The main purpose of the Bill is to exclude agricultural leases from certain provisions in the Statue Book which might be regarded as inhibiting the development of leasing as part of our land tenure system. At the same time, the opportunity is being taken to include a group of provisions of a technical nature aimed at tidying up some existing, largely domestic, Land Commission operations and functions.
The programme of reform of landlord-tenant relations in Ireland saw the tenant advance from the position of occupation at the whim of the landlord to himself becoming the owner of the land. The process began around 1860 with a series of statutes which granted progressively more rights to the tenant until the balance of advantage lay with him over the landlord. It is arguable that this development, and the consequent loss of any real control over their estates by landlords, convinced the latter class that ultimate transfer of ownership was inevitable and that their interest lay in securing the best possible terms for the transfer rather than in resistance. Subsequent to the achievement of tenant-purchase, it became the accepted view that the landlord system should not be allowed to be revived. The measures benefiting the tenant in an actual landlord-tenant relationship up to now have remained on the Statute Book.
The achievement of ownership of his land by the tenant had at least one not too acceptable result. Possession of land, per se, tended to be regarded as an end in itself and more important questions of user and management tended to be overlooked. The instinctive and basic motivation of landholders was the determination to retain control of the holding and, ideally, to enlarge it. Because the legislation was so much orientated towards the tenant, the adoption of leases even of a short or medium term nature came to be seen by landholders as a threat to their secure ownership of the land. Having seen the process of dispossession by the former landlords, the native landowner was not disposed to lay himself open in his turn to the same fate.
I believe that much has been done over the past year or so to change this attitude and to get the concept of land leasing promoted and accepted among the farming community as a way of making better use of our land. I have had numerous discussions on this theme with farming organisations, with the co-operative movement and with other national and local organisations. The response has been very encouraging. All are in favour of leasing and many have shown their willingness to work at developing it.
There is now a growing awareness that our owner-occupier system of land tenure is rather rigid and inflexible and that it seriously retards the pace of structural change. Landowners persist in holding on to land long after they are able to work it fully. It is quite evident that this attitude which attaches unwarranted status to the mere possession of land contributes, to a very substantial degree, to the rigidity of our land structure. If agriculture is to make its optimum contribution to the economy, then it is the use to which land is put that is of importance. The rigidity in the system must be replaced by mobility. Since coming into office, I have given particular attention to this problem. I want to ensure that more and more of our unused land is put into production by being channelled into the management of those willing and able to work it to its full potential. One of the most promising ways of doing this is, in my view, through the encouragement of leasing.
As I mentioned, the fact that the old landlord and tenant laws leaned in favour of the tenant has been one factor which inhibited the development of land leasing on any scale here. If we are to get leasing established as a normal farm management practice we must allay any fears potential lessors may still have about leasing their land. Some have fears about the way their land will be used if they lease it. Some, quite genuinely, are afraid that they would bring themselves to the unfavourable attention of the Land Commission. Others worry that the provisions in earlier legislation could affect their rights, if they lease.
It seems to me that the man who leases his land for a term of years is not only assured of a guaranteed income but is also far less likely to run the risk of having his land exploited than he would if he let it on the 11-month system. The temporary nature of the latter system ensures that neither owner nor tenant is likely to invest in improvements. As for any intervention by the Land Commission, I have several times already given an assurance, and I will reiterate it here, that the Land Commission will not seek to acquire any lands which are the subject of a bona fide lease, nor will they accept any claims for tenancies in respect of leases made in recent times or from now on.
As for those provisions in earlier legislation, it is obviously right that a prospective lessor should have the assurance that, when the lease has expired, he will be able to resume possession without fuss or legal complications. Any apprehension about claims under law for tenancy interests, compensation, and so on, would present a serious, if not decisive, deterrent for a lessor. Because of this I considered it proper that those statutory provisions in the old legislation which seem to favour the tenant unduly during the course, or on expiry, of a lease should be identified and revoked. This course was recommended in the report of the inter-departmental committee on land structure reform and accepted in the 1980 White Paper on Land Policy.
