I think it was understood when we were on this amendment before that amendments 70 to 75 inclusive would be taken together.
Town Tenants Bill, 1930—Committee Stage (Resumed).
How does the Ceann Comhairle propose to put the questions on these amendments?
I think we will have to put the question on amendment 70 simpliciter, that the words proposed to be deleted, stand. With regard to amendment No. 71, if we put the question "That the words proposed to be deleted stand" and that that was affirmed, that would preclude 72, 73 and 74. On amendment 71 if we put the question that the words "the gross rent" stand, that will permit of question on amendments 72, 73 and 74. The intention is to put the question on No. 71 in a form which will not preclude the other amendments.
This matter was under discussion when the Dáil adjourned on the last day. As Deputies remember, the amendments were made to the section of the Bill which defines the manner in which the rent to be reserved under a new tenancy granted under the Bill to a tenant with forty years' occupation and entitled to a new tenancy, is to be calculated. The proposal in the Bill is that such rent shall be calculated by the court on the basis of the rent which the landlord might reasonably expect to get under circumstances of normal competition and on the basis of vacant possession, less any allowance that is to be made for improvements effected by the tenant which may increase the letting value of the dwelling. The amendment which I have proposed is designed to vary that method of calculation. In discussing this, I think it is well that Deputies should bear in mind a remark made by the Minister for Justice on the Second Reading that there are two separate questions relating to town tenants which should not be confused. The first is the manner in which the relationship of landlord and tenant can best be put on a permanently satisfactory basis, and the second is the manner of dealing with the abnormal situation now existing arising out of the shortage of houses. It is very hard, of course, when discussing this particular section to keep these two questions separate. Although the Bill we are discussing is intended to be a permanent Act, and may be in operation twenty or thirty years hence, under circumstances that we cannot foresee, at the same time we must face the fact that certain conditions operate now and are likely to operate for some years to come when this Bill will be in operation and which will considerably affect the manner of its operation. These circumstances are that houses are scarce, and because they are scarce the rents demanded are very high. A number of tenants are at present protected by the Increase of Rents Act. That protection will be removed this year, and therefore the tenancies as defined under this Bill will cease with the coming into operation of this Act.
In the case of such of these tenants as will have then a statutory right to a new tenancy, a considerable increase in rent is to be anticipated; in other words, the rent as calculated in the definition contained in paragraph (f) of this section will be probably very considerably higher than the rent which these tenants are now paying. The question is, is it fair that that considerable increase in rent should be permitted? The proposal which I am submitting to the Dáil is that where the rent, as calculated in accordance with the section, exceeds the old rent then the rent to be reserved under the new tenancy should not exceed the old rent by more than half the difference between the old rent and the rent as calculated under the section.
In order to satisfy ourselves that that is a fair proposal, it is necessary to discuss how the increased letting value of the dwelling arises. It may be that the increase in the letting value arises out of some action of the landlord in respect of which the landlord should be entitled to some additional remuneration. It may be, although it is most unlikely, that the additional letting value arises out of some action of the tenant. I say that is most unlikely, because if the increased letting value were due to improvements as defined under the Bill, the tenant would get an allowance for that. In the majority of cases the increased letting value will have resulted from actions neither of the landlord nor of the tenant. They will have resulted from the activities of the local authorities or public service companies. Is it fair, as the Bill proposes, that the entire increase in the letting value arising from such causes should be given to the landlord? On the other hand, is it fair that the increase in letting value should be given to the tenant? The Bill proposes that it should be given to the landlord. One of the effects of that will be that the value of this Bill, restricted as it is in its scope, to tenants who are fortunate enough to come within its scope will be very limited. They are given the right to a new tenancy undoubtedly under very limited circumstances, but for that new tenancy they will have to pay the highest rent the landlord could expect to get if he was letting the premises to a new tenant on the basis of vacant possession. Apart from whatever improvements they may have effected, they are getting no consideration from the fact that they have had the long period of occupation required by the Bill, namely, forty years.
The proposal submitted by Deputy O'Connell, that where the dwellings concerned were let in 1914, the rent under the new tenancy should not exceed the 1914 rent by more than the amount permitted by the Increase of Rents Act, has our sympathy. That proposal has our sympathy. The difficulty, however, is that it does not distinguish between the two questions to which I have referred. It relates to the particular difficulty now existing, and not to the permanent problem, and in permanent legislation it seems particularly undesirable that any special year should be taken as a standard, particularly one so far away as 1914. The ideal solution would be to get this Bill amended on the lines I have suggested, and to deal with the special problem arising out of the shortage of houses by separate legislation, either by continuing the Increase of Rent Acts for another period or by substituting for them similar legislation providing safeguards against profiteering in rent. The proposal I am submitting means that the increased letting value of the dwelling in any particular case shall be divided equally between the landlord and the tenant. I have already explained that, if possible, I should like to have found means of giving that increased letting value, or some part of it, to the local authority whose expenditure has probably created it, but I have not been able to find a means. This amendment is, in my opinion, the next best alternative, and I submit it to the House as such.
It is evident from the speech of Deputy Lemass that he is not a very enthusiastic supporter of the amendment. He has made a statement in his opening remarks which I must take the opportunity of contradicting in its entirety. He has stated, when dealing with increased letting values, that it is most unlikely that these increased letting values arose from the action either of the landlord or of the tenant. I understood that Deputy Lemass had some experience of business. I understand that when a business man gets an empty business premises, if there is no trade or connection attached to these premises, they are an entirely different entity when he first gets them from what they are after they have been in the hands of a successful business man for a term of years. I maintain, as far as the increased value of business premises is concerned, that it is due only in a very small way to the action of the public authorities, and that it is due in no way whatever to the action of the landlord.
The action of the landlord is confined to one thing, the investment of his capital. It ceases to function otherwise than in the purchase of a house. The increased letting value of the premises is due to the establishment of a business, the establishment of a trade turn-over, and the establishment of a trader's good-will. I submit, and I challenge contradiction, that if it were not for the capital that a business man puts into a house, the initiative and enterprise of the businessman, and the money he spends upon advertising and in other ways, the increased letting value of the premises would be entirely negligible as far as public authorities are concerned, and certainly would not be due to the owner of the property.
There is no proposal to charge him for his good-will either in the Bill or in any amendment.
The plain fact of the matter is that Deputy Lemass's statement is contradicted by the report of the Town Tenants' Commission. The Commission has laid down in its report very clearly one very definite proposition, that in the case of business men there is what they term a compelling equity, which should entitle business men to get different treatment from the treatment which should be meted out to people who occupy ordinary dwelling-houses. I cannot understand any business man submitting to this House that there is any analogy between the enterprise of a business man and the action of a person living in an ordinary dwelling-house. It is self-evident that a person living in any ordinary dwelling-house does nothing that causes an increase in its value. It is equally self-evident that the value of a business premises is absolutely due to the enterprise and skill of the business man. Under this Bill the business man will be entitled to obtain a lease. The court will be empowered to grant the lease. I would remind the House that since 1906 and before business town tenants have been suffering from grievous hardships. That fact was recognised as long ago as 1906, and it has been admitted by the Town Tenants' Commission that the 1906 Act has lamentably broken down. We are proposing under this section of the Bill to remedy wrongs that existed, as far as business tenants are concerned, as long ago as 1906. The question I want to ask the House is this: does this section as it stands in the Bill remove the existing wrongs under which business tenants are at present suffering?
I want to make certain submissions in asking the House to consider this sub-section. The first submission I make is that this sub-section completely ignores the compelling equity to fix a fair rent that has been recommended for business tenants in the report of the Town Tenants' Commission. The next submission I make is that the rent which will be fixed by the court will not be a fair rent, but will be the full competitive letting value of the premises, which will be entirely worthless to any business man. If a lease is granted by the court at the full competitive letting value of a business premises, so far as the business man is concerned' that lease is entirely valueless. I want the House to realise one thing which it is very prone to forget, that under the Act of 1906 a business man was entitled to compensation for loss of good-will and disturbance, and that under this Bill that compensation is removed, that he is entitled to nothing but the right to obtain a new lease. If that lease is valueless, will the position of the business man under this Bill be better or worse than it was under the Act of 1906? I make another submission: that under the section as it now stands the door will be open to unscrupulous landlords to bring bogus offers of rent into court and to compel the court automatically to fix what I can only term as rack rents.
I have made these submissions to the Minister inside and outside the House. I want to inform the House that the submissions which I now make are not my own personal submissions alone, are not my own personal interpretation of the existing sub-section. I have had the advantage of consulting the legal members who sit on this side of the House, and each of these members whom I have consulted has confirmed in every particular the submissions which I now make. I say, without hesitation, that if this section of the Bill is forced through the House unamended it will have dangerous repercussion upon the permanency of the Government and upon the stability of the Government Party. Some people may think I am going very far. I think I know my Dublin as well as anybody else and what the business people of Dublin are thinking. I happen to be a businessman who understands this question from the practical view-point and the practical angle, and I know what I am speaking about. The Press has even appealed to the Minister to improve this section of the Bill in a reasonable way, but up to the moment he has remained admant and the Party machine will be brought into play if the position of the Minister remains unchanged to force this section through the House. The Minister is in control of the Bill and perhaps he is the better judge of the two, but there will be no Party machine in operation when the Government goes to the country.
In the section we are now discussing we have reached the kernel of the Bill, namely, the fixation of a fair rent. If the lease granted by the court fixes such an annual rent that it does not constitute a fair rent, then this is a worthless Bill. Coming to the section as it stands, and speaking as a practical businessman with some little knowledge of the law, I have no hesitation in stating that this sub-section is entirely worthless to the businessmen of Dublin. Upon the definition of a fair rent this whole Bill depends; the rest is merely details and a filling in of the whole, and on the definition of a fair rent in this section the court will be bound to act. What are the fundamental principles embodied in this section of the Bill on which the court will find what is to be a fair rent? The first is that the court will be bound to conclude that a fair rent is that particular rent which is in the opinion of the court what "a willing lessee not already in occupation would give and a willing lessor would take for such tenement, in each case on the basis of vacant possession being given." In the original section the words "normal competition" are incorporated. The criticism these two words have received in the House evidently forced the Minister to change his mind, and I think he has an amendment on the Paper to remove these words from the Bill. But the first question we ask with regard to this very important section of the Bill is this: What does an incoming tenant pay, and what pay does he obtain on the basis of vacant possession of a business premises where goodwill and trade turnover have been established? He obtains (1) vacant possession of those premises for which he pays; (2) an established business or trade turnover of the occupying tenant, for which he does not pay a single halfpenny, and (3) the trade fixtures which are useless to the tenant dispossessed, and for which he pays nothing. This section as it now stands will operate in such a way that the trade turnover of the existing tenant will be placed in the hands of the landlord as a whip to extract a high rack rent from the tenant in occupation. And if the tenant in occupation wishes to retain possession of these premises upon which his livelihood depends he will be forced to pay that rent or give up possession. I want the House again to mark that if the lease is worthless to the tenant, he will not obtain under this Bill the thing he obtained, however inadequately, under the Act of 1906, that is, compensation for disturbance or loss of goodwill. He gets nothing under this Bill for these.
Has the Deputy read the Bill?
Yes: I know he will get nothing except in a very uncertain or reserved way—in a certain set of conditions, but in normal conditions he will get nothing under this Bill. What is the position there as far as a business man in occupation of premises with a trade turnover to-day is concerned? He is tied to the one business premises, while the landlord has all the competition of the Irish Free State behind him, and not alone has he the competition of the Irish Free State behind him, and not alone has potential tenant he may require for these premises, and he has the competition of the English invaders who are competing for the retail trade in this country, and the tenant is confined to this one premises where he has established his good-will and which is the main source of his living. In my opinion, the words in the Bill, "on the basis of vacant possession" can only be described as outrageous. They defeat every equitable principle of law and they coerce the court to fix the annual rent at such a figure that if they had reasonable freedom they would never fix it. That is so much for the rent that the incoming tenant will be prepared to pay.
It is self evident that if a tenant is after a valuable premises in an important street in the City of Dublin he can afford to offer a much higher rent for it than the tenant in occupation. Now let us inquire, under this valuable section of the Bill the Meredith definition of what is a fair rent—what a willing lessor will accept. There can be no hesitation in stating that we know what a willing lessor will accept. We know what they have been accepting for business premises in Dublin for the past three or four years. We know that the moment a lease expires, and a business premises falls into the hands of the landlord his first act is to double, and in some cases to treble, and, in many cases, quadruple the existing rent. I wonder how any farmer listening to me would feel if the rent of his holding were doubled, trebled or quadrupled.
I have known in the City of Dublin business premises which have been kept idle for a period of four or five years, and for what reason? Was it that there were not tenants available? That is not the reason. The reason was because the landlord could not obtain an exorbitant rent. I can state another fact that cannot be contradicted by any member of this House, and that is for the last four or five years the ratepayers of Dublin have been losing annually a sum of £15,000 per annum by way of rates on vacant premises in the city. And this is the section introduced by the Minister to remedy the existing evil under which business men suffer. I now come to what, in my opinion, is the most harmful characteristic of the whole section, and that is the opportunity for a bogus offer of rent by an unscrupulous tenant. Under the Bill as the section now stands, if the landlord goes into court and submits an offer in writing stating that a person is willing to pay an amount stated in that particular document then, in my opinion, and in the opinion of other legal men of this House, the court will be almost bound to fix the fair rent on the figure stated by the landlord in court. Let us assume a tenant is paying £100 a year and one of those bogus offers is placed before the court by the landlord for £300 or £350 a year, what position in the interpretation of the section as it now stands will the court be in in the fixation of a fair rent? The terms of the section are perfectly mandatory. The court is bound in the mandatory words: "What a willing lessee not in occupation will give ... on the basis of vacant possession and what a willing lessor will accept."
All I can say, as far as the section is concerned, is that it is utterly worthless and absolutely unacceptable to the business men of this city. Under the section, as it now stands, what will the business men receive under the terms of their new leases? They will receive a letting at the full competitive letting value of the premises. Is there any need to introduce a Bill for them to obtain that? Is it necessary to come to the Dáil for an Act for a business man to obtain a lease from his landlord at the increased letting value to-day? If that is the Minister's solution he will never go down in history as the man who solved that particular problem.
I would like to remind the Minister that the Chamber of Commerce a short time ago drew serious attention to the decline in the trade turnover of the City of Dublin. The published dividends of firms engaged in business in Dublin are available to members of this House. The serious economic condition of traders is reflected in these dividends. How many firms to-day are able to pay 10 per cent.? I venture to say that you can count them on certainly the fingers of two hands. How many are paying five per cent.? How many are paying dividends by drawing money from reserve, and how many have completely exhausted their reserve? I do not want to draw any incorrect picture of the economic position of business men in the country at present. What I say is if the same rents under this Bill are going to be inflicted on them, then it would be better if this Bill were never introduced.
A short time ago this House introduced the Dublin Poor Relief Bill. What was the effect on the business men of the passage of that Bill? What proportion of the Dublin Poor Relief Bill was paid by people engaged in trade and commerce, and how does that compare with professional men or men in other walks of life? Any one conversant with Dublin knows that for the one pound paid by the rest of the community the Dublin men engaged in industry are paying four to five pounds. I want the Minister to be fair in dealing with the business men of the city. We want no confiscation of the rights of the landlord. We want him to obtain a reasonable return on his invested capital, and we want the business man to obtain a fair rent, a rent that is fair to the tenant and fair to the landlord.
The sub-section I asked the Minister to introduce is entirely free from the pitfalls I have submitted to the consideration of this House. Due regard is paid to the interests of the landlord on the one hand, and of the tenant on the other. The court must pay due regard to the lettings in the immediate vicinity and to the other terms of the tenancy. There is a clear recognition of the rights of the owners of property. The only safeguarding of the tenants' interest is in the words "without regard to good-will." That is a perfectly simple and unambiguous section, the interpretation of which only needs common sense, for the section set out in the original Bill is a section that I do not think the courts or anyone in the land can say what its logical meaning amounts to. I ask the Minister with the greatest possible deference and respect, to give the business tenants in this city, and the country generally, a reasonable chance under this Bill. If this section of the Bill is forced through the House as it stands, I for one, although I sit on the Government Benches, will go into the division lobby to vote against its passage.
Deputy Byrne is taking full advantage of a very difficult problem to make political capital out of it. I cannot see that there is an enormous amount of difference between his amendment and the original terms of the Bill, for this reason—that houses in the ordinary course fall vacant and will be subject to the vicissitudes of gambling conditions of shops in the City of Dublin. We know that people will take shops at a very high rent. If in a particular vicinity two or three shops fall vacant and are taken at high rents then the judge must take up exactly the same position in forming a judgment, according to the amendment of Deputy Byrne, as he would if the terms of the Bill remained the same, because the thing which conditions the general price of shops in the ordinary course falling vacant is what a willing lessee would give. We all agree with Deputy Byrne that the present situation is bad from the point of view of the shopkeeper and the trader and our attitude is that the only thing to do under present circumstances, unless you can pass very radical legislation, which Deputy Byrne has not advocated or shown any sign of it in his amendment, is to try to split the difference and check competition on the trader so that at least fifty per cent. will be taken off the increase and the trader will get the benefit.
It is a small point. It might be better to leave the matter of the willing lessor and the willing lessee out of the original Act and make it the price which is given in the vicinity. There is not much difference in it. I admit that would be better, and even if that is done we contend we should go a step further, that the increase in the old rent should be split by half and that the trader should get the benefit. Most of the opinions of Deputy Byrne have the full support of a large volume of opinion and I hope the Minister will see his way to accept the limitation as we have put it for him.
When we approached this problem of dealing with fair rents it seemed to us that the main difficulty that would face the court would be the phrase in paragraph (f) "in circumstances of normal competition." Having regard to the circumstances that exist in regard to the housing problem, and the abnormal shortage which, so far as one can see, will exist for a considerable time, it seemed necessary to have some standard to fall back upon. The standard which we thought would be fair is the standard laid down in the Increase of Rent (Restrictions) Act. At first I thought that the position in August, 1914, should be the standard, but I quite agree that other considerations have to be taken into account, so we put down an amendment that the standard should be that set up under the Increase of Rent and Mortgage Interest (Restrictions) Act, 1923. As far as I can follow the amendment moved by Deputy Lemass there is not much difference between his suggestion and mine, because he is prepared to give a certain proportion of the letting value to the landlord and a certain proportion to the tenant. I think that is inherent in my amendment, because the landlord gets a certain increase under the Increase of Rent Act. There is not a vital difference between us. There is a good deal in the objection that Deputy Lemass raised, that this is a permanent measure while the Increase of Rent Act is a temporary one. The objection raised in other quarters is that anything tending to perpetuate the Increase of Rent Act would be a great discouragement to the speculative builder. I wonder if anyone in this House or any substantial body of opinion outside sees any future in this country for the speculative builder. Candidly I do not. I do not believe, no matter what legislation is passed here, that there will be any big development by what were known before the war as speculative builders. I do not think we need pay too much attention to that aspect of the question.
Deputy Lemass stated that the amendment took no regard of houses built after 1914. As far as my information goes, the greater number of houses affected would be those built before 1914. The number of houses built and rented, and liable to be built and rented in future, will, in my opinion, be comparatively small compared with the number of houses built before 1914. I do not pretend to have made a close examination of the matter, but the information I have is that the vast majority of the houses now rented were built before 1914. It seemed to us that that would be the way to approach the question in order to get some reliable standard. I agree with the other Deputies that the proposal in the Bill will lead to a great deal of difficulty and to any amount of litigation. If the section is left as it is I feel certain that in the vast majority of cases it is going to work out to the detriment of the tenant and that the landlord will profit by the abnormal conditions and the shortage of houses, conditions with which he had nothing to do. A landlord is entitled to a fair return for the capital he has invested, but he is entitled to no more. If the section is left as it is he will get a much bigger return because of the shortage of houses. My amendment and that of Deputy Lemass are the same in principle, and I do not propose to press mine if the Deputy's is accepted, or if something along the same lines is put into the Bill. I am definitely opposed to this paragraph in the section. It is so vague that it will lead to endless litigation and, from its construction and implication, it seems to me that a tenant will be made to pay for the artificial shortage that has been created owing to the drop in the number of houses built or available since the war years. Perhaps the amendment moved by Deputy Lemass would be more applicable to general legislation. If I thought that amendment was acceptable I would be prepared to withdraw my amendment.
Might I point out a defect in Deputy O'Connell's amendment? All it does is to fix a maximum rent with regard to houses built prior to the 4th August, 1914, and it gives the court no standard on which to base a rent, except merely the maximum. The system of fixing rents laid down in this section is not to be applicable under the amendment to houses built prior to the 4th August, 1914. Does the Deputy follow me?
In the Deputy's amendment it says that the gross rent "in respect to houses built prior to 4th August, 1914, shall not be more than the rent permitted by the Increase of Rent and Mortgage Interest (Restrictions) Act, 1923." All it does is to fix the maximum. There is no system by which any rent less than the maximum can be fixed, because the court has no basis on which to act.
I am quite prepared to accept the maximum.
What about the others?
I will chance it.
I think a very considerable amount of this discussion has been due to the fact that the definition of gross rent contained in paragraph (f) has not been very carefully or fully examined by the Deputies who spoke, or, if fully examined, full value has not been given to every word contained in the definition. Let us take it as it stands. "The gross rent shall be the rent which in the opinion of the court a willing lessee not already in occupation would give and the willing lessor would take for such tenement, in each case on the basis of vacant possession being given, and in circumstances of normal competition, and having regard to the other terms of such tenancy and to the letting values..." I have an amendment to leave out the words "in circumstances of normal competition" because they crept in there in error; and then it runs on "...of tenements of a similar character to and situate in the vicinity of such tenement but without regard to any goodwill which may exist in respect of such tenement." In the first place the court decides what a willing lessee not already in occupation would give. It is not what a tenant in occupation at the present moment would be willing to give rather than to be put out. It is what a willing lessee not already in occupation would be willing to give and what a willing lessor, that is, an ordinary person who is anxious to let his house and who is not looking for the last penny, would be willing to take.
How many landlords of houses are not looking for the last penny?
Deputy Byrne got very strong on those words "on the basis of vacant possession being given." Of course you can only assess a rent on the basis of vacant possession being given. What is the alternative to vacant possession? I cannot see any alternative to vacant possession. It means that the tenant is going into possession. If you leave out those words or put in words to the contrary it would mean that he would be a tenant who was not in occupation, and that is not a basis to which you would look forward. You must have either the basis of vacant possession, or somebody else in occupation. Obviously the rent is to be the rent which a person is going to pay when going into occupation. This is not a letting to a middleman, it is a letting to a tenant who is in occupation. "In circumstances of normal competition." Those words are the very words which deal with the present circumstances. The court must make every allowance under these words "for any shortage that exists at the present moment." If there is any abnormal shortage now, and everybody admits there is, in reference to houses the court will take that into consideration.
That is not quite clear. The terms also might mean normal competition for particular houses instead of normal competition for houses in general.
I think it means clearly competition in normal circumstances.
That might be for particular houses, and have nothing to do with the shortage of houses generally.
