Committee on Finance. - Landlord and Tenant Bill, 1965: Second Stage. – Dáil Éireann (18th Dáil) – Wednesday, 27 Apr 1966

Committee on Finance. - Landlord and Tenant Bill, 1965: Second Stage.

Minister for Justice (Mr. B. Lenihan):

I move that the Bill be now read a Second Time.

I would like, initially, to give Deputies a very short résumé of what the Bill contains. Its main object is to give lessees and certain yearly tenants who pay a group rent the right to purchase the fee simple of their property, that is, to acquire the greatest estate in land that can be acquired under our law. Persons who have to collect rent from neighbouring lessees and pay the total to a common landlord are being given the right to obtain an apportionment of the rent, following which each lessee will pay his portion of the rent direct to the landlord. Where disputes or difficulties arise with regard to the exercise of these rights a simplified system of arbitration by county registrars is being established to cater for them.

One of the matters which the county registrar will be able to settle is the purchase price of a ground rent where the parties cannot agree. To reduce to the very minimum the possible field of disagreement a maximum purchase price is being provided where the land is held under a yearly tenancy or under a lease which has not less than 25 years to run and where the land does not exceed an acre; in that event the purchase price will be such sum as would enable the landlord to maintain his income if he had invested the purchase money in the most recent National Loan.

The Bill also amends, in a number of respects, the existing landlord and tenant law. It reduces from one-sixth to one-eighth the fraction of the gross rent which will be payable when a reversionary lease is given on the expiration of a building or proprietary lease pursuant to the Landlord and Tenant (Reversionary Leases) Act, 1958. It provides that, where a landlord relaxes a covenant restricting change of user or the carrying out of minor improvements, he will not be entitled to gain financially, and that, where planning permission for such works has been obtained, it will not be necessary to obtain the landlord's consent at all. It deems a covenant in a lease requiring the lessee to insure with a named insurance company to be one which does not specify such a company. It abolishes the general rule that the lessee must bear the lessor's costs of drawing up the lease. Finally, it provides that certain covenants will continue to have effect after purchase of the fee simple, namely, covenants which protect the lessor's own amenities or which are required to enable the lessor to comply with a statutory obligation.

As I have said, the main purpose of the Bill is the introduction to Irish law of the principle of leasehold enfranchisement. Over the years there has been a great deal of argument for and against this principle. These arguments were fully considered by the Ground Rents Commission, which came down unequivocally on the side of giving lessees the right to become fee simple owners of their property. I do not intend to go into the arguments for and against leasehold enfranchisement except perhaps to say that I consider it fully in keeping with good social policy. The law should encourage private ownership of houses and householders should be allowed to become full owners of their houses, if they so wish. Indeed, I am happy to be in a position to sponsor legislation which will, I hope, mark the end of this thorny question, and I am particularly happy that the solution has been recommended unanimously by a Commission who were highly qualified to deal with all aspects of the matter.

The persons who are to enjoy the right to purchase the fee simple are building and proprietary lessees within the meaning of the 1958 Act and certain yearly tenants. It is generally accepted that these persons are those who might be said to own the "bricks and mortar" interest in their property subject to the payment of a ground rent. The right is being given to these persons irrespective of the use to which they put the property — that is whether the premises are used for business purposes or for residential purposes. The Commission proposed that the right of purchase should be given to lessees of residential and composite residential and business property. The Government have decided that it should also be given in respect of purely business premises. As far as leasehold enfranchisement is concerned I see no logic in distinguishing between property owners by reference to the uses to which the property is put. The essential distinction is that between the owners of the bricks and mortar interest in the property — and all others.

Naturally, the question of the purchase price gave the Commission and myself a great deal of difficulty. The Commission suggested a rather elaborate formula which required that a number of criteria be considered in deciding upon the purchase price, the main one being that the price should be what a willing purchaser would pay and a willing vendor accept for the interest. They rejected the idea that the price be related to a specific number of years purchase as this must inevitably, in certain cases, be unjust either to the landlord or the tenant. While I accept that the provision of a specified purchase price by reference to a given number of years purchase would lead to anomalies as feared by the Commission, I have been strongly of opinion that the absence of some clear indication to prospective purchasers as to what the purchase price should be would be a practical defect in the legislation. The resulting uncertainly would deter leaseholders who would otherwise avail themselves of the facilities given by the Bill. It would tend to encourage litigation where the amount in dispute would not be considerable. The solution which the Bill proposes will, I hope, prove satisfactory. It is that the formula suggested by the Commission will apply to all cases but that, in addition, the price so decided shall be subject to a maximum in practically all cases. The maximum price will be a sum which if invested in the most recent National Loan would give a gross income equivalent to the rent being purchased. This will ensure that landlords, whose interests are being compulsorily acquired, will be able to maintain their income.

It is, in my opinion, necessary to approach this whole question from the point of view of maintaining the landlord's income because in a large number of cases the landlords may be the trustees of a charity or policyholders in an insurance company and any legislative provision providing for a purchase price which would result in a drop in their income could have serious financial results not alone in relation to the reduced income but also by reference to a drop in the value of their assets. The maximum will apply in all purchases pursuant to the Act except where the lease has less than 25 years to run or where the land demised is over an acre in extent.

The exclusion from the maximum price provision of larger properties raises the difficult problem of potential development value. It is sometimes argued that a landlord's interest in leasehold property consists not only of the value of his rent but also the fact that he may be able to share in the increased value of the site on redevelopment. As against this it is argued that the landlord can never benefit from potential development value during the currency of the lease without the lessee's first taking the necessary steps towards redevelopment.

The solution adopted in the Bill is based on the practical view that in smallish properties the landlord's chances of realising any share of the redevelopment value are very slight and that purchase of the fee simple by reference to the rent only is fair in such cases. However, where there is a good deal of land accompanying the property the purchase of the fee simple could mean freedom from a covenant restricting development and could result in a windfall of several thousand pounds to the lessee who had bought the fee simple on the basis of a small rent. This is particularly important where such properties were originally leased at low rents for the purpose of retaining an open character in a neighbourhood or for providing sporting amenities. I consider that drawing the line at an acre of land is a fair solution to this problem. In cases where the lands are extensive the purchase price will, in default of agreement, be determined by the county registrar who will have regard inter alia to the nature of the land, its location and user, to the current price of similar property and to any other matters which he considers relevant — in short, to all the various criteria which the Commission recommended should be taken into account.

The exclusion from the maximum purchase price of leases with less than 25 years to run is consistent with the Commission's recommendation that the current rent should be taken into account in deciding the purchase price only where the lease had at least 25 years to run. This recognises that on termination of the lease the landlord is entitled under the 1958 Act to increase the ground rent to a sixth of the gross rent. This prospect of an increased rent has a present value which becomes greater as the lease runs out. I accept the Commission's view that this value is of no significance when the prospective increase is 25 years or more away.

Next to the purchase price, perhaps the most important question the prospective purchaser will ask himself is what will the costs be. This is a question which is very difficult to answer because the circumstances affecting leases differ very widely. Some leases which are held direct from the fee simple owner will not present very much difficulty and the costs involved in purchasing the fee simple will not be very great. On the other hand, there may be a number of intermediate interests between the purchasing lessee and the fee simple owner. Naturally, in such cases the purchase of the fee simple will give rise to greater difficulty and the costs will be greater. Apart from the ordinary costs of conveying the fee simple, costs may also be involved in disputes when the parties cannot agree on any question arising on a proposed purchase. I think it would be generally agreed that very little can be done to avoid the necessