Dáil Éireann díospóireacht -
Thursday, 10 Nov 1960

Vol. 184 No. 6

Private Members' Business. - Purchase of Ground Rents—Motion.

Mr. Larkin

I move:

"That, in the opinion of Dáil Éireann, the Government should without delay introduce proposals for legislation to enable owners of dwelling-houses and business premises in cities, towns and villages to purchase, on equitable terms, the ground rents to which such houses and premises are at present subject."

In moving this motion, I should like to draw the attention of the House to circumstances which might be considered somewhat peculiar, at least. In modern circumstances and in modern times the State and local authorities have been endeavouring to encourage citizens to purchase houses as residences for themselves and their families and millions of pounds have been spent under the Small Dwellings (Acquisition) Acts. The bulk of the money was spent to provide houses. That has resulted in a situation where people enter into commitments to purchase residences for their families but, even on the full completion of their payment for such houses, many of them find that they do not own a single inch of the ground on which their dwellings are situated.

This condition not only applies in cases where the owner of the land is a non-national, a speculator, an association, a building society, or some other form of body; it also applies in the case of the local authorities. It applies in the case of the city of Dublin where over the last 20 or 30 years thousands of dwellings have been constructed with the aid of public funds. It applies even in the case of our own local authority and I think it applies to many others. Spokesmen of Fianna Fáil and spokesmen of Fine Gael in various quarters and on various occasions have lauded it as being most desirable that people should buy their own houses so that these houses shall become their property and that of their heirs and successors; yet not many local authorities have made arrangements to sell the tenant-purchaser the ground on which the house is built.

There may be reasons for this. Possibly we may hear them during the course of this debate. It may well be that the local authorities, to some extent, are anxious to control by this means the people who live in the houses just as in the case of an absentee landlord. I propose to illustrate that by reading a letter addressed to Deputy Corish dated the 7th November. I do not think it would be proper in these circumstances to mention the name of the individual. The letter reads as follows—

Dear Mr. Corish,

In view of your forthcoming motion in the Dáil to have proposals introduced for legislation to enable owners of dwellinghouses and business premises in cities, towns and villages to purchase on equitable terms the ground rents to which such houses and premises are at present subject, I would like to let you know my experience.

I am 19 years of age. My father died last year and I now carry on the family business in our premises...

My granduncle...built our premises out of his savings. A degrading, Elizabethan lease was imposed on him by the landlord, the ground rent being £4 14s. per annum. My granduncle just had to accept the covenants in the lease, otherwise he could not have built the premises...

Under a settlement, the premises pass to me absolutely on my reaching 21 years of age. At present they are held for me by trustees.

It had been usual in the past to let one of the rooms in our premises; there had been four such lettings. Since my father died I, as advised, applied to the landlord for permission to make a fresh letting of the room. Permission was refused. Nevertheless I made a fresh letting of the room.

Now the landlord has commenced proceedings against me to eject me and our family from our premises, merely because I refuse to be dictated to as to whom I allow across my doorstep. Needless to say my ground rent has always been paid promptly.

The landlord's only interest in my property is this ground rent of £4 14s. a year or 1/10 a week. With income tax deducted, as it must be, his income from the property is £3 1s. 1d. a year, or 1/2 a week, less than the price of a loaf. The capital value of his interest in my property—15 years' purchase—is £70 10s., about the price of one beast sold in my shop.

An approach was made to the landlord to sell his interest to us, but without result.

It seems fantastic to me that the landlord could hold me and other members of our family by the throats, and could have the power to eject us from our premises, merely because he draws an income of 1/2 a week from our property.

Surely this is landlordism at its worst! The ghost of Queen Bess stalks our town and it is about time something was done about the matter. The facts I give can be confirmed by reference to the two local T.D.s. I wish you success in your efforts to have these degrading ground rents abolished.

I was dealing with two specific cases, one of which was the case of the local authorities. At one time, I was inclined to the view that because local authorities, with the aid of finance from the central Government, had provided dwellings, it was possibly in the interest of the community to reserve the control of the ground rents, with a view to preventing undesirable development in the premises rented from the local authority, but, on more mature consideration, that appears to me to be only avoiding another issue altogether. Consequently, I feel now that there is no merit in saying to a tenant purchaser of an urban dwelling or the tenant purchaser of a cottage: "We will arrange a scheme of purchase for you. You can buy your dwelling over a period of so many years and if you have sufficient financial support and if you can get a guarantor or go to the bank, you can come to the local authority, pay down the full price and as far as we are concerned, the premises is yours but you will continue to pay us ground rent and we will be your ground landlord."