It would have to be assumed that it was for houses in general. Circumstances of normal competition must mean for houses in general. If the Deputy has any difficulty about the words being open to that meaning actually, I possibly might expand the words "normal competition." But normal competition is precisely what I think the plain meaning is. If there was a reasonable supply of houses to go round, and a reasonable supply of tenants looking for them what is the rent that you would fix? That is what is meant by it. The Deputy is aware that the words are taken from the Report of the Town Tenants Commission. It is perfectly obvious what the Town Tenants Commission means, and I think this does convey this meaning accurately. I would be perfectly willing to expand the words, so that that meaning would be more clearly conveyed, but I am standing on the general principle that it should be, if there was not an abnormal shortage, what a reasonable landlord would be willing to take, and what a reasonable tenant would be willing to give, if there were a fair number of houses to be let, and a fair number of tenants looking for them. By fair I mean a reasonable number.
I submit to the House that that is probably the real basis. I have expanded the definition, however, by saying "and to the letting value of tenements of a similar character in the same vicinity"; that is to give the court a little further help in fixing the rent. The court will look to two things —first, what is actually happening, and second, how much the rent given for houses in the neighbourhood is due to abnormal competition. I come now to examine the first of the amendments which have been put forward. Deputy Byrne's amendment would be rather cruel to the tenants. His speech was entirely to the effect that he is afraid that there should be lettings at full competitive letting value. There will not be under the section as it stands, because the full competitive letting value would be what the house goes to now. The Deputy spoke about what is happening at the present moment in Dublin—that rents have been quadrupled. I will not go into that now, but I say that rents which are being fixed now are, in the first place, as high as the landlords can possibly get. But there may be rents fixed now where the landlord is getting the very maximum that he can get owing to the fact of abnormal competition, and at the same time he is getting the letting value. That would be full competitive value. But under this Bill he will get nothing of the kind. He can only get what a willing lessee would give in circumstances of normal competition and without any regard to the goodwill of the tenant. Deputy Byrne's amendment says "the gross rent shall be the rent which may be fixed by the court, having regard to the letting value of tenements of a similar character in the immediate vicinity." That allows the whole competitive value of the house, apart from goodwill. If a landlord is letting a house he is getting the maximum rent he can. What is the letting value of one house?
Will the Minister look at amendment 76?
I am taking amendment 71 first. I am going to deal with the others afterwards. Take that amendment 71 which, instead of being helpful to the tenant, would actually, by deleting the words "in circumstances of normal competition," force the court to fix the rent at the very maximum rent which houses would carry in the neighbourhood. Take the next amendment, which is Deputy O'Connell's. I could not dream of accepting Deputy O'Connell's amendment because this is a permanent measure, and to take the artificial standard say like that of 4th August, 1914, would, I think, be terribly unfair to everybody. You must look at what are the values of the premises now.
Some houses are let at a very high rent, and others at a low rent. Circumstances have altered enormously since then. To say that for all time the rent shall be what it was on a particular day, whether it is August, 1914 or any other time, would be an unfair basis, and would not do justice as between landlord and tenant. It is purely an artificial fixing. I have got this much sympathy with Deputy O'Connell; if we could have some sort of rule of thumb by which these rents could be fixed I would like it very much; if there would be no necessity for going into court I would like it very much. But I do not see any rule of thumb by which you can fix ordinary rents of ordinary premises. I think you must consider every single case on its own merits, and decide the value of each premises taken by itself as a single unit, having some regard to the letting value of similar houses in the same neighbourhood.
Of course, I might point out, in passing, as far as Deputy Byrne's amendment is concerned it might be no standard at all, because there might not be a house of a similar character in the immediate vicinity. It is quite likely that you would be letting a particularly large premises, and that there would be nothing except very small premises within a half a mile of it. You may not be able to apply that standard at all.
In other words, you could apply it under your section of the Bill but you could not under my amendment.
It is not the sole standard in my definition. It is one of the standards which may be utilised. Deputy Byrne's definition is the sole standard. Now I come to Deputy Lemass's amendment, No. 75, and to Deputy Byrne's amendment, No. 71.
That is not being discussed now.
[An Leas-Cheann Comhairle took the Chair.]
If the Deputy wants to make argument in favour of his amendment I am sure we will all listen to him with great pleasure. I will take Deputy Lemass's amendment, No. 75. I think here Deputy Lemass goes very much upon a false issue, because he assumes, as far as I can gather, that in every case there would be an increase of rent. I do not agree with him there at all. I think there are houses at the present time that are let at too high rents. It is quite possible in a neighbourhood where rents are falling. I know that this is met by the second part of Deputy Lemass's amendment. He visualises that. But there are other cases in which the rents will rise, and it does not follow that they will rise owing to the action of the Urban Council or the Dublin Corporation, or anything of that nature. It may be purely adventitious. More people may be coming into a particular country town and it may raise the value of the premises very much, while people going out might lessen the value very much. There is another circumstance which depends neither upon the landlord nor the tenant. This is a positive example. Suppose you have premises let in the year 1890 for £50 a year. You come into court, and let me say that the rent is fixed at £60, giving a substantial increase. The Deputy would say it ought only to be £55. The rent in 1890 may have been very low, and some houses might be let more cheaply than others. Also there is a very big difference in monetary value now compared with 1890. As everybody knows, there was a distinct alteration in money value immediately after the Boer War. There was a small decrease in money value after the Boer War, and it has become enormous since the Great War.
Nobody, for instance, would say that an income of £30 a year in 1890 was in any way equal to an income of £30 now. It was a far greater income in 1890 than now. The purchasing power of money has fallen enormously, and it does seem to me in fixing rent it is only fair that the alteration in the value of money should be taken into account. There are a great number of other circumstances, and therefore I cannot see why, if the court give due regard to the present shortage of houses in fixing rents, it could not allow any value because there is a scarcity of houses. I think we have taken a perfectly safe and fair line, but you might be very unfair in certain cases if you accepted Deputy Lemass's amendment. It would mean that where, owing to the alteration in the value of money or other circumstances, a small increase is given, the landlord is not to get the full value of the increase. That does not appear to be fair and, after all, I venture to think that the whole House is endeavouring to do justice between the landlord and the tenant. We have been putting our heads together as well as we can to achieve that end, and I do not think it would be just in all circumstances that the landlord would only get half of the increased value when actually he might be entitled to the whole.
In connection with that point I would like to say a few words. It is undoubtedly true that the value of money has decreased since the rent of £50 was fixed, but the Minister's proposal is based on the assumption that the value of money is going to remain at the present level. The tendency is in the opposite direction. The value of money is increasing. It would be unfair and a hardship on the tenant to fix a rent when the value of money was increasing, so that it is not really possible to legislate with any fluctuations in the value of money in view.
As to whether it is fair or not to the landlord that this increase should be halved, the Minister made reference to various causes which might create an increase. I only mentioned an increase due to the activities of a local authority as an example. The other possible causes of that increase to which the Minister referred might also be taken into account. Should the entire increase be given to the landlord if more people are coming into a country town or for some other reason arising out of the community as a whole, but not arising out of any action of the landlord? Why should the entire increase be given to the landlord? Why should the benefit not be given the tenant? That question might be asked. We propose to split the difference.
Suppose you had two houses some distance away belonging to the same landlord; one house has gone up in value and the other has gone down. You would allow the landlord to bear the whole loss in the case of the house that is gone down, but he would not be allowed to get the whole value in the case of the house that has gone up. That does not seem to be quite fair. One tenant would be paying a higher rent than the other.
Distinctly a higher rent. Suppose a tenant remains in a house and there was no increase, then he is paying the old rent. Another tenant enters a house that has increased by £10 a year in value and he only pays £5 of the increase. He is getting his house more cheaply because he is getting a more valuable house than the other man. I think that is plain.
That is plain. Is there any reason why he should not?
- Aird, William P.
- Alton, Ernest Henry.
- Beckett, James Walter.
- Bennett, George Cecil.
- Blythe, Ernest.
- Brennan, Michael.
- Carey, Edmund.
- Cole, John James.
- Collins-O'Driscoll, Mrs. Margt.
- Conlon, Martin.
- Connolly, Michael P.
- Cosgrave, William T.
- Daly, John.
- Davis, Michael.
- Doherty, Eugene.
- Doyle, Peadar Seán.
- Duggan, Edmund John.
- Dwyer, James.
- Egan, Barry M.
- Esmonde, Osmond Thos. Grattan.
- Fitzgerald, Desmond.
- Fitzgerald-Kenney, James.
- Gorey, Denis J.
- Haslett, Alexander.
- Hassett, John J.
- Heffernan, Michael R.
- Henry, Mark.
- Holohan, Richard.
- Law, Hugh Alexander.
- Leonard, Patrick.
- Lynch, Finian.
- Mathews, Arthur Patrick.
- McDonogh, Martin.
- McFadden, Michael Og.
- McGilligan, Patrick.
- Mongan, Joseph W.
- Mulcahy, Richard.
- Murphy, James E.
- Murphy, Joseph Xavier.
- O'Higgins, Thomas.
- O'Leary, Daniel.
- O'Reilly, John J.
- O'Sullivan, John Marcus.
- Reynolds, Patrick.
- Roddy, Martin.
- Sheehy, Timothy (West Cork).
- Thrift, William Edward.
- Tierney, Michael.
- White, Vincent Joseph.
- Wolfe, George.
- Boland, Patrick.
- Brady, Seán.
- Briscoe, Robert.
- Carty, Frank.
- Cassidy, Archic J.
- Clancy, Patrick.
- Corish, Richard.
- Davin, William.
- De Valera, Eamon.
- Fahy, Frank.
- Fogarty, Andrew.
- Gorry, Patrick J.
- Hayes, Seán.
- Houlihan, Patrick.
- Jordan, Stephen.
- Kent, William R.
- Killilea, Mark.
- Kilroy, Michael.
- Lemass, Seán F.
- Little, Patrick John.
- Maguire, Ben.
- Moore, Séamus.
- O'Connell, Thomas J.
- O'Kelly, Seán T.
- O'Reilly, Matthew.
- Ryan, James.
- Sexton, Martin.
- Sheehy, Timothy (Tipp.).
- Tubridy, John.
- Ward, Francis C.
I move amendment 71, which reads as follows:—
To delete paragraph (f) and substitute the following new paragraph:—
"(f) the gross rent shall be the rent which may be fixed by the court, having regard to the letting values of tenements of a similar character in the immediate vicinity, and to the other terms of such tenancy, but without regard to any goodwill which may exist in respect of such tenement."
I move amendment No. 72:—
In paragraph (f), line 1, after the word "rent" where it first occurs to insert the words "in respect to houses built prior to 4th August, 1914, shall not be more than the rent permitted by the Increase of Rent and Mortgage Interest (Restrictions) Act, 1923, and in respect to houses built after the 4th August, 1914."
Amendment put and negatived.
I move amendment No. 73, as follows:—
In paragraph (f), line 6. to insert after the word "regard" the words "to the user of the tenement and".
I think that this is only a verbal amendment. It was put down in order to make the words clearer. My own belief is that the meaning of the words is as contained in the section. If that is so, this amendment would not change their substance but would make quite clear what the words mean. I do not want to press the Minister on the matter, but perhaps he might consider it and see whether the amendment is necessary.
I will consider it, but I do not think it is necessary.
I move amendment 74:—
"In paragraph (f), page 16, lines 7 and 8, to delete the words `in circumstances of normal competition.' "
These words really crept in in the second instance through a mistake, and I ask the House to delete them.
Is it not a useful mistake? If the words relate to normal competition for houses in general should that not be put in the section?
I do not think so.
Is it the Minister's intention that the court should take into account the rents likely to be obtained for premises in circumstances of normal competition as well as rents for similar tenements in the same vicinity at present?
What the court has to do in the first part of the paragraph, that is, in circumstances of normal competition, is to take the notional value of the house as it would be in the usual circumstances. It would be unnecessary to put the court to the trouble, and it would be of no help in similar circumstances, to consider what is the notional value of the surrounding houses. Combine the two; what is the actual letting value, what the houses there are going at. That would be a guide to the court, in addition to the other part of the definition.
Would not the effect be an increase in the gross rent as calculated in the paragraph? In other words, the court would take into consideration the notional value and increase that in respect of the value of similar tenements.