The effect of the present Bill, therefore, will be to give equal status to both lessor and lessee and to enable them to come together and agree between themselves on the terms of the lease without any overriding statutory provisions. I might add, in passing, that two model leases are widely available. One was drawn up jointly by the Irish Farmers Association and Allied Irish Banks working in co-operation with the Incorporated Law Society of Ireland and the Royal Institute of Chartered Surveyors. The other model was drawn up by the Irish Co-operative Organisation Society. These documents are, of course, models only. The precise provisions to be included in any individual lease, will, as I have said, be a matter for the parties concerned in each case.
The task of identifying the main inhibiting provisions has now been carried out. The enactments concerned are set out in section 3 (1) of the Bill which is before the House. The intention is that these enactments will not apply to a lease of agricultural land made after the Bill has passed into law.
I will outline briefly the sections of the old Acts which are covered by the Bill.
Sections 70 and 71 of the Landlord and Tenant Law Amendment Act, Ireland, 1860, provide for reinstatement of a tenant if he pays all arrears and costs within six months of the execution of a decree for possession and applies to the court for reinstatement. It is felt that a lessee who is in breach of the terms of his lease and against whom a decree for possession has been executed should have no further claims on the leasehold and that the lessor should be entitled to resume undisputed possession of his land. Subsequent minor amendments of these provisions contained in section 13 of the Land Law (Ireland) Act, 1881, sections 7 (3) and 30 (2) of the Land Law (Ireland) Act, 1887 and section 16 of the Land Law (Ireland) Act, 1896, are also provided for.
Sections 3 and 7 of the Landlord and Tenant (Ireland) Act, 1870, provide for the payment of a compensation for disturbance by a lessor. There is legal advice that ejectment of a tenant on expiry of a lease could be regarded by a court as disturbance. As indicated already, one of the main aims of the Bill is to ensure that it will be the terms of the lease itself which will govern the relationship between the lessor and lessee. If the lessor is forced to take ejectment proceedings in order to regain possession of his property on expiry of a lease, then he should not be put at risk of having to pay compensation to the lessee.
Section 4, Landlord and Tenant (Ireland) Act, 1870, provides for a claim by a lessee, on quitting the lease, for compensation for improvements carried out by him on the leasehold. Such improvements might have been carried out against the wishes of the lessor, or be of no value to him. Again it seems much more appropriate that the arrangements for improvements, as agreed between the parties, including compensation, if any, should be determined by the lease agreement itself.
Section 1, Land Law (Ireland) Act, 1881, gives the lessee the right to sell his interest in the leasehold. Here, also, I feel that the parties themselves should prescribe the terms of the lease, including any provisions regarding sale, subdivision or subletting by the lessee as they may agree.
Section 4, Land Law (Ireland) Act, 1881, provides that a lessee from whom a lessor demands an increase in rent is entitled to compensation, to be fixed by the court, in respect of the fall in sale value of the tenancy in consequence of the increased rent. It is probable that this provision was primarily in respect of tenancies based on the simplest documentary, or even verbal, agreements. Modern leases would normally make provision for adjustments of the rent during the term of the agreement, so that the questions of the lessor demanding an arbitrary increase would not arise.
Section 13, Land Law (Ireland) Act, 1881, permits a lessee to sell his interest within six months of the execution of a decree for possession for non-payment of rent. The intention here is to ensure that the lessor is entitled to regain undisputed possession of his property on termination of the lease for whatever reason.
Section 22, Land Law (Ireland) Act, 1881, renders void an agreement by a tenant to contract out of any rights conferred on him by statute provided the holding concerned has a PLV not exceeding £150. Because of the Supreme Court decision declaring the PLV system to be unconstitutional, it is possible that this provision is no longer operative. However, it is included here in order to put the matter beyond doubt. The intention is that, as already indicated, the terms of a lease will be those agreed between the parties and will not be subject to overriding statutory provisions.
Before turning from this landlord-tenant legislation I would like to spell out again that what is being proposed in the Bill represents a complete turn around in the basic philosophy of landlord-tenant relations as it has been conventionally accepted here for over a century. The clear intention is that, as far as possible, lessees will hold land from the owners on the terms explicitly laid down in the lease contract itself rather than on those stipulated by those old statutes. The original legislation was introduced to protect a particularly weak section of society — the tenants-at-will — who had no security in their livelihoods, or, indeed, in their very homes. The State intervened to support them against exploitation by the dominant class of the day. The support and protection are no longer necessary in the context of modern day leasing. What is envisaged now is an agreement between equal partners, freely entered into for their mutual advantage. As I have already said, the 1980 White Paper indicated that legislation would be brought forward to repeal any existing statutory provisions which might be interpreted as inhibiting the development of leasing as a form of land tenure.
