continue to pursue it until a solution is found. The Minister also referred to the conflicting rights of landlords and tenants.
The Bill does not provide for interest to be payable on the compensation charged against a property. We purposely did not provide that as we considered it inappropriate. There is also a Statute of Limitations on interest, of which the Minister will be aware. There are three ways to deal with these questions. They can be dealt with by agreement using the multiplier under the existing formula or arbitration. Those options remain open for people to pursue.
The Minister stated that the Bill should be constitutional, workable, involve no cost to the Exchequer and a real improvement. The Bill will be constitutional, workable and will not involve a cost to the Exchequer. The cost for the individual will be low, approximately £30 for registration. The Bill will represent a real improvement for ground rent tenants.
The question of extending the lease from 15 to 20 years can be discussed subsequently. It is important that we do not become involved in the minutiae of this complex issue. The parties have agreed in principle to this legislation which will abolish ground rents once and for all. That is what people want us to do and we should proceed now to Committee Stage on which we can discuss the various details.
Question put and agreed to.