The Deputy would prefer to have these words left out?
No, to have them in.
There is not a lot in it. Deputy Byrne raised the point that a landlord might put in a bogus person who would offer an impossible price and, if there was a person of that nature brought forward who was making a most impossible offer, the court would be helped and guided by seeing what actual letting had taken place in the immediate vicinity.
The real value of the words, as they stand, lies in this, that in a very short time a fair rent would be fixed in a town and what the court has fixed as a fair rent in one premises will be a guide for the landlord and the tenant for every other premises. If it is known that the letting value will be, in a very short time, the rent fixed by the court, I think that will guide landlord and tenant and guide them so much that it will help very much to keep them out of court. I think that is the real value of these words.
I move amendment 76:
Before paragraph (h) to insert the following paragraph:—
Where allowances for improvements have been duly made in the determination of the gross rent by the court, and the rent so determined exceeds the rent payable under the terms of the previous tenancy, the rent payable under the terms of the new tenancy by the occupying tenant shall not exceed by more than half the rental which such occupying tenant paid under the terms of the previous tenancy.
This amendment is to limit the amount of the increase of rent that can, under the power of the court, be imposed upon a tenant. A moment or two ago the Minister referred to the factors which would operate in the fixation of a fair rent, and one particular factor to which he referred was the reduced value of money. I am in complete agreement that that factor is going to operate in a very important way in the view of the court in whatever particular rent it may fix. I agree with Deputy Lemass that money has been steadily appreciating in value for some considerable time. That appreciation in the value of money is likely to increase. Another aspect of the question that has to be taken into consideration is that the rents now being paid by most of the traders are being paid with the greatest possible difficulty. Rates and taxes have gone up considerably and this imposition represents to the business man almost a second rent. What the business men are anxious to obtain is not confiscation of the property rights of the landlord. They have capital invested themselves and they recognise that where capital is invested there must be a reasonable return upon that investment.
The Minister, in dealing with the present section of the Bill, referred to the fact that under the Act there may be considerable rent reduction. A business man in this House who is running a business premises and expects a reduction of rent under this Act can only be termed either a cheerful optimist or a cheerful idiot. With one solitary exception I do not know of a street in this city where letting values have depreciated. I know only of one single street in which that has occurred and I have no hesitation whatever in saying that in 97 per cent. of the cases of rent fixation that will take place under this Bill there will be a substantial increase of rent. That will be granted under the new leases in court. Business men are perfectly willing to pay a reasonable rent. They are perfectly willing to take into consideration the depreciated value of money. They recognise that the depreciated value of money affects landlords in just the same way as it affects business men.
Under this section there is no limitation to the amount of the increase of rent which a tenant may be forced to pay. My amendment limits the increase of rent to fifty per cent. The Minister referred to one fact, and that was that a letting that was made, say, in 1890, may have been a letting made when the rent was exceedingly low. If the Minister is willing to accept the principle of a limitation to the increased rent that will be fixed as a fair rent by the court I am willing to meet him in every conceivable way—if he will only accept the principle that there must be some limitation as to where this increase begins and where it will end. I submit that if a tenant is paying £100 per year by way of rental and power is given to the court to increase that by 50 per cent., that means £150 per year, and that is a reasonable allowance on the one hand for the depreciated value of money, and to the business man on the other hand. But, under the section, business men do not know where they are and what rent they will be asked to pay. That is a very serious position for them, and one that they face with very grave doubt and misgivings.
I may be told that the incorporation in the Bill of a limitation to the amount of the increase of rent that the court could impose may more or less be looked upon by the court as a direction for a general all round increase of rent. But business men have had such sad experience in the past, that they look forward to no limitation in the amount of the increase of future rents with the very greatest possible misgiving. As I pointed out, 97 per cent. of the business premises in the city are going to have their rents increased under this Bill. I submit to the Minister the difficulty which a business man will be under to prove to the satisfaction of the court that the rents in his immediate vicinity have so steeply climbed, taken in conjunction with depreciation in the value of money, that he will be entitled not to receive a lease with an increase of rent, but a lease with a large decrease of rent. In my opinion, it is almost a thing that one with common sense cannot possibly visualise. One has got to take into account certain factors existing to-day. The competition that the retail trade has now to face in Dublin is just as keen as it was previously in what is termed the wholesale trade. We have now an invasion of English retailers and English multiple shops, and every one of these shops has sent up rents rapidly.
Under the amendment there would be a limitation to the increase of rent which a tenant will be forced to pay. The business man has two alternatives. He has either to take this permitted increase of fifty per cent. as a limit to the power of the court or the section as it stands without limitation. In my opinion the greatest possibility exists that the rent fixed by the court may be fixed at a figure that would render the granting of a lease entirely valueless to a business man. That is a very serious danger, and I ask the consideration and help of the Minister to guard against it.
There are certain sections in the community who do not regard business men as useful members of society. A common term for business men is "profiteeers," but, speaking with inside knowledge, I can assure the House that business men have the greatest possible difficulty in meeting existing rents. Although they are willing to pay a reasonable increase of rent, they cannot regard with equanimity the power of the court to double or treble the rent, if the court so thinks fit. I would also draw the attention of the Minister to the fact that, in addition to the powers for increasing the rent under the Bill that the court possesses, the court may require the expenditure of a capital sum by way of improvement or permanent repairs or something in the nature of a fine. Is the Minister taking into consideration that very important concession to the property owners? The court may also order the postponement of a new tenancy until the repairs are carried out. Is that not a very valuable concession to the property owner? What concession is given to the tenant? The business tenant actually does not know where he is. I want the Minister to bear in mind that the granting of a new lease to a business tenant is the only concession under this Bill, while under the Act of 1906 there was compensation for disturbance and loss of good-will. There is no such compensation under this Bill.
I also ask the House to remember that most business men have been in occupation of their premises for an exceedingly long period. Take a business man in possession of a house for twenty or twenty-five years, which is no uncommon thing in Dublin. What return by way of rental will that business man have made to the landlord? Will he not have paid the landlord back more than twice the original price of the premises? There ought to be some limit to the amount of the increase the business man will be asked to pay. I have already submitted that the increased value of business premises is due to the investment of the capital of the business man, to the enterprise of the business man, who may have spent considerable sums of money in advertising, and in other ways to create a trade turnover in the premises. All these factors should be taken into consideration by the Minister. I submit that it is equitable that there should be some limitation to the increase of rent the business tenant will have to pay. If the Minister is willing to accept the principle, I shall not boggle about words. I have put down fifty per cent. If there are exceptional cases where exceedingly old rentals prevail, if the Minister is willing to accept the principle of the amendment, he can easily insert certain words so that complete justice will be done to the landlord in exceptional cases. I ask the Minister to give some help to the business men of this city. I am not painting any untrue picture when I say that at present most of the business men have the greatest possible difficulty in paying the existing rents and when they are asked, under this Bill, as they will undoubtedly be asked, to pay an increased rent, it will mean that the greater proportion of them will certainly be put out of business.
For the reasons which I stated a few moments ago when dealing with Deputy Lemass's amendment, I cannot accept this amendment. Deputy Byrne has said a great deal about what an advantage the landlord gets under this Bill by necessity of the tenant having to put the place in repair, but surely the person who gains by putting the place in repair is the tenant. He is the occupier of the premises; no doubt these repairs give greater security to the landlord. It is better security to the landlord than if the house was not in a good state of repair, but surely the person who has gained most is the tenant, who has the full advantage of these repairs. However, that does not seem to be completely relevant to this particular amendment. What happens here is the court calls upon the Commissioner for Valuation to make a valuation of the house. That is one of the guiding principles on which the court goes, and that rents, as Deputy Byrne seems to be afraid, are going to jump up by half or anything like that is a situation that I do not visualise at all, and I am perfectly certain it will not happen. The general principle on which I stand is that the court, dealing fairly as between landlord and tenant, should not be restricted in its fair dealing between the two.
I object to the action of the Minister in associating this amendment with mine. I do not think there is any similarity between them at all. Mine is a sensible amendment. Deputy Byrne apparently thinks that where a tenant was paying £50 a year, and the gross rent, as calculated under paragraph (f), minus the allowance in respect of improvements, is fixed at £60, because there has been that increase of £10 the court should be permitted to fix an increase of £25. That is the purpose of his amendment. If the old rent was £50, the gross rent, minus allowance for improvement, is £60, the court is given discretion to fix the rent at £75. That is an amendment apparently brought in in the interests of the tenants, according to Deputy Byrne. I do not think the tenants will be the least bit obliged to Deputy Byrne.
It is evident the amendment is going to be defeated. I am not at all disturbed by not having the support of Deputy Lemass rather than his disapproval. I happened to be associated with the Town Tenants movement on the subject before Deputy Lemass ever put his pen on paper, and I know what the business men of Dublin want.
Do they want a 50 per cent. increase on their rent?
They want a limitation of the amount of the increase fixed by the court. That limitation I have sought to obtain. Even if I am defeated when the question is put I shall have carried the wishes of business town tenants regardless of what Deputy Lemass said.
I do not think that Deputy Lemass is fair to Deputy Byrne on this matter. Deputy Byrne's amendment does not say that the rent must be increased by 50 per cent.
It may be Deputy Byrne announced that if his amendment was not accepted he would vote against the Government in every Division Lobby. There are only two Division Lobbies and now he has the chance of voting against them if he wants to succeed.
I think instead of challenging a division the simplest way would be for me to ask you to register my vote in favour of the amendment.
Amendment 76 is negatived—Deputy J.J. Byrne dissenting.
I move amendment 77:
In paragraph (h) to insert after the word "may" line 20, the words "save where the landlord was, under the conditions of the previous tenancy, liable for repairs and failed to execute them."
Paragraph (h) provides that the court may, as one of the terms of the new tenancy under the Act, require the tenant to expend specified sums on repairs, including painting and decorating. It is possible that the necessity for that expenditure may arise out of the default of the landlord if the landlord is liable under the terms of the old tenancy for such repairs. The amendment is designed to protect the tenant in such a case and to provide that the court may not require him to expend the sum if the landlord is responsible for the repair of the premises under the old tenancy. It is quite possible that the landlord may default and that the tenement may not be in fit repair on the day the new tenancy is granted, and that the court may put upon the tenant the responsibility of expending a certain sum of money to meet the default of the landlord. I do not think that that is fair and the purpose of my amendment is to prevent that. I ask the Minister, if he is not prepared to accept it in the form I propose it, at least to agree that there is something there to be safeguarded. I ask him to undertake to consider the matter, and to devise an amendment of his own to meet the position.
Certain representations have been made to me which I think are well-founded, that in the case of certain tenants landlords do not execute repairs that they have covenanted to do, that the only thing they could do is to go to the court and get an order compelling the landlord to carry out his repairs. That is an expensive and difficult procedure for the tenant to adopt. On representations made to me I have ready, for the Report Stage, an amendment which will enable the tenant, where the landlord after notice does not carry out the repairs, to carry out the repairs himself and to charge the landlord for them. I need not go into the actual wording of the amendment now. Deputies will see it on the Report Stage. It is not quite the same as Deputy Lemass's amendment, but I think it really carries out what appears to me to be the real grievances which the tenants have where the landlord does not keep his part of the bargain.
I hope the Minister will see, and I am sure he will, that the course he has suggested is open to great danger, and I hope he will guard against that danger in his amendment. If you give the tenant power to say what repairs are to be carried out the landlord's position would be very dubious.
The tenant will have to serve notice on the landlord pointing out the condition of the premises. Of course, repairs are different from improvements. He will have to point out to the landlord, for instance, that the roof is leaking, and the landlord has covenanted to keep it in repair. If the landlord does not do anything, at present as a remedy he would have to get an injunction to compel the landlord to put the roof into repair. My amendment simply proposes that he will serve notice on the landlord to the effect maybe that the roof is in a hopeless state and request him to repair it. If the landlord does not carry out the repairs the tenant can carry them out himself, but we can debate the actual words when we come to them later on.
