Dáil Éireann debate -
Wednesday, 25 Jun 2003

Vol. 569 No. 4

Ground Rents.

Mr. Morgan

Ground rents are a feudal tax, a hangover from the days of British colonial rule in Ireland, and their abolition must be facilitated. Sinn Féin does not agree that ground rent landlords should be compensated. As a legacy of colonialism, ground rents have been unjust from the start. Therefore, to compensate would legitimise what is manifestly unjust. It is scandalous that this has not been dealt with since the coming into existence of the Twenty-six County State.

Ground rents represent an ongoing injustice against hundreds of thousands of Irish people who have suffered at the hands of land speculators, both native and foreign, avaricious builders and many opportunists in the legal profession since the foundation of this State.

On the question of so-called constitutional difficulties, I expect the Minister of State will say he is sure I would not want the Government to introduce a Bill that is unfair or inequitable. He is correct. However, I would call on the Government to bring forward legislation now and allow it to be tested in the Supreme Court as was done with Part V of the Planning and Development Act 2002. If it is unconstitutional we can then proceed to a constitutional referendum to allow for such legislation.

Householders whose leases are about to expire are placed in an unacceptable position whereby they are forced to choose between buying a freehold on their house for one eighth of its value or signing a new lease for a drastically increased rent. With the value of houses going up, people whose leases are due to expire are justifiably angry and concerned.

An example outlined by ACRA related to a householder in Dublin whose ground rent lease has expired who is struggling to hold on to the family home. The ground rent landlord is demanding a sum of €54,000 for freehold interest plus legal fees of €127 per hour until agreement is reached. The amount demanded is based on a formula in the current legislation which allows the landlord to claim one eighth of the market value of the family home. The alternative for those who cannot afford to buy out the expired lease is to sign a renewal of the lease for 35 years.

The formula for the new ground rent per annum is computed on the basis of the open market rental value of the house. Many of those who find themselves in this invidious position are elderly and have no income other than their pension. They spend their remaining days in fear, yet the Government says there is nothing it can do.

Ground landlords are statute-barred from claiming more than six years' arrears, yet this is ignored by landlords who continually try to intimidate defenceless tenants and extract the maximum amount of money from them. In 1997, the Minister for the Environment, Heritage and Local Government, then in Opposition, com mended the Fianna Fáil Private Members' Bill on ground rents to the Dáil. He stated: "All Members accept that its preparation involved an enormous amount of teasing out and discussion to ensure its provisions were justified on constitutional grounds." Why was the Bill constitutional when Fianna Fáil was in opposition and unconstitutional when it is in Government? Has the Government come under pressure from powerful vested interests?

I ask the Minister of State in his reply to outline how he intends to overcome the apparent difficulties in introducing this legislation. Is he telling the House that it is beyond the capabilities of his Department to right this wrong? Is the Government committed to tackling this issue? Recently, when an Opposition Deputy sought to ascertain the publication date of the ground rents abolition Bill, a senior Cabinet Minster was heard to quip, "ring the Land Registry". I give this example to outline the dismissive attitude of the Government to those campaigning for the abolition for ground rents.

ACRA has campaigned for the abolition of ground rents since 1973 and we are told that all of the major parties support the abolition. People have waited 80 years for this legislation. How much longer must they wait?

Mr. B. Lenihan

The constitutional difficulty Deputy Morgan appears to have relates to the existence of this State, which is not a Twenty-Six County State.

Mr. Morgan

How many counties has it?

Mr. B. Lenihan

The Constitution provides that the name of the State is Ireland. The ambition of the State, as proclaimed in the Constitution, is to secure, by peace and agreement, the unity of the whole of Ireland. I am concerned by the Deputy's reference to the Twenty-Six County State because some of his party's propaganda outside the House has taken to referring to this institution, Dáil Éireann, as the Leinster House Parliament, when it is the direct descendant of the first Dáil and sequentially named as such.

Mr. Morgan

The address is Leinster House.