I am well aware that the removal of these inhibiting provisions will not, of itself, succeed in getting leasing established as a normal farm management practice, but it will help clear some of the worries farmers have in regard to leasing their land. It will now be open to those looking for land to lease and those willing to make land available to come together freely to make their agreement on the conditions which should attach to each letting.
However, the major task still facing us is to get people to see that the letting of their land for a term of years is a very simple and profitable option for those who are unable, because of age or other reasons, to work it. There is, of course, an amount of such land available — the amount has been estimated at just one million acres. However, almost all of this is let under the 11-month conacre system. We must try to convince those who are letting their land on this seasonal basis that it would be in their own best interest, as well as in the national interest, to adopt a fixed longer term arrangement. As I said earlier, a term lease should eliminate the risk that is inherent in the 11-months system that the lands will be exploited and rundown. When the owner gets his land back at the end of the fixed term, it is now likely to go back in good condition. Nor should he fear losing out at a time of rising rents, because any normal lease will provide for periodic reviews of the rent payable. The lessee, on the other hand, will have a guarantee of possession for a stated number of years, and he can plan his enterprise in a rational and constructive way without the uncertainty of renewal from year to year. Leasing will both make it easier for newcomers to get into farming and enable the small farmer to enlarge his holding, without the necessity for capital investment in purchase.
As leasing is a novel concept in Ireland, it will take a great amount of promotion to get the idea accepted. I have directed the Land Commission to take a positive role in so promoting it. Area officers of the commission have been assigned specifically to the task of promoting and encouraging leasing in their areas. They will foster discussion and interest and will co-operate with farming organisations, co-operatives and other national and local bodies who are anxious to bring potential lessors and lessees together.
I would like here to refer to the very valuable work being done by co-operatives to promote leasing. They have had, and continue to have, a unique role to play in this area. Co-operatives are an ideal vehicle for promoting discussion and interest in the subject and for putting potential lessors and lessees in touch with one another. I would like to express my appreciation for the contribution they are making and to say that the Land Commission are eager to work with them towards attaining wider acceptance of leasing.
While I am talking about leasing, I would like to mention that the Social Welfare Act, 1984, contains a provision for new rules for the assessment of means for social assistance in cases where land is leased. At present, income from leasing of any kind of property is based, broadly speaking, on the capital value of the property while income from 11-month lettings is taken to be the actual rent received. Under the new rules rent received on foot of bona fide leases of agricultural land will be treated in the same way as rent from 11-month lettings for the purpose of assessing income under the Social Welfare Acts. This has removed what I consider to be a serious obstacle to the adoption of leasing. Before I leave the subject I would like to say that I am at present considering other measures under which leasing would be encouraged. Of course the budgetary constraints under which we work at present will limit the options to be explored.
I would now like to deal with sections 4 to 14 of the Bill. As I said earlier, the opportunity is being taken to streamline some Land Commission procedures and to facilitate revesting and the exchange of land. For example, up to now, the Land Commission have had the power, in exchanges, to accept registered land only. It would facilitate the distribution of lands on hands and, generally facilitate schemes for rearrangement, if the commission's power to exchange was extended to include unregistered land where the exchangee has a right to vacant possession.
Another proposal is to provide for the dissolution of the Irish Church Temporalities Fund, the extinguishing of charges on land payable to that fund and the validation of the ending of payments to the fund as from 28 September 1975. The history of this fund, very briefly, is that under the provisions of the Irish Church Act, 1869, the temporal property of the Established Church, including its revenues, passed to the State. The Act also set up the Church Temporalities Fund into which the former revenue of the Church was paid. In 1881 the administration of the fund devolved on the Land Commission. Over the years the process of compulsory redemption of charges on lands which were the subject of proceedings under the Land Purchase Acts brought about a huge reduction in the income accruing to the fund and the collection of rents became uneconomic. By 1975, the rental income was reduced to about £1,000 and collection of the remaining rents was ceased. The section also provides that the assets, now standing at about £2.8 million in Government investments, and any future sums that accrue, will be paid into, or disposed of for the benefit of, the Exchequer, as the Minister for Finance may decide. Section 14 and the Schedule to the Bill provide for repeal of various enactments. These repeals are required in connection with the dissolution of the fund.