In that case it would be the landlord's duty to put the roof in a proper state of repair. The actual amount might be a matter of dispute between the landlord and the tenant. Cases arise where the landlord holds that he is not bound to do that kind of repairs. If the Minister proposes by a simple form of notice to a landlord to make him responsible, it would be a dangerous proceeding.
If the landlord does not agree that they are repairs which he is bound to carry out, he is then prepared to compromise. Amendment, by leave, withdrawn.
I move amendment 78:
In paragraph (h), line 22, to delete the word "including" and substitute the word "excluding."
This is a simple amendment which, I think, the Minister will find no difficulty in accepting. No one will hesitate to agree that the court should have complete power to order the expenditure of money on permanent repairs, but under the section the court will have power to order the carrying out of painting and decorating. I think that is carrying the principle too far, and it appears to me to be a kind of reductio ad absurdum.
Decorating is possibly not necessary, but painting may be very necessary for the preservation of a house. Hardly anything will make a house deteriorate in value more quickly than the absence of painting. If you allow your window sashes, doors, etc., to remain unpainted for a very considerable time they will rot away. I will meet the Deputy and bring in an amendment in which I will delete the word "decorating" and substitute the words "for the purpose of preservation but not painting for the mere purpose of decorating." That is to say, the exterior painting necessary to keep the house in preservation. After all, painting may, in certain circumstances, be as necessary as keeping slates on.
I would ask the Minister to consider that phrase "in the circumstances of normal competition" with a view to seeing if it does actually embody the meaning he has given to it. Perhaps if it were extended to read "in circumstances of normal competition for houses of similar type in the same vicinity" it might meet the point I have in mind.
I would like to ask the Minister to consider putting in words on the lines he mentioned himself to explain more definitely what circumstances of normal competition were. He indicated himself here what he did intend them to mean, that is, if there were no abnormal shortage of houses. I think it would be well to have that in the Bill. I think it is essential, because it is extremely doubtful whether every lawyer would take the same view of it.
Deputy Byrne, a few moments ago, taunted me with being the ally of Deputy Lemass. I find now that Deputy Byrne and Deputy Lemass are allied in having the word explained and that they have a third ally in Deputy O'Connell.
That is a powerful combination.
In deference to that very powerful combination and having regard to my own views also I am willing to expand those words. Personally I have no doubt about their meaning. The words were in the report and that is the meaning they conveyed to me without any difficulty, but if there can be any difficulty about them, I will expand them so that the difficulty will no longer exist. It would be hard on a landlord and tenant if they had to fight a case to the Supreme Court on the meaning of the words. If there is any doubt expanding the word will certainly clear it away, but I do not think there is.
On behalf of Deputy Morrissey I move amendment 79:
In sub-section (5), line 55, to delete the words "at the request of a party."
I think what the Deputy had in mind in putting down this amendment had relation in sub-section (1) of that section. It states that the court may and if so requested by either party shall cause to be sent to the Commissioner of Valuation a request for valuation; that is, the court, of its own volition, must ask for a valuation if so requested by either party. Section 5 would seem to imply that where the request is sent to the court itself, as it is entitled to do by sub-section (1), it need have no regard whatsoever to the valuation furnished by the Commissioner. In Section 24, where something of the same kind of principle is involved with regard to the valuation by the Commissioner in regard to compensation, it seems to be very much stronger. The court shall be bound by the several estimates and statements contained in the valuation unless the court for reasons shall declare such valuation to be erroneous in law and fact. It does not seem to be clear on the face of this why it is only when the valuation is made at the request of a party that the court is even expected to have regard to the valuation submitted. It may ask for a valuation, but then it may disregard it completely without giving any reason.
I am willing to accept this amendment. I do not think that it makes any real alteration in the meaning of the section. As the section stood, the court might send for and receive a report from the Commissioner of Valuation; in that case the court might send for it, but the court need not have regard to it. In the other cases where the parties or either of them wish to have a report it is then that the court should have regard to it.
What I had in mind was that the court might not always be the same person. It might be changed, in the case of sickness.
Or in the case of death.
I move amendment 80:—
In line 26, after the word "tenement" to add the words "and shall for all purposes be deemed to be a graft upon such previously existing tenancy and the interest of the tenant thereunder shall be subject to any rights or equities arising from its being such graft.
This amendment is consequential upon other amendments which we produced here the other day dealing with the position of persons who are holding on under the provisions of the Increase of Rent and Mortgage Interest (Restrictions) Act. It would enable any party who had a beneficial interest in the premises to preserve his interest, for instance, if one of the next-of-kin of the deceased might happen to get a renewal in his own name, the other persons interested in the existing tenancy would carry on their interest into the new tenancy. It is going to be a continuation subject to all the rights and liabilities which were affecting the previous tenancy.
I move amendment 81:
In sub-section (1) (a), line 31, before the words "the fixing" to insert the words "the expiration of one month from the date of."
I doubt if anyone will oppose this amendment. The purpose is merely to give the landlord a little time to raise the money which may be necessary. It might be extremely hard on him if he were compelled to pay immediately. All that is asked for is one month to raise the money which may be necessary.
I do not think that is unreasonable, and I am willing to accept it.
I move amendment 82:
Before Section 34 to insert a new section as follows:—
(1) Where a tenancy in a tenement is terminated and the estate or interest of the tenant of such tenement under such tenancy was immediately before such termination subject to a mortgage or charge for securing money, such mortgage or charge shall extend and attach to any compensation under this Act which shall become payable to such tenant in respect of such termination.
(2) Where compensation under this Act is payable to a tenant and the landlord or superior landlord by whom such compensation is so payable has notice of a mortgage or charge which by virtue of this section or otherwise affects such compensation, such landlord or superior landlord shall either—
(a) where such tenant so consents, pay such compensation to the owner of such mortgage or charge, in this section referred to as the mortgagee; or
(b) where the mortgagee so consents, pay such compensation to such tenant; or
(c) where the mortgagee and such tenant so direct, pay such compensation to the mortgagee and such tenant in such manner as is so directed; or
(d) where no such consent or direction as is mentioned in this sub-section is given, pay such compensation into court.
(4) Where compensation under this Act is paid into court under this section the court may, on the application of any person interested, make such order in regard to such compensation as justice may require.
This deals with the question where a tenancy was mortgaged and any compensation under this Act is payable. It makes provision that where the tenant consents such compensation shall be paid to the mortgagee; where the mortgagee consents he will pay such compensation to the tenant; where the mortgagee and such tenant so direct, pay such compensation to the mortgagee and such tenant in such manner as is so directed; or where no such consent or direction as is mentioned in this sub-section is given, pay such compensation into court. It is obvious that if premises are mortgaged the really substantial beneficial interest in the premises belongs very largely to the mortgagee, and it is only right that he should receive the moneys which are due to him by the tenant on the holding. The tenant receives compensation for his interests in the holding and it shall be payable to the mortgagee.
In line 6, after the word "determined" to insert the words "and in either case such tenancy was terminated otherwise than by ejectment or surrender."
The only object of this amendment is to prevent a bogus claim being brought by any tenant, because a tenant who wished to remain on in possession, though he knew he had absolutely no claim or right of any kind, might serve notice on which he knew he would be finally defeated, but thereby he might remain in occupation some little time.
I move amendment 84:
Before Section 35 to insert a new section as follows:—
Where a tenancy in a tenement terminated before the passing of this Act and the tenant of such tenement is at the passing of this Act in occupation of such tenement notwithstanding such termination and without having obtained a new tenancy in such tenement, such tenancy shall for the purposes of this Act be deemed to terminate immediately after the passing of this Act and this Act shall apply accordingly.
The effect of this amendment is to bring in all persons who are still remaining on under the Increase of Rent and Mortgage Interest (Restrictions) Act, even though they have not actually paid any rent. If they are at the passing of the Act, in physical occupation, they will come under the provisions of this Bill. It is an extension slightly of what we have gone into in the earlier discussions on the Bill. Where a person is remaining on he is entitled to the benefit, if he has not been physically disturbed in possession prior to the passing of the Bill.
I move amendment 85:
In sub-section (2), line 40, to delete the word "week" and substitute the word "month."
This is the same as the other amendments dealing with time.
Not quite the same There is a slight difference. Sub-section (2) would have to be read in relation to sub-section (1), which provides that a tenant served with notice to quit, or whose tenancy has expired by the fall of a life or of any other uncertain event within three months, can get this information relating to the reversion, in the landlord's title. There should be really no reason for delay in supplying that information, and if it is proposed to extend the period from one week to one month some consequential alteration will be necessary in sub-section (1).
I fancy that we shall meet Deputy Thrift to a certain extent by inserting a fortnight.
I will accept a fortnight, but I think it will take some time to get the information.
On behalf of Deputy Morrissey I move amendment 86:—
In line 1, page 20, to delete all words after the word "void" to the end of the section.
A contract by which a tenant would be directly or indirectly deprived of the right to obtain relief under this Bill should not have any qualifications.
I am inclined on the whole to accept this amendment. There might be certain cases in which the landlord and tenant are in such a position that they are both free to act and decide themselves that they will remain outside the provisions of the Bill. This section was taken from the earlier Town Tenants Act. I think these cases will be very rare and that this might possibly be utilised to have a false form in a lease.
I move amendment 87:
To delete sub-section (2) and substitute the following:—
"In this Part of this Act, the expression Proprietary Lease or Proprietary Agreement, means a lease complying with all the following conditions, that is to say:—
(a) such lease is a sub-lease (whether mediate or immediate) under a building lease, and
(b) the land demised by such lease is the whole or part of the land comprised in such building lease, and
(c) such lease is made for a term expiring at the same time as, or not more than one year before the expiration of such building lease.
This is a very important amendment to a very important section. As the section stands it seems to me that on the expiration of a building lease the ground landlord will be bound to grant a reversionary lease to the holder of the sub-lease, except in certain cases on what would be found in practice to be the old rent. That is not done at the moment. He will be bound to grant a lease to the holder of the building lease except a sub-lease called in this section a proprietary lease. That is made with certain conditions. Two of these conditions are specified in the Bill, that the sub-lease must have been made for a period of 31 years, and accompanied by a fine of at least 25 times the ground rent. I contend that will mean in practice that in almost all cases the occupying tenant will not be the person who will get the lease, but it will be someone that I might call the middleman who will be entitled to get that lease although he had made a contract perhaps with the occupying tenant to the effect that the occupying tenant on payment of a considerable sum of money should be entitled to what we take it to be all the rights of the middleman at the time. I mean to the rights of the middleman in many cases. I do not say that this applies in all cases; but it seems to me in these sections we are trying to meet a variety of cases by one enactment and in so doing we are bound to decide unjustly for certain types of those cases. A few cases will be those where the original builder, the owner of the bricks and mortar, is still in possession of the building lease and this section is probably drafted with special attention to his rights, but they are a comparatively small proportion of the actual cases. In most cases the owner of the bricks and mortar will have sold to someone else and that someone else will have sold to someone else and that may have gone on for a variety of times before you can come down to the actual owner of the building lease at the time that lease falls in.
Each of those sales was recognised at the time as the sale of what was virtually a profit rent for a certain number of years. The seller knew what he was selling and the buyer knew what he was buying. He paid a price determined by the value of what he was to get out of it. In England, I understand that in such cases insurance is effected, so that the time the rent falls in a corresponding sum of money will be available, or else the owner of the rents sets aside as a sinking fund a certain portion of the profits each year to meet the amount of his expenditure. If he does that or if he spends all his money, that is his look-out. A bargain was made, a definite thing is sold for a definite price with, presumably, the full knowledge of both parties.