Mr. B. Lenihan

It is important to note the denigration of the institutions of this State, which were secured after an enormous sacrifice by previous generations.

Mr. Morgan

The Irish people.

Mr. B. Lenihan

I have considerable sympathy with the Deputy's concerns about ground rents. The development of ground rents in this country evolved over hundreds of years in a particular legal context. An odd feature of the system was that it was a peculiarly Irish legal development, which involved pyramid titles and a vast number of intermediate lessors whose eventual claim to rent, essentially, involved a rather nominal sum but still represented a substantial burden to real owners of land.

I welcome the fact that the Deputy has raised this matter which successive Governments have attempted to tackle. The Government's legislative programme makes provision for the publication of a ground rents Bill during 2003 with a view to abolishing ground rents. The fact that the Bill is included in the programme is an indication of the Government's intention to act in this matter.

The current position is that under the Landlord and Tenant (Ground Rents) (No. 2) Act 1978, there is a statutory scheme for the acquisition of the fee simple by the owners of dwelling houses. Part III of the Act provides a special procedure, operated at low cost by the Land Registry, whereby owner occupiers of dwelling house may acquire, readily and relatively inexpensively, the fee simple in their property. The purchase price in most cases is, at present, approximately 23 times the ground rent.

The Act contains a provision for the determination of applications of the purchase of a fee simple in cases where the consent of all the necessary parties is not forthcoming. In such cases, the Registrar of Titles will determine the application by arbitration. The Act also makes provision for the circumstance that the ground rent landlord cannot be found. This is not an obstacle to a tenant negotiating directly with the owner of the ground rent for the purchase without reference to this legislation.

It is generally accepted that the present arrangement for the purchase of ground rents under the 1978 Act works well and since its introduction, more than 70,000 householders have availed of this low cost purchase scheme operated by the Land Registry. However, the scheme does not apply to buying out ground rents which have less than 15 years to run. The arrangements here are different 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, which is up to a maximum of one eighth. I have been advised that this provision arises because the value of a lease to a landlord increases the closer is the lease to expiry. I appreciate that this is a difficult position in which tenants may find themselves and it has been compounded by the increase in house prices in recent decades. The advice to tenants whose leases can be affected by the 15 year provision is to arrange to buy out their ground rents in good time.

The Deputy stated that successive Governments have used the excuse of constitutional difficulties for their failure to introduce legislation on the ground rents issue. In response, let me state that any Government must ensure that any action taken on this issue, or on any other issue, is in conformity with constitutional requirements, which the Government is obliged to ensure are respected when taking any action. It would not be appropriate to enter into the details of this matter pending the completion of the work that has now been undertaken in the Department of Justice, Equality and Law Reform. Suffice to say that the constitutional difficulties referred to concern the respective rights of ground rent tenant and landlords. I am sure the Deputy would agree that the Government should introduce a Bill that is fair and equitable and that will not affect the constitutional rights of any person. We are working to achieve this solution.

One constitutional difficulty on which I will comment, and which has been a accepted by many Governments, is that the abolition of ground rents without appropriate compensation would not, in all circumstances, be in keeping with our constitutional obligations. While this matter is receiving attention in the Department, the House should appreciate that it has proved to be very complex and, as yet, has not been resolved. The Minister believes it is vital, before introducing any legislation regarding the abolition of ground rents, that these constitutional issues be addressed and resolved. Pending the resolution of these issues, it is not possible for the Minister to indicate when the Bill will be published.

The abolition of ground rents is a complex and emotive area and it is vital that the right decisions are made and the proper course of action pursued. It is also important that the introduction of any new legislation would not have the effect of worsening the current position from the viewpoint of the ground rent tenant and landlord. It is the Government's intention that any Bill dealing with the abolition of ground rents will be in line with constitutional requirements and will, at the same time, deliver a better solution for ground rent tenants.

The Dáil adjourned at 11.20 p.m. until 10.30 a.m. on Thursday, 26 June 2003.