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Seanad Éireann debate -
Wednesday, 22 Jun 1983

Vol. 101 No. 2

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

Question proposed: "That the Bill be now read a Second Time."

The special ground rent purchase scheme provided by Part III of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, was given a life of five years by section 18 of that Act and is due to terminate on 31 July next. The Bill proposes to extend the operation of that purchase scheme for a period of 12 months, that is, to 31 July 1984, subject to a three-fold increase in fees.

The purchase scheme was introduced for the benefit of ground rent tenants of dwelling houses who wish to buy out their ground rents and under it the Land Registry does the legal work, up to the present for merely nominal fees. 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.

For reasons that must be largely a matter of conjecture, purchases under the scheme to date, about 22,000, amount to only one-tenth of the total number of potential purchasers as tentatively estimated at the time the scheme was introduced. However, there is at least some evidence to suggest that failure to avail themselves of the scheme on the part of a substantial number of persons may have been due to the effects of the ground rents campaign which sought to persuade people neither to pay ground rent nor to buy out the ground landlord. That is, that campaign may have created the impression that ground rents on dwelling houses could simply be made to disappear by the waving of a statutory wand, and without the ground rent tenant having to buy out. It is possible that such persons may now have come to recognise that that is something that will not happen and cannot happen.

At all events, there has been an increase, little short of dramatic, in the number of inquiries and applications under the purchase scheme since the date, some months ago, when the Minister for Justice drew attention to the pending termination of that scheme. Some of this increase may arise simply because intending purchasers put matters on the long finger: however, much of it may arise from the growing realisation that there are two and only two ways in which ground rents can be abolished: one is by purchase and the other is by confiscation. Purchase must mean purchase by the property owner himself because even the promoters of the ground rents campaign have not suggested that the purchase of ground rents should be paid for out of public funds, and of course even in normal times any such suggestion would be indefensible.

The Minister for Justice already has made it clear when announcing the impending termination of the scheme that confiscation of the ground landlord's property would be still less defensible. Accordingly, the inescapable conclusion is that if existing ground rents on dwelling houses are to be abolished, that abolition is up to the ground rent tenant himself.

Of course there may be many householders who are not concerned to abolish their ground rents and who are quite happy to hold their dwelling houses under long leases. For those who are so concerned, however, I should like to say a further word on the question of abolishing ground rents by confiscating the property of the ground landlord. Naturally, everyone is against confiscation. Nevertheless, it has apparently been quite possible for the ground rents campaigners to be overtly against confiscation and at the same time to advocate policies that would amount to the same thing. For example, the idea has been advanced that a date could be set, by statute, some years in the future, after which the payment of ground rents on dwelling houses would cease to be legally enforceable. In the intervening period the ground landlord and the ground rent tenant should negotiate. It is not explained, however, just why the ground rent tenant should negotiate about anything if his liability to pay is going to terminate anyhow — that is, if confiscation will come to his aid should he be unwilling to buy out the ground landlord. It has also been suggested that some ground landlords are more "deserving" or less "deserving" than others and that a ground landlord who inherited his property is less deserving than one who bought into ground rents in the first place — without however explaining the implications of this kind of thinking for other areas of our law, for instance, succession and taxation.

Finally, it has been suggested that a ground rent tenant who with his predecessors has paid ground rent for as long as 30 or 40 years is the person deserving of compensation, rather than his ground landlord — again, apparently, without facing up to the implications.

The organisers of the ground rents campaign appear indirectly to have conceded that arguments of this kind do not stand up to scrutiny, in as much as they have lately been calling for a referendum on a proposal for constitutional change to enable ground rents to be abolished otherwise than by purchase. This call amounts to an indirect admission that abolition without payment of purchase money, in whatever guise any such proposal would be presented, would amount to confiscation and would be unconstitutional. It is important that everyone concerned should be quite clear about the Government's position on this.

The Government will not initiate any change of that kind. It is not a question — as sometimes seems to be suggested — of the Constitution raising a technical obstacle and of removing that obstacle by bringing about a corresponding technical change in the Constitution. The constitutional barrier to the abolition of ground rents without compensation to the owners of those rents is a fundamental one. Indeed, that barrier is the same one that leaves houseowners themselves secure in the possession of their own properties. It would be wrong in principle to try to remove it.

At the end of the day what we are left with is a situation where purchase applications under the 1978 scheme are now pouring into the Land Registry at a rate that is almost bound to generate substantial arrears by the time the original termination date arrives. More important, many intending purchasers may be left disappointed in as much as they may be unable to lodge completed applications in time. In this situation the Government have decided to extend the scheme for a period of 12 months, as this Bill proposes. The main reason for the extension is, of course, to give a further opportunity to purchase to those who otherwise may be too late. A supporting reason is the consideration that, because of likely arrears of work arising out of the present flood of applications, the Land Registry staff concerned must in any event continue to be employed under the scheme until well beyond the original termination date.

However, what has to be ruled out is any extension of the scheme at the same fees as were fixed in 1978. The scheme was expressly introduced to encourage the abolition by purchase of ground rents on dwelling houses, and the fees were fixed at what even in 1978 were nominal levels. That is to say, it was expressly recognised that the operation of the scheme would involve a significant charge on public funds and this charge was accepted, for a strictly limited period, so as to encourage that abolition.