What is now proposed is that unless the person in possession at the time when the reversionary lease is proposed to be given has been in occupation for 31 years and has paid this fine of twenty-five times the profit rent, then instead of his getting what he thought he was getting, the right to the reversion of the lease, that right goes back to the original seller, the seller to him; and instead of this being a Bill to benefit the tenant it will be a measure to establish the middleman in unchallenged possession. The ground landlord is not concerned with this particular section at all. It is a question between the middleman and the occupying tenant in most cases. If the section stands as it does at present it is giving to the middleman a greater proportion and it gives him the right to the reversion of the lease instead of giving it to the occupying tenant. I think we should be doing something which would be a grave injustice to most of the tenants if we were to do that. I hope we shall find some way before we leave this section to arrive at a just and fair solution as far as the possible difficulties go.
There are various rights to be considered—the right of the tenant, the right of the middleman in certain cases and the rights of the ground landlord. The Bill seems to me to include in the greater proportion of the cases most of those rights for the benefit of the middleman. To meet those cases or to meet certain cases of the middleman the Bill is drafted, but in order to give the middleman his rights in a small proportion of cases, surely it is not reasonable that we should do what is unjust and unfair and against all reason in the greater proportion of cases. I contend that that is what the Bill does in its present form. I will not say any more at the moment until I see precisely the way in which it is met in various parts of the House.
I find myself inclined to support Deputy Thrift in this amendment. Amendment 89 on the Order Paper embodies our proposal concerning these reversionary leases, but the amendment embodies a common-sense proposal and, therefore, I suppose, will be rejected by the House. The question for us is to find the next best line of action to take. The question which the Dáil has got to decide is whether it is right the reversionary lease is to be given to the occupying tenant or to the middle-man. The proposal in the Bill is that it be given to the middle-man except in certain conditions. The proposal in Deputy Thrift's amendment is to give it to the occupying tenant. As between these two we will come down on the side of the occupying tenant. I take it that Deputy Thrift's purpose is to eliminate the middle-man in so far as it is possible to do it.
Wherever it is fair.
The position is that the adoption of this amendment which Deputy Thrift has proposed would mean that this right to the reversion of the lease would go, not to the middle-man, but to the tenant in occupation. We should endeavour, and I think the Minister has expressed his intention of endeavouring, to get as near to the person in occupation as it is possible to get. The proposal here is to give to the occupying tenant the right of a reversionary lease, if he has a sub-lease for more than 31 years and if he has paid a fine exceeding 25 times the annual rent. As Deputy Thrift has pointed out, there are quite a number of people who have purchased subleases for a shorter duration than 31 years and for a smaller amount than 25 times the annual rent. These people thought they were purchasing the middleman's entire interest in the premises concerned, and also purchasing his right to a reversionary lease. The Bill proposes to deprive them of what they bought and paid for and to restore to the middleman what he had sold. That seems unfair and unreasonable. I can find it hard to believe that that was the Minister's intention. Yet if the Bill goes through unamended that is what will happen.
The view which I expressed upon the Second Reading, that in the great majority of cases the middleman has no right to a reversionary interest at all, still stands. In the majority of cases he is a person who has bought a profit rent for a number of years, gets exactly what he paid for, and at the end of a certain number of years he has a right to nothing. He bought an annuity, he got an annuity, and that leaves him out.
The ground landlord, as Deputy Thrift pointed out, is not concerned in this. It is mainly a matter between the middleman and the tenant. If the Dáil is not prepared to accept our proposal to give that profit to the community to whom it belongs, at least it should give the advantage of the new lease in the terms to be fixed by the Bill to the occupying tenant as against the middleman. As Deputy Thrift's is the first amendment on the Order Paper and, therefore, will be put first in the Dáil, in anticipation of the defeat of our own amendment, we will support it.
I desire to oppose this particular amendment. I may say, incidentally, that I am very much astonished to find Deputy Thrift standing up here as a champion of confiscation. He has told us, and Deputy Lemass has supported the view, that what the buyer of the house bought in fact was merely 25 years', or so many years', profit rent. That is portion, but only a portion, of what a person purchasing a house has bought in the past. He has bought so many years' profit rent, but he has also purchased the sporting chance in some cases, and with the definite knowledge in others, that he will, as the owner of the house, get a renewal of the lease.
That is what we are proposing for them but what the Bill is denying them.
I am talking about the purchaser of the house.
If he has only purchased twenty-five years' the Bill proposes to deny him the reversion. The amendment is proposing to give it to him.
What I am arguing is that when the lease is up the owner of the house should get the right to the renewal of the lease.
We are in agreement on that.
I thought from the statement that you were ignoring the fact that after so many year's profit rent there was the problem of the renewal at the end of the term. I only heard portion of Deputy Thrift's remarks, but what I understood him to argue was that the tenant in occupation should get the right to the new lease at the expiration of the lease. If I am wrong in that I have nothing further to say.
My point is that the purchaser of the sub-lease should get the renewal.
That is the person in occupation.
I am arguing that the person who owns the house should be the person to get the renewal of the lease.
I hope the Minister will not, in any circumstances, accept an amendment which will have the effect of confiscating an interest which was created in the property by the original builder, the owner of the bricks and mortar. There is a great danger in looking at this question from the viewpoint of middlemen and so on, of creating confusion of thought. The term "middleman" as I understand it, means the owner of the bricks and mortar—that is, the middleman who has invested his money. When the lease runs out, I hope this Bill will have the effect of refusing the landlord the right to take over the property as his own creation, or to take the major interest in the property by fixing a new ground rent at a very much higher figure. I would like the term "middleman" to be left out. What we have to protect really, and what this amendment would undermine, is that the successor in title to the bricks and mortar who has invested money in the property is obviously the persons who is entitled to a renewal of the lease on fair terms and not at the option of any landlord. The person who has bought a thousand pounds house, a fifteen hundred pounds house, or a two thousand pounds house is the successor in title to the original owner, or the house may have come down from father to son or grandfather to grandson, or even further than that. The owner of the title is the person who in equity is entitled to a renewal of the title and to a continuation of the enjoyment of the capital which has been invested, and which capital is his property. Deputy Thrift seems to have some other person called by that vague term "middleman" in his mind. If there is some difficulty I think a new clause should be put in to meet it, but I hope the Minister will not accept, under any conditions, an amendment which undermines the rights of the property owner.
This is the first amendment Deputy Thrift ever introduced that I stood up in this House to support. I agree with every word that Deputy Thrift has said. The House has a choice under this Bill of giving a reversionary lease to one or two people. Deputy Thrift advocates that those who have a sub-lease should be entitled to a reversionary lease, while on the other hand Deputy Beckett advocates that the successor in title to the purchaser should be in equity and justice entitled to the lease. If for a moment we would just look at the position as it stands, we have four classes of interests involved. We have a ground landlord to whom the ground will come back again when the lease has expired, and who under the Act will be bound to grant something up to 150 years of a lease, as Deputy Thrift has said, at a nominal rent, either to the building or the proprietary lease holder.
[An Ceann Comhairle resumed the Chair.]
We have the intermediate lessees, who are wiped out entirely without any consideration. These are what are rightly termed "middlemen." We have then the owner of the bricks and mortar, and we have the tenant in occupation. You have four classes—the owner of the land, the intermediate lessee, the builder of the property, and the tenant in occupation. Which of these classes is in equity entitled to the reversionary lease? Under the Bill, one class of middleman will be set up, while another class, the intermediate lessee, will be removed. Except under the Bill, the term "proprietary lease" be applied to any person who holds a sub-lease, no matter what sum of money it involved, such persons would be entirely wiped out and the reversionary lease would be given, as Deputy Beckett holds it should be, to the successor of the man who erects the bricks and mortar. Unless the proprietary lessee pays twenty-five times the amount of his annual reserve rent he is wiped out without consideration, or, unless under the Bill he has an interest in the lease for a term of 31 years, expiring at the same time as or not more than two years before the expiration of such lease, he is wiped out without consideration. You are setting up a new middleman. Is the man who has erected the bricks and mortar entitled to more consideration than the occupying tenant? Which of the two has the greater equity in the reversionary lease?
If a builder develops an estate he acquires the land on a building lease generally for a long period—99 years would be very short and probably it would be 999 years—and he knows what he is buying. He gets it at a particularly low rent and develops it by the erection of houses. At the end of that period the builder of the house, who has undoubtedly performed useful functions, has been amply repaid by the 99 or 999 years' income, as the case may be. What happens to the occupying tenant? He is to be placed absolutely at the mercy of the builder. I think that, as the section stands, it can only be regarded as being flagrantly unjust to the occupying tenant.
If it is not amended the builder will be set up as a new middleman, and I say that the title of the Bill would really be a misnomer. It is not a Town Tenants Bill, but might rightly be termed "The Middleman's Charter." What will happen if the section passes as it stands is that you are going to set up a new middleman as the lord of the manor for 150 years simply because he has erected a house. I hold that the one vital thing that is necessary for fixity of tenure is the complete elimination of the middleman. When I appeared before the Town Tenants Commission I stated that the middlemen were a curse on the progress and prosperity of the State. I said that they had received their pound of flesh and that immediately their interest expired they should automatically disappear, and that there should, as far as possible, be direct relationship between the landlord and the occupying tenant. I had good reason to make that statement. I had in mind the case of a middleman who wanted to confiscate the interest in important business premises in the City of Dublin and to evict a tenant without regard to his established trade or good-will. What should be done under the Bill is that there should be a fair division of the appreciable value. Between whom —between the man who built the house, the owner of the bricks and mortar, or between the tenant and the landlord?
The first step, in my opinion, in the amelioration of the town tenants' condition is the complete elimination of the middleman. Under the Bill, however, we are setting up a new middle-man and giving him a reversionary lease for 150 years. There has been a certain practice growing in well-managed estates. It has been dealt with in the Report of the Town Tenants Commission; that is, the practice of eliminating the middleman and to grant the reversionary lease wherever possible direct to the tenant, the only stipulation being that the occupying tenant would acquire the interest of the middleman. Knowing this practice, many tenants, especially around the outskirts of Dublin, have spent substantial sums of money in acquiring the interests of the middleman, who is frequently the man who built the house. These middlemen sold their interest to the occupying tenants.
If the Bill passes without Deputy Thrift's amendment these sums of money which the occupying tenants have paid will be gone.
That is absolutely wrong. In that instance the purchaser, the person whom the Deputy calls the middleman, gets the lease.
That would be unless these interests amounted to two things, a lease of 31 years or 25 times the annual rental reserved on the property. I challenge the Minister to contradict that. These are the only two persons, called proprietary lessees, who will be entitled to the lease—the proprietary lessee on the one hand and the owner of the bricks and mortar on the other. If the Minister goes carefully into the Bill he will find that the contention which we are making is right. That is what will happen and those occupying tenants who bought out the interests of the middleman will get nothing unless they comply with the conditions regarding the proprietary lease, namely, have a 31 years' term or paid by way of fine 25 times the annual rent reserved. I would like to look at the position of the owner of the bricks and mortar. I would like everyone to get equity and justice but I suggest that under the Bill the owner of the bricks and mortar is receiving much more consideration than he is entitled to. I want Deputies to remember that the house has changed proprietors a great number of times since the granting of the original lease, and the price paid in each transfer of ownership will be found to be the present value of the profit rent over a term of years. It means that the present owner has paid a sum which represents the full value of the property. The practice in regard to building land has been a very cute one. They generally retain interest in the holdings for a couple of years longer because, if they do, they are entitled to the benefit of a reversionary lease, but in the case of well-managed estates when the question of a reversionary lease arose the owner of the property, finding that these middlemen would only get a short reversion for a couple of years, declined to grant a reversionary lease to them.