It is also proposed to provide that the term "prior mortgage" mentioned in section 80 of the Building Societies Act, 1976, does not include charges on land to secure payment of a purchase annuity, a land reclamation annuity or any other annual payment to the Land Commission. Under section 80 of that Act, a building society may not give a loan on a property subject to a prior mortgage unless that mortgage is in favour of the society. The effect of the present proposal will be that the existence of any land purchase annuity or annual sum or land reclamation annuity will not prevent a building society from advancing a mortgage on a property subject to such a payment. As a major proportion of land is subject to Land Commission annuities the effect of this provision will be to simplify greatly the process of setting up a building society mortgage.
Before I conclude, I would like to emphasise that, whilst the encouragement of leasing is an integral part of a comprehensive land reform programme, it is nevertheless only a first step in the formulation of such a programme. I have in recent months been examining critically a number of aspects of the land problem that seem to me to be of particular importance. The problem of late inheritance and the need to give smallholders a fair chance to compete for land coming on the market in their locality are matters of fundamental concern. Some progress is already being made in encouraging group purchase of land, the rearrangement of fragmented holdings and the division of commonages. It has been estimated that some 80 per cent of all land transfers take place as a result of inheritance and succession. What is most desirable here is that successors come into possession of land at an age when they are still sufficiently receptive to the up-to-date ideas and practices that will enable them to work it efficiently. Unfortunately, this is not what is happening. In far too many cases, farmers delay transferring their lands until they are themselves aged and their successors are no longer young. Naturally, individual family circumstances will dictate the time and manner of the disposition of property, but we must seek ways which would contribute towards lowering the average age of succession.
I am having a look also at the possibilities for partnership arrangements or phased transfer of management between owner and heir. In general terms, I incline to the view that the problem of late succession and inheritance is not one in which legislation is likely to make a major impact. Nevertheless, the budget decision to extend for one year the stamp duty exemption for transfer of land to young trained farmers is an example of the kind of positive influence that can be exerted by the State in this area. I have been considering whether there might not be a case for regulating or controlling the sale of land that comes on to the open market. In the past the suggestion has been made that land purchase should be regulated by the imposition of a surcharge on the purchase price, possibly on a sliding scale, depending on who buys it. The main purpose of such a surcharge would be to enable the smaller farmer to gain access to land. Related to this would be the encouragement already being given for joint purchase by small groups of farmers where such land comes up for sale. By coming together to purchase as a group the individual farmers are given purchasing power they would not otherwise possess.
The Land Commission will give all the help and advice possible in the subdivision of land purchased by groups and in any necessary rearrangement of holdings which might be required following the purchase. The lending agencies have promised their support for farmers seeking to join together as a group to buy land. Land Commission staff will also help farmers to sort out the problem of fragmented farms. This is work in which they have great experience and they are available to put that experience at the disposal of farmers. The commission will do all the paperwork and arrange for transfer of ownership of the final holding to each of the occupiers. The restructuring of holdings can, of course, greatly add to the value of the land and lead to increased efficiency and output.
I am anxious also to see more progress being made in the division of commonages. Obviously not all commonages are suitable for division. However, there are areas of potentially productive commonages where division would be a very worth while proposition. Here, again, help is available from the Land Commission staff. I have referred very briefly to these matters so that the House would see the Bill that is before it in the wider context.
Apart from what I have touched upon, there may be other aspects of the land situation which should be considered and I would welcome the views of the Members of this House on these. Land policy has been virtually unchanged for a long time. It is clear to me and is, I think, now generally accepted that the aim of future policy must be to create the conditions which will stimulate the optimum level of structural change, thereby ensuring that land is in the hands of those best able and willing to work it to its maximum potential. Leasing will have a very important part to play in this area in the future and I have no hesitation in commending the Bill to the House as an important measure designed primarily to encourage the wider acceptance of leasing.