Whether that abolition is substantially achieved during the period of extension that is proposed, there is no case for continuing to accept a charge on public funds the original case for which depended on its being a strictly limited time. Indeed, even if maintenance of support from public funds at the same level were to be contemplated, changes in money values alone since 1978 would indicate a doubling of the fees.

However, as I have said, there is no case for continuing to support the purchase scheme from public funds at any level of subsidy. At current costs, the estimated break-even point comes with a trebling of the fees and that is what the Bill proposes. More accurately, the Bill proposes to treble those fees that are prescribed in the 1978 (No. 2) Act itself, that is, the fees payable by owner-occupiers. For "consent" cases the fee payable in respect of applications lodged after 31 July next will become £15 instead of £5 while the fee payable where arbitration is required will become £36 instead of £12. The remaining fees, including the fees payable by purchasers who are not in occupation of the relevant dwelling houses, it is proposed, will be increased accordingly in revised regulations. Although the new fees are indeed matched to the cost of the scheme it is fair to say that they are still very moderate.

There is one caution that it may be well for me to enter: the proposed extension of the purchase scheme on a self-supporting basis may be taken to imply an intention to provide for its further extension, and perhaps its establishment on a permanent basis, after the extension now proposed has run its course. I would ask the House not to read any such implication into the proposals in this Bill. The matter is one that may indeed come under examination but if and when it does there are factors that must be considered that would argue against any further extension of the scheme, and would argue quite strongly against it. It follows that intending ground rent purchasers who wish to avail themselves of the scheme would not be well advised to long-finger the matter any further.

However, there is on the other hand something else that I would like to make clear: despite some newspaper headlines which have recently appeared, termination of the 1978 purchase scheme does not involve termination of the right to buy out ground rent, 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 allowed to terminate next month the right to buy out would be unaffected. Ground rent tenants of dwelling houses would retain the full entitlement to buy out that was first given by the 1967 Ground Rents Act — although, of course, they would no longer have the benefit of the services of the Land Registry and would have to make their own arrangements for any legal services they might require.

I commend the Bill to the House and I ask for a Second Reading.

I welcome the extension of the 1978 Act which is provided by this Bill. I was glad to hear during the course of the Minister's speech that there are now a very large number of people applying to buy out their ground rents. By and large, the campaign against ground rents has very little merit. Many people have been misled by this campaign to their detriment. There may, of course, have been cases in the past in which ground rents appeared to have been inequitable and unjust, but generally speaking a case against all ground rents as such cannot really be made and should not be made. I am glad that the Government have taken such a strong stand on this issue, that there are only two ways to get rid of a ground rent: one way is by buying it out and the other is by confiscation, and the Government have no intention of introducing legislation to permit confiscation. I hope this campaign will peter out, as I think it must, eventually. I hope that many more people will avail of the opportunity provided by this extension of the Act to buy out their ground rents if they wish to do so. Of course there are many people who are quite willing to pay ground rent, have no ambition to buy it out and they are perfectly entitled to adopt that point of view.

As the Minister has said, the Bill has a twofold purpose. First, it extends the operation of Part III of the 1978 Landlord and Tenant (Ground Rents) Act for a further period of one year. Second, it has the effect of trebling Land Registry fees payable on applications made to the Land Registry under that Act. Regarding the extension of the operation of the 1978 Act for one further year, in effect it allows the individual to continue for that period to use the machinery of the State, through the Land Registry, in effecting the completion of the purchase of his ground rent interest. Of course, it does nothing to interfere in any way with the right of somebody holding his rights under the 1967 Ground Rents Act. The only difficulty that would arise in relation to that Act is that the individual may have to incur somewhat greater legal fees.

It may be appropriate at this stage to make the point to the Minister that in certain situations when there is a single ground landlord and when his interest is registered in the Land Registry, it would facilitate and reduce costs tremendously if a key map of that particular landlord's interests was made available for tenants in a particular locality. I have in mind my own locality, Westport, where the ground landlord is the Marquis of Sligo, and Castlebar, where the ground landlord is lord Lucan. In both cases, individuals purchased their ground rent interest without availing of the provisions of the 1978 Act, such individuals as well as paying their own legal costs and the legal costs of the ground landlord's solicitor. also have to pay the cost of employing an engineer to map the ground which is being purchased.

The Land Registry have very stringent mapping regulations and this can impose a charge of £40 to £60 on somebody who is paying a ground rent of 50p or £1 per year. If the Department of Justice and the Land Registry were to get in touch with various interests throughout the country and make available in various locations key maps, that could have the effect of reducing substantially the cost of purchase in places where the purchase price is very small. Regarding the trebling of Land Registry fees, much has been said about that, particularly in the other House. It is well to note however, that since 1978 Land Registry fees in relation to all other transactions have at least increased on two occasions. The increase of fees under this Act brings the fees into line with other fees and makes the operation within the Land Registry no longer loss-making.

I agree absolutely with the point made by Senator Ryan in relation to the campaign to confiscate ground rent. The Minister has made the point very well in her speech to this House that ground rent interest cannot be confiscated. One would run into tremendous constitutional difficulties if one attempted to do that and the people who have been propagating such campaigns are possibly aware of it and have been misleading people who have been giving them support on this point. Other than that, I fully support this Bill.

I would like to thank the Senators for their contributions and would like Senator Durcan to note that we will keep his suggestion in mind about Land Registry maps but cannot promise to implement it.

Question put and agreed to.
Agreed to take remaining Stages today.
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