In that practice I think they were prefectly justified, for I submit to the House that the middleman, whether he be the builder of the bricks and mortar or another person who is a party interested in the occupying tenant, should not be entitled to obtain the benefit of the reversionary lease. That being the practice on well-managed estates, that the middleman was refused a lease, there was no difficulty in enabling the tenant to purchase the interest of the years that remained outstanding. If, however, this Bill is passed you are going to set up what I have already termed a lord of the manor in the person of the owner of the bricks and mortar and give him a reversionary lease of 150 years. For what? Because he erected the house, because he spent £300 in the erection of the house at a time when the cost of building was very much lower than it is at present. I contend that in the interests of equity, it is not the owner of the bricks and mortar who should get the lease. I contend that the occupying tenant is the person who is entitled to the reversionary lease. If this is a Bill for the amelioration of town tenants in general this House should take proper care to see that the occupying tenant will get the benefit of this particular section. I have been advised that the greatest possible difficulty exists with middlemen, building lessees and otherwise, who get these leases for a long term of years—99 or 999 years—to get them to keep the house in repair, and that in fact it has been found that the only parties who can satisfactorily get these repairs carried out are the tenants in occupation.
I would draw the attention of the House to paragraph 40 of the Report of the Town Tenants Commission. In that report it is stated: "We attach considerable importance to the last suggested exception, that exception being in cases of good estate management. There are undoubtedly carefully and excellently-managed estates with which it would be inadvisable to interfere in any way, but the aim of our recommendation is to secure that the settled practice of such estates should determine the general law." Is this Bill carrying out that recommendation? Is that recommendation embodied in this section of the Bill? I submit to the House it is not, that it is the opposite of the recommendation you have actually embodied in the measure. I ask the Minister carefully to consider the amendment which Deputy Thrift has moved. I think it is a reasonable and an equitable amendment. I think the granting of a reversionary lease approximately of 150 years places the occupying tenant completely at the mercy of that man and is certainly doing nothing to ameliorate the town tenants' lot. I ask the Minister to accept the amendment.
Everybody speaking on this amendment seems actuated by a desire that equity should be meted out to every person interested in houses, but apparently there is some confusion of thought in arriving exactly at a conclusion as to what is Deputy Thrift's amendment. Deputy Byrne, who has just spoken, has spoken a good deal of the person known as the middleman, and in the case of ordinary lettings he, for the purpose of his argument, has divided the class of people interested in these holdings into four distinct categories or characters. There is first the owner of the soil who is receiving the ground rent. He then accepts the position of the building owner or the successor in title of the building owner, and then he comes along to the person against whom he directs the great weight of his argument, namely, the middleman, and under him the occupying tenant. If Section 41 of the Bill stood exactly as it is, there would be no protection whatever in the ordinary way for the middleman, to whom Deputy Byrne has such a decided objection, because, as I conceive it, the position of the middleman is this: We will suppose that a building lease is made for 99 years and that the person entitled to the lessee's interest carries out the covenant of building, and having carried out that covenant lets to another person, simply makes a letting to a person who then becomes the owner of the interest, and that other person becomes the middleman who makes the letting to the person in occupation. Unless there was a fine reserved or leased to the middleman, or unless he was obliged to carry out the duties of the covenant which the building owner had carried out under his lease, that is, in other words, unless the owner of the building lease had thrown over on the middleman, or the person whom Deputy Byrne described as the middleman, all the obligations under the building lease, that middleman would not be protected.
The effect of Deputy Thrift's amendment is this. It is not concerned with the middleman, but I do suggest that it is concerned purely and simply with the owner of the soil, because what Deputy Thrift's amendment attempts to do is to wipe out all intervening interests, no matter how much equity or how many equities any of these intervening interests will have, and to bring into immediate contact with one another the actual occupying tenant and the owner of the soil. I do not know whether Deputy Thrift is moving that in the interest of the occupying tenant, but I suggest it is not in the interests of the occupying tenant, because the occupying tenant is already protected in so far as he has a right to obtain a new lease under Part III of the Bill. I suggest that the only purpose of the amendment is to bring these parties into immediate contact, and thereby secure for the owner of the soil a greater rent than that to which he might be entitled in the ordinary way. Suppose the occupying tenant has cast over on him any of the obligations which were formerly cast on the person called in this debate the building owner, that is, the lessee under the building lease, if the building lessee has either, by way of premium given over to any person the interest which he may have in his lease; if he has cast certain obligations over on another person, the occupying tenant by asking him to carry out certain repairs or improvements, which the building lessee would be obliged to do under the lease, then that occupying tenant, if he complies with sub-section (2) of Section 41 would be entitled to a reversionary lease. The building owner who had thrown over his obligations, and who had, in fact, taken a premium for his interest in the building lease, should not be entitled to a reversionary lease. Deputy Thrift's amendment goes a good deal further than that because the definition of the proprietary lease given in Deputy Thrift's amendment is simply this, that it is a sub-lease under the building lease. The position if Deputy Thrift's amendment were carried would be this. I understand that on certain estates there was a recognised practice of granting renewals to the owners of building leases. Undoubtedly in a number of cases the owners of building leases erected quite a number of houses. They let them out to various occupying tenants. They had this expectation of a renewal of interest in the building lease. They carried out, and are carrying out to the conclusion of their building lease, the obligations cast upon them by that lease towards the owner of the soil. They have never accepted from a tenant a premium so that it cannot be said that they have sold for any valuable consideration their interest in the building lease. They never cast upon the tenant the necessity to make improvements, so that it cannot be said they threw on him the obligations under the building lease. Yet Deputy Thrift's amendment would wipe out entirely either the original lessee under such a lease, or his successors in title, and would confer on a tenant, who had not paid any premium for his sub-lease, who had not expended any money on repairs or improvements, an equity which I think practically everybody here recognises, if the purpose of this section be to establish equities, as far as possible should be vested in the building owner. For these reasons I suggest that the amendment should not be accepted.
I should like to ask Deputy Finlay if he will explain how bringing the ground landlord into immediate contact with the occupying tenant will increase the rent that the ground landlord will receive.
I do not suggest that. I presume in one way it would not. I am wrong in that statement, because if the building lessee did apply for, or was entitled to a reversionary lease, the same considerations would apply to the fixing of the rent. I accept that. I made a mistake in that.
I think Deputy Finlay could not have heard me when I said that it was quite obvious that I was not speaking for the ground landlord. The landlord is not concerned in the amendment. We must take that for granted. It is really, I think, very largely due to confusion as to these terms. Deputy Beckett got confused over the term "middleman." Perhaps I am, too. I do not profess to understand fully the intricacies of this section, but I think Deputy Beckett is confused over the term "the owner of the bricks and mortar." What I am trying to do is to get the real and proper owner of the bricks and mortar, at the time the lease falls in, the right to the reversionary lease.
The Deputy is doing the opposite.
As I take it the reversionary lease must be given to the holder of the building lease, unless there is a proprietary lease, and the proprietary lease must be that twenty-five times the rent reserved has been paid and that it is for a term of thirty-one years. If a person bought a house which was going to fall in under a building lease in 1932, if he bought that house in 1905, and became the purchaser, as he thought, of that house for that period of years, twenty-six years ago, I take that man to be the real owner of the bricks and mortar. But, under this Bill, he has only got a proprietary lease which has not run for thirty-one years.
The Deputy is perfectly wrong.
Then we misunderstand the section.
I am afraid so.
The section seems to me to say that the holder of the building lease or the proprietary leaseholder is the person who is entitled to the reversionary lease. I admit that the matter is very complicated. It is so complicated that I do not think we ought to pass a section which, I am convinced and am assured, will do a great injustice in very many cases, without going into the matter most carefully in a way in which I do not think we really as a body are capable of doing in this House. It is quite impossible to separate, as Deputy Finlay says, Section 43 from Section 41 altogether. I think the whole matter ought to be investigated by a conference between the different interests. What we want to get is justice and equity to meet, as far as we can, a variety of interests. I maintain that it is fundamentally impossible by a section like this of a general kind to meet the various types of cases which arise. I believe that this section will be just in a small number of cases, but that it will be most unjust in the great majority of cases.
I am a mere layman in this matter, but as the section has been explained to me it seems to me that the Minister, whether inadvertently or not, is trying to benefit this wonderful middleman at the expense both of the ground landlord and of the occupying tenant. I do not believe in Deputies repeating what others have said, and Deputies Byrne and Thrift have said all that I can possibly say. In regard to Deputy Finlay's remarks, I think he said that the amendment, if carried, would have the effect of bringing the actual occupier directly into contact with the ground landlord. I do not know what the objection to that is, if it is true. In fact, I think it would be rather an advantage, because, from what I have heard of estates in Dublin, the actual occupying tenant does better when brought into contact direct with the ground landlord rather than with the middleman. I hope the Minister will consider the amendment.
Perhaps we had better hear what the Minister has to say on the matter.
I think that there has been very considerable misunderstanding of this section by Deputy Thrift and other Deputies who have spoken. As Deputy Finlay pointed out, the main error into which Deputy Thrift and other Deputies have fallen is that they have considered Section 41. Section 41 is not an operative section; it is merely an interpretative section. It simply describes what building lease and proprietary lease means. The actual section which is of importance is Section 42, which states to whom the reversionary lease is to be granted. Deputies obviously are greatly mistaken as to whom the reversionary lease is to be granted.
Deputy Thrift, for example, put forward a case of a person who had purchased the interest of a building lessee. In that case he stands in the shoes of the building lessee and he is the person to whom the lease will be granted.
Perhaps I did not state my case fully. What I intended was that he had purchased that lease up to 1931, not for the whole term, leaving one year over. Therefore, he came into the position of a proprietary leaseholder instead of the holder of the building lease.
Let us make it perfectly clear. There is, first, the building lease. The building lessee, that is, the person who has held under the building lease, does not of necessity hold by an hereditary title, as there seems to be some idea here. Any person who has purchased the interest of the building lessee under the building lease becomes the owner of that lease and will be entitled to the reversionary lease. In a great number of cases, as has been pointed out, the occupying tenant has bought the interest of the building lessee and he is then in contact with the ground landlord, and it is to him that the reversionary lease will be made. In other cases he has not done so. The owner of the building lease, that is, as has been put again and again here, the owner of the bricks and mortar, because he is the person who actually built the house, has made either a sub-lease or a letting from year to year of the premises comprised in this building lease. He is the person who has done everything for the improvement of the property. He has taken his lease and in a great number of instances he has made the necessary roads and built the house; he has invested his capital. The bricks and mortar have been put there by him. He is what everybody, in rough parlance, calls the owner of the house. He lets it for a short or long term. He maintains, I submit to the House, still the same rights which he had before. He is the person who has done the improvement.
Now let us consider what Deputy Thrift's amendment is. Deputy Byrne seems to consider that Deputy Thrift's amendment gives to the occupier a right to the proprietary lease. It does not. For instance, if an occupier holds under a tenancy from year to year he does not get any right to a proprietary lease under this amendment. The only persons who get any rights under Deputy Thrift's amendment are persons who hold under a lease, be it for a long or short term. Supposing I have a house and have expended a considerable amount of money upon it and sub-let it under a lease for three or four years. What equity has a person who has only been there for three or four years to cut me out and get a building lease for 99 years from the ground landlord? I cannot see any equity. I could see it, possibly, if a person had been there for a very long time, but I can see no equity when a person has only been there for five or ten years as against the person who has paid the hard cash, possibly a very large sum in hard cash, for the interest in the lease. But if you pay a large sum in cash for the interest in the lease and you make a short lease then you lose everything under the amendment. Your lessee under the short-term lease becomes entitled to a reversionary lease and you are cut out entirely. If you were wise enough to make a letting for ten years from year to year you would not be cut out under the amendment. It is only if you have been foolish enough to make a lease.
What I have been endeavouring to do is to discover in whom the real interest in the bricks and mortar part of the premises lies. I think it lies primarily in the person who has erected the premises and made the improvements around it, but you must go on further. He may have sold his interest out and out. If he did, it goes to his successor in title and then no question arises—the person who purchased from him is there. He may, on the other hand, not have sold the entire of his interest; he may have sold it in part. You have the case in which there is a tenant who is paying a substantial rent for premises, but who, in addition, paid a fine. If the fine was a very substantial fine, the tenant has become certainly part-owner with the lessee in the building lease; part-owner with his immediate landlord in the premises.
