asked the Minister for Local Government if he will state the text of the circular letter issued in relation to the administration of the Labourers Act, 1965.
Written Answers. - Labourers Act, 1965.
135.
Following is the text of the circular letter which was issued on 24th February, 1966:—
Labourers Act, 1965.
Sale of Labourers Cottages.
1. I am directed by the Minister for Local Government to enclose a copy of the Labourers Act, 1965, which became law on the 3rd November. This circular letter does not purport to contain a comprehensive review of the provisions of the Act, which should be studied in detail by the appropriate officers of the housing authority.
2. Section 17 of the Labourers Act, 1936, provides that a vested cottage (which, in this context, includes a plot) shall not, during the period for the payment of the annuity, be alienated otherwise than by devise or by operation of law or by sale with the consent of the housing authority. The section also provides that a cottage shall not be subdivided or used otherwise than for the accommodation of an agricultural labourer and his family.
3. Section 21 of the 1936 Act provides that a vested cottage may not, during the period for the payment of the annuity, be mortgaged or charged.
4. These provisions were designed to ensure that cottages provided from public funds would continue to be used for the accommodation of agricultural labourers and their families notwithstanding the sale by housing authorities of the cottages to their occupants. With the passage of time the provisions have been found to be unduly restrictive. Section 2 (1) of the Labourers Act, 1965, provides for some relaxation by enabling a housing authority to consent to the mortgaging, charging, alienation or subdivision of a cottage. The relaxation is not intended in any sense as a general departure from the policy that cottages should be used as far as possible for the accommodation of persons in need of housing.
5. In accordance with this general objective, a housing authority should normally consent, under section 2 (1) of the Act of 1965, to the mortgaging or charging of a cottage or plot only where the mortgage or charge is intended to secure a loan for the reconstruction or improvement of the cottage or for some other housing purpose.
6. Similarly, section 2 (2) will strengthen the powers of the housing authority to refuse consent to the sale of a cottage by a vested owner if they consider that the sale would not be in the best interests of housing policy. Before the enactment of the provision there was doubt as to whether an authority could refuse consent to a sale solely on the grounds that the proposed purchaser was not an agricultural labourer. It was also doubtful if they could refuse consent even if the proposed sale would leave the vendor or his family without accommodation—thus, perhaps, again throwing the responsibility for housing them on the authority. Section 2 (2) gets over these difficulties by providing specifically that a housing authority may refuse consent to the alienation of the cottage if they are of opinion that—
(i) the person to whom it is intended to alienate the cottage is not a person in need of housing, or
(ii) the alienation would leave the vendor or his dependants without suitable housing.
7. These two criteria should, therefore, be applied by a housing authority when a request for their consent to the sale of a cottage is received. If the proposed purchaser is a person in need of housing but not an agricultural labourer as statutorily defined, the Minister would be prepared to consent to the suspension by the authority of the conditions of section 17 of the Labourers Act, 1936, which require that the cottage shall not be used except for the accommodation of an agricultural labourer and his family. Similarly, if the purchaser is a farmer buying the cottage for the accommodation of a workman, the Minister would not object to consent being given by the authority where no other eligible purchaser is forthcoming who would be willing to use the cottage for his own accommodation. In all cases where the consent of the authority is sought to the sale of a cottage to a person who is not in need of housing, the authority should consider if purchase by them to meet an ascertained housing need would be justified.
8. Where the sale or transfer of a cottage is proposed and the housing authority are agreeable, section 2 (3) of the Act of 1965 enables them, before consenting, to require the annuity to be redeemed. Alternatively, they may, under section 2 (5), consent without requiring redemption of the annuity. If the plot or part of the plot held with a cottage is being charged, mortgaged or subdivided, the authority are required, under section 2 (4), to apportion the annuity and, where a sale or transfer is involved, to require to be redeemed the part of it which relates to the land being divided from the cottage.
9. When an annuity or apportioned part of an annuity is redeemed in full, all the restrictions on the sale of the property to which the annuity or part relates, the uses to which it may be put, and on mortgaging, subdivision, etc., will, under section 4, cease and the property could, for instance, be used without reference to the housing authority for business purposes or resold by the purchaser at a profit. The Act also permits of the redemption of part of an annuity on a cottage. Where this happens, the restrictions will cease to apply to such extent as the authority may, by order, determine.
10. An amount for the redemption of the annuity based on a purely mathematical calculation of the present value of the annuity, which is generally small, would yield a figure disproportionately low in relation to the benefits to the purchaser of having the property freed from the existing restrictions. Accordingly, the amount which the Minister will be prepared to approve under section 3, for the redemption of an annuity, will be assessed on the basis of the current market value of the cottage (or, if appropriate, of the plot or part of the plot) at the date redemption is proposed, due allowance being made for the number of years for which the annuity has been paid on the cottage. For example, if a cottage has a market value free from annuity and other statutory conditions of £800 and the annuity has been paid for 15 years out of a total payment period of 40 years, the purchaser should get credit for 15/40ths of the market value, i.e., £300, so that the amount which he should normally be required to pay for redemption would be £500. Where, following subdivision, a bona fide sale or transfer of a plot as a housing site for a member of the family or of the household of the vested owner is proposed, the authority may accept in redemption only the present value of the part of the annuity apportioned by them in respect of the plot.
11. Where a housing authority wish to ensure that the statutory restrictions will continue to apply to a cottage which the vested owner proposes to sell, and, at the same time consider that they should get some benefit from a transaction which their capital and work made possible, they should require payment to them of an amount under section 2 (5). The amount which the Minister would be prepared to approve for the purposes of this subsection will normally be not less than one-third of the current market value of the interest being sold, subject to the proviso that, in general, the amount paid to the authority should not exceed the price that would have to be paid under subsection 2 (3) for the redemption of the annuity (and consequent freeing of the cottage from the statutory conditions). Where, however, a bona fide transfer or assignment to a member of the family or of the household of the vested owner is proposed, the authority should not require any payment to them as a condition of their consent.
12. Section 3 provides that an annuity or any part of an annuity may, if the housing authority think fit, be redeemed by the person liable to pay it. Thus, the purchaser of a cottage could, independently of any question of sale or transfer, redeem his annuity if the authority agreed. The amount for redemption of which the Minister would normally be prepared to approve in these circumstances is as set out in paragraph 10.
13. Individual cases under paragraphs 10, 11 and 12 should, until further notice, be submitted for the approval of the Minister.
14. Moneys received by a council in respect of the redemption of an annuity or under subsection 2 (5) of the Act should be used for a housing capital purpose such as the provision of additional housing, the payment of supplementary grants, the redemption of loans, etc. Subsidy will cease in respect of any cottage on which the annuity is redeemed.
15. The Land Registry should be notified of all cases in which annuities are redeemed or apportioned so that they may make any necessary amendments in their records. The details should be given in the form of a simple certificate containing any information necessary for identification of the cottage concerned and for rectification of the register.
16. This circular replaces circular No. H.7/59 of 28th May, 1959, dealing with the sale of vested cottages.