To a great extent the same situation exists in the case of people purchasing their dwellings under the Small Dwellings Acquisition Acts or purchasing their homes through insurance companies, and such bodies. While insurance societies, housing societies, the State and local authorities are prepared to sell the person the house, by and large, they are not prepared to sell him the ground on which the house stands.

I do not know who the ground landlords are. I do not think it is a matter of great importance because the principle enshrined in this motion is the principle that if one is and should be estitled to buy one's home, dwelling or house, one should be entitled to buy the piece of ground on which it stands. The legal position at present is this, I think: If somebody buys a house over a period of 35 years, at the end of that period, one can actually come in and take possession in certain circumstances.

Why should a white-collar worker, a carpenter, a professional man or a small business man who has been encouraged by propaganda and by making loans a bit easier through grants from the State and through supplementary grants from the local authorities, be also under the hardship that while he can buy his house he cannot purchase the piece of ground upon which the house or garden is built?

I understand that this matter was discussed many years ago in this House, but whether or not it was discussed or what was done with it on that occasion is not, I submit, of very great importance either. I also think that it is not particularly important as to who owns the ground rents because that is not the aspect we are concerned with. The motion before the House is not, in fact, one calling for anybody to be given the ground rents. It is not, in fact, and it might well have been, a motion calling for legislation so as to afford occupants of houses an opportunity to purchase the ground on which their premises is situated and that the price of the ground rent should not be increased because of the operations of local authorities, development societies or the national Government. The motion simply asks that legislation should be introduced which would provide an opportunity for these people to purchase their ground rents at equitable terms.

It is true that in a number of housing estates developed in or around the city of Dublin in recent years there have been instances where people bought their houses under a freehold system. They have become, when they completed the purchase of their dwellings, not only the owners of the house but also the owners of the land. If that is fair and equitable in a number of cases, I hold it to be fair and equitable in general.

I do not see—and I have been a member of Dublin Corporation for many years—that there is any argument in the principle which would entitle Dublin Corporation to say to anyone purchasing a house from them, whether tenant purchaser or otherwise: "We will lend you the money. You can repay us and we will build you a house. You will repay us the capital and interest charges but under no circumstances will we include the question of the ground on which your house stands." In moving this motion, I want to draw specific attention to that position and I ask for support from all sides of this House.

Mr. Corish

I formally second the motion.

Mr. Corry

Listening to Deputy Larkin, I do not think he knows very much about the country outside of Dublin which seems to be the be-all and end-all of his existence in this matter. I should like to call his attention to the Purchase Bill passed through this Dáil very many years ago in respect of labourers' cottages. Under that, the tenant who purchases becomes the complete owner of his own house and one acre of ground and annuities to the Land Commission are finished.

There is no such thing as ground rent in that respect. Certainly, Deputy Larkin must not have been alluding to the ordinary cottage tenant purchaser. On the other hand, if he is dealing with what we call a non-municipal house in the country—and I speak for a pretty considerable area surrounding Cork City, out as far as Kinsale, Macroom, Youghal and Bandon—in no case did we ever purchase land for housing purposes that carried a ground rent. In all cases the land was purchased outright; in all cases we have brought in purchase schemes for the tenants and in no case is a tenant purchaser liable to ground rent. Therefore I do not know what Deputy Larkin was alluding to, except that he may know of cases in Dublin. As far as country life is concerned, he has a very poor knowledge of his subject and I should just like to correct him on that.

I have a great hatred for ground rents and ground landlords, as great a hatred as any man living. On several occasions I have spoken against them in this House and outside it and I have found that when we succeeded in getting tenants to fight we managed to get ground rents reduced considerably. In the case of Cobh we succeeded in getting a slight reduction of thirty-three and one-third per cent. on all ground rents, though it took us two years to do so through non-payment of rent, fighting a few cases in the courts and finally by arrangement at arbitration. We have many towns in which most of the property is owned by landlords residing in England and all the ground rent leaves these towns each year without conferring any benefit on this country.

As I said, my sole reason in getting up to speak was to correct the impression Deputy Larkin seemed to have that local authorities are inviting tenants to purchase their houses but still keep collecting ground rent. That position may exist in Dublin but I do not know where else it exists. It does not exist under the Labourers Act, which provides for the purchase of labourers' cottages and under which we are working the non-municipal housing schemes in Cork County. There, when a tenant purchases his house, the land goes with it. However, some difficulties have arisen in connection with that. For example, under the cottage purchase scheme a tenant, no matter how anxious he is, may not buy out his house by putting down the full sum of money. He is not allowed to do so and the local authority cannot accept that money from him. To be frank, it was only within the last fortnight I found out that.

A Deputy

Still learning.

Mr. Corry

I am still learning. This was a case of a tenant purchaser who bought out his cottage, got it vested, and started to make some needed improvements. He spent something like £1,200 on a couple of rooms, a bathroom and sanitary accommodation. He was able to get a grant from the State and also from the local authority, but when he went to look for a loan from the local authority he could not get it because so long as a first mortgage remains a local authority is prevented from giving a second mortgage.

Mr. Corish

I suppose the council still owns the house until he has paid the last penny.

Mr. Corry

The council does not. As a matter of fact he pays an annuity to the Land Commission and the funny thing in the case I mentioned is that it amounted only to £32 and, on account of that £32 being on it, he could not get a loan for the reconstruction of his house. It is a case I discussed today with the Minister for Local Government in an effort to arrive at a solution of it. In conclusion I cannot understand a Deputy like Deputy Larkin judging everything by this many little city he has in Dublin.

Mr. Larkin

There is a bit of jealousy there.

Mr. Corry

Not a bit.

Mr. Ryan

As the House is aware, the Fine Gael Party have already publicly declared their intention to introduce legislation, when returned to power after the next election, to permit tenant occupiers to purchase the ground rents on their property. This is being done because Fine Gael believe that the whole theory of ground rent being a fair rent, charged by the owner of land on those who use his land, is not valid in the Twentieth Century, and that ground rent today is nothing more or less than a privately imposed tax levied on the property of another. We believe that when a person buys a piece of property for building purposes, or when he purchases a building on a piece of land, he is then the owner of the equitable interest in that land and all that is on that land.

If a person pays £1,500—a fair price for an average house in the city of Dublin may range from £1,000 to £1,500 though it can go much higher— for the bricks and mortar in a house, he becomes the moral substantial owner of that land, and it is farcical to see a ground rent collected in this day as a fair rent charged for the use of the land on which the house is built. We believe the moral substantial ownership goes to the person who purchases the land on an open market.

It may be said that a person freely purchases a house with a ground rent attached to it but that, of course, is utter nonsense because, if he is in an an area where ground rents are levied, the possibility of purchasing a freehold house is almost negligable. That that is so in Dublin is indicated by the fact that one—only one—firm of builders have been making a good thing in recent years out of advertising their houses as having no ground rents attached. It is true that the plots on which these houses are being built are not having ground rents charged on them in futuro, but the purchasers are being charged £100 to £150 over and above the normal price of the houses. It is a penalty which the tenants are being called upon to pay because our society continues to tolerate a system which might have been appropriate in feudal times but which is certainly very wrong today.

We must, of course, preserve the rights of private property and Fine Gael have made it clear that, in introducing legislation permitting tenant occupiers to purchase out the ground rent, the rights of other people will be preserved. But rights must not be considered as being monopoly rights or the rights of class, privilege or money. A fair price can be paid, but I do not believe there is any need to entertain to any great extent the argument of the landlords who say the cost of buying them out will be too much. We cannot allow one small section, particularly when so many of them are outside the State, to hold the community up to ransom.

Let us be quite clear what we mean by the rights of private property. I would refer the House to our own Constitution. You will find that the abolition of ground rents, in the manner in which Fine Gael advocate it should be done, is not only consistent with the Constitution but is in fact called for by it. Article 40, section 3, subsection (2) says:

The State shall, in particular, by its laws, protect as best it may from unjust attack and, in the case of injustice done, vindicate the life, person, good name, and property rights of every citizen.

I feel that a ground rent today is an unjust attack upon the property rights of the masses of our people. If they wish to own their own land, they find that if they exercise their right to ownership, they cannot completely acquire that right because a privileged section of the community have either the money or ancestry which gives them the right to levy a private tax. Article 43 acknowledges the right of man to private property and guarantees to pass no law attempting to abolish that right. But that, I think, does not mean our Constitution guarantees the right to property in anything. I think it is permissible to say that when that right is exercised against the common good, then the common good must be supreme.

The same Article, Article 43, makes it clear that the exercise of that right is conditional on its contributing to the common good. Clearly, I maintain, ground rents do not contribute to the common good of our people. Article 43, Section 2, subsection (1), states:

The State recognises, however, that the exercise of the rights mentioned in the foregoing provisions of this Article ought, in civil society, to be regulated by the principles of social justice.

Subsection (2) states:

The State, accordingly, may as occasion requires delimit by law the exercise of the said rights with a view to reconciling their exercise with the exigencies of the common good.

It is already well established by our courts that the Houses of the Oireachtas are the sole determiners of what amounts to the exigencies of the common good. Therefore, it is appropriate that we should be considering this very important matter as it affects so many of our people.

I believe it is a good thing for people to live in their own houses, that they should have some property rights in the houses in which they live. By owning their own houses or buying them, our people will live in a money box. We believe it will improve their stability if they can acquire their own property. We in this country have one of the lowest percentages of privately-owned houses in the civilised world. Even in the United States, which many of us fancy is a country in which everybody lives in a flat or dwelling of that nature which would prevent its being privately-owned, I understand that some 75 per cent. of the people are living in houses which they own or are buying through some loan or mortgage. Our percentage is very much less. I am not sure exactly how much but I think it is somewhere around 20 per cent.

One of the reasons why our people are slow to buy their own houses—and today it is a great deal cheaper to get a 95 per cent. loan from a local authority or building society, even at 7 per cent., and pay the outgoings than it is to rent a house from a private source—is ground rent, and in addition there is Schedule A tax, stamp duty and the legal costs in regard to conveyances. I regard ground rents as one of the irritants discouraging people from purchasing their own houses. It may be said it is only an infinitesimally small amount of the annual outgoings. Of course it is, but it is these irritants, never previously borne by people, which discourage them from buying their own houses. I appreciate that the Schedule A tax comes out of the ground rent in the majority of cases.

Mr. Haughey

Surely the Deputy means that the ground rent is allowed as a charge against Schedule A tax? It is the other way about.

Mr. Ryan

Yes, but the layman says: "My ground rent is £15 and I will pay one-third of that in tax." I appreciate it is actually set-off, but the average householder looks on it the other way.

These are payments which have to be met twice a year in lump sums. There is much bother and worry attached to them, and on top of that, the other burdens and responsibilities of house ownership have to be met. If we removed these irritants, we would get more people to buy their own houses and that would make more money available for housing people who cannot afford to do so themselves and cannot be expected to do so in the foreseeable future.

Fine Gael believe this motion should be supported in principle because of what it endeavours to achieve and because it wishes to remove a social injustice. My own belief is that we ought to go further in this matter. Not only should we make it obligatory on landlords to sell the rents at a fair price to tenant occupiers but we should prohibit the creation of any new ground rents. I do not know what our society would think if the first owner of a motor car—an article costing about £500 or £600—were to levy a rent on any succeeding owner; but that is what is done with ground rents today. If you accept that as valid, you ought to accept as valid and socially desirable that the first owner of a motor car should impose a tax of £5 per year on every succeeding owner of the car. The same could be applied to pieces of furniture. The first owner of a bedroom suite or a drawingroom suite should be entitled to levy a tax on any succeeding owners. It is the same principle, and, to my mind, it is highly obnoxious and socially most undesirable.

I believe we should not permit the sale of ground rents to anybody except the tenant occupier. I appreciate that this will be a restriction on the sale of ground rents but I believe that it is socially necessary. The only way in which we can in our time make a serious contribution to this injustice is to put these restrictions on the ownership and assignability of ground rents.

Debate adjourned.