What I am endeavouring to get at is who has really got the major interest. If the tenant has paid a small fine then I think the landlord's interest in the premises as against a head landlord is greater than his. On the other hand if the tenant paid a very substantial fine then I think he is really more the owner than the person to whom he paid the fine. For that reason we have put in this figure of 25 times the amount of the annual rent. If a person has paid a larger sum than would produce the annual rent he certainly is the owner of the premises.
What would be his position if he paid fifteen times the annual rent?
If he paid fifteen times the annual rent I do not think he has acquired as valuable an interest in the premises as the landlord who made the letting to him has retained.
Even if the vendor intended him to acquire the interest.
I do not follow.
Take a person who has paid a fine of fifteen times the annual rent for a lease of 25 years and thought he was accepted as buying the vendor's interest in a reversionary lease. Is he not being deprived of it under this?
I do not think so because we must bear in mind that as well as paying a fine he is also paying a very large and substantial rent and you do not consider the person as owner of the house who is paying a very large and substantial rent. You get the two things merged together. There is a joint interest in the house. If I have a house and let it at a substantial rent I undoubtedly have an interest. If the person who purchased from me paid a very substantial fine he undoubtedly has an interest but what we must try and do is to decide who has the larger interest and define the border-line. If it goes more on the one side it is the landlord's and if goes more on the other side it is the tenant's. According as the rent is larger in proportion to the fine it is the landlord's, and according as the fine is larger in proportion to the rent it is the tenant's. That seems to me to be endeavouring to get what is the real substantial justice of the matter, and whether a fine is paid or not paid would have nothing to do with Deputy Thrift's amendment at all. It would mean that anybody who got a lease for no matter what short term would be entitled to this reversionary lease, cutting out the person who possibly ten years ago paid a very large and substantial sum for the premises. I do not think that would be fair and equitable. I do not think in practice the tenant will ever have paid a substantial fine unless he is going to have a very long lease. All these matters must be regulated by what is fairest in the greatest majority of cases. I would listen to any argument or specific instance that could be put forward which would show that in the majority of cases that would not work out right. But I have heard no such arguments at all and I cannot therefore accept Deputy Thrift's amendment. I am not going to discuss Deputy Lemass's amendment.
The Minister has made a most excellent case in favour of it.
It is the greatest example of State socialism that has ever been put forward, and I wonder how Deputy Lemass can reconcile it with the recent Encyclical.
As I stated when I moved this amendment, I was quite clear in my mind that it might operate harshly in certain cases. The Minister has principally answered me by drawing attention to the cases in which my amendment would work unfairly. I grant that there are such, but my contention is that in the great majority of cases that occur it is the Minister's own section that would work unfairly. I ask the Minister this question, and not being familiar with technicalities, I do not want to be defeated on a technicality.
I am trying to use the right technical term. Supposing 20 or 25 years ago a building lease was made to run until 1932, and a sub-lease was made which was to expire in the year 1931, what kind of a price did the man who took that sub-lease pay? What did he think he was buying, and what did the seller think he was selling? The purchaser thought he was buying a house; the seller thought he was selling a house. What was to happen in '32 was that they would both lose, and as far as getting a reversionary lease is concerned, they had very little concern with it, because they thought they would get the reversionary lease at a proper price. What we are doing to-day is making the reversionary lease a gift. Therefore it is of the highest importance to know who is to get the reversionary lease. Thirty years ago it was not so, but by 1933 we are going to do something of which neither of the parties had any thought 30 years ago. I ask the Minister what the seller thought he was selling, and what the purchaser thought he was buying, and what was the price paid.
If he became the purchaser, then he is the owner of the building lease and gets the lease.
No, but of the sub-lease, and would become owner of the proprietary lease if it ran for 31 years and had paid 25 times the rent reserved, which will limit the number of proprietary leaseholders to an infinitesimally small number, not worth while dealing with in a Bill. I submit that the Minister has only got hold of a fraction of the cases. It requires much wider inquiry and discussion, if we are to get to the justice of the matter.
I might tell the Deputy that it deals with a very large number of cases, because it very often happens that a man in effect sells his interest by way of a lease at a nominal rent—that is to say, he might get a fine of a couple of thousand pounds possibly, and make the lease for the rest of his term except one year at a rent of 10/-, the object being to preserve the covenants of the lease. There are a considerable number of cases of that nature.
The object being to enable the holder of the building lease to sue if the covenants are broken, but not the object being to secure the reversionary lease.
In that case it would be the tenant.
Not unless the lease is for a term of 31 years; might he not have paid the two thousand pounds 25 years ago?
If he paid it 25 years ago he would have got nothing.
On sub-clause (2) of Section 41 of the Bill, would the Minister consider a class of people whom I think, on the definition as it stands, would not come within it? There are two ways of exacting a payment of money by a person to whom a sub-lease is made. One is the payment of a premium by the sub-lessee to the sub-lessor; another way, which I am informed a number of people have resorted to, is they are lessees of premises more or less dilapidated, and they make a sub-lease of those premises on the condition that the sub-lessee expends a substantial sum of money in carrying out improvements on those premises. Paragraph (d) of sub-section (2) of Section 41 says: "Such lease was made partly in consideration of the payment of a sum of money (other than rent) by the lessee to the lessor." I would suggest for the Minister's consideration that such lease was made partly in consideration of the payment or expenditure of a sum of money. I think there are cases where the sum of money expended is so substantial as to show an intention on the part of the person making the sub-lease, in those cases either a building lessee or a successor in title of the lessee, to deprive himself of any further interest in the property which might have been given to him in the original lease.
That is my point in connection with old buildings which have been reconditioned. In those cases they would spend more in reconditioning than would pay for a house in good condition.
What I want to protect is that the successor in title gets the reversionary lease. People come in and buy ground rents with a year or so to run, and complicate the issues. We seem to be working as if they were the main issue. The main issue is that the successors in title should have their rights. They used to be called gerry-builders in my young days. I call them the goose that laid the golden egg. Builders in the past who created houses for people to live in were an asset to the State; they are a disappearing asset now. Anything in this Bill which makes it more difficult for them to carry on the business which they know best will be a disaster to the State. It is an absurdity that laws should be passed on those lines.
Deputy Byrne mentioned the occupying tenant. Occupying tenants make a contract for services and get the benefit of that contract. They never for a moment consider, when making that contract, that they are staking a claim to something else that might come in the future. I do not think an honest tenant would accept a condition that such a person should step into the building owner's shoes. It is absurd to my, perhaps, weak intellect, and I do not think that that contention should for a moment be put forward. Deputy Byrne suggested that the builder knew what he was getting in his lease when making it. If the builder makes and gets a good lease, and the property is kept up by him. his successors in title, it is an investment which has been built up by him. deputy Byrne suggests that the middleman should be completely eliminated and that he is a curse to the country. Such wild talk will not help us in coming to a decision on this matter.
The middleman, if you call him such, creates property for the benefit of the State. He should be encouraged in every possible way and his interests so protected that it will be possible for new middlemen—I call them building owners—to rise and carry on those services which at the moment are at a very low ebb.
Property has changed hands many times. When Deputies make that statement I think they have lost sight of a very important fact. How many times has a property that has changed hands paid toll to the State? Each time a property changes hands it pays tolls to the State either on the part of the lessor or of other interests according to the relationship to the property. Anything that would confiscate that property when it has got to the third, fourth or fifth generation would be a crime, the State having always taken toll before it was transferred to other hands. I think the position must be looked at from the main point of view. If it is necessary to introduce a clause to prevent the exploiters of property getting some benefit I have no objection, but on the main issue I have.
I hope I have not given the House the impression that I indulge in wild talk as Deputy Beckett stated I did. The impression I intended to convey to the House was that under the Bill a wrong was being done to the occupying tenant. Although we had an assurance from the Minister, who dealt very ably with the case put forward by Deputy Thrift, that certain statements which were made were not correct, still we must say that so far as we are concerned these tenants are labouring under a considerable amount of difficulty. On the section defining a lease, we have come to two conclusions: (1) that unless a tenant has acquired a thirty-one years' term by way of interest in the property he will not be entitled to a reversionary lease; and (2) that unless the tenant has paid twenty-five times the annual rent he will not be entitled to a reversionary lease. We submit that where tenants have purchased holdings for a term of fifteen or twenty years and have paid substantial sums, as we know tenants have paid in many instances, it appears most inequitable that they should be wiped out and that the interest in the reversionary lease should go, as Deputy Beckett stated, into the hands of the man with the goose which laid the golden eggs.
I always thought that builders in this country were well able to look after themselves. While I recognise that they perform a very useful function, still, there is a limit to their utility. What happens in actual practice is that these building lessees take a few years' interest in a holding. In cases like this we maintain that if a tenant has fifteen, twenty or twenty-five years' interest in a sub-lease it is most inequitable to eliminate him, and place him at the mercy of a new man whether he is a man who erected the bricks and mortar or not. I would draw the attention of Deputies to the section in the Town Tenants Report dealing with well-managed estates where it is pointed out that they viewed that practice with considerable satisfaction, and that there was no intention of interfering with the continuance of that practice. In fact, as far as I can see, this section of the Bill interferes with a practice that has met with commendation in the Report of the Town Tenants Commission, because, unless you comply with that condition I do not see how the reversionary lease can go to the sub-lessee. I do not want to stress this point unduly. If the Minister thinks there are conflicting interests concerned of a substantial character, I would ask him to give some undertaking that the various speakers would have an opportunity of consulting him, so that there should be a reasonable compromise on the question. Viewing the section as it stands we cannot get away from the fact that in practice, in well-managed estates, tenants have expended very substantial sums in the acquisition of various interests for terms of years, but now, unless they are there 31 years they are out of consideration. I do not think if this is a Town Tenants Bill, that that could be considered equitable in any way. We do not want to do the builders any injustice, or the people who have paid substantial sums to acquire leases. We think the interests of both parties should be reconciled, and we ask the Minister to give the people concerned an opportunity of meeting him, so as to get some undertaking to meet the various objections put up on behalf of occupying tenants, as well as on behalf of building lessees.
I am not going to take it from Deputy Beckett or anyone else that occupying tenants have no right, simply because at some time in the career of a builder's family, maybe 999 years ago, they built a house that they are entitled to the full right and title to it secula saeculorum. I want a fair and reasonable drafting of the section that will do justice to the interests of the occupying tenants and the building lessees. I would ask the Minister to see if the conflicting interests could have a chance of consultation before he accepts the amendment.
What Deputy Byrne and other Deputies seem to have forgotten is what Deputy Finlay made clear, that an occupying tenant who would not be entitled to a reversionary lease under this part of the Bill, is always entitled to his rights under the previous parts.
At what rent?
As to the other matter that Deputy Finlay raised, that the tenant should be given credit not merely for money spent by way of fine, but also given credit for what he spent on improving the premises, I undertake to bring in an amendment to that effect on the Report Stage.
I suggest to the Minister that it will be unsatisfactory if this amendment is put to a division and either carried or lost. I support Deputy Byrne's suggestion that the proper thing at do is to adjourn the discussion and that in the interval the Minister should confer with the different interests involved and see if there is not some satisfactory way out.
I can assure the Deputy that I have consulted completely with everybody who came to me to express his views. I do not see that there is the slightest advantage in having to-morrow this discussion which we have had to-day at very considerable length.
I think I can promise the Minister that that will not occur.
I think we will need to have this discussion to-morrow and that we will continue to have it until the solution that is in my amendment 89 is accepted. The Minister is afraid of that, and that is the cause of the whole trouble.
No, I am quite prepared for that.
I move to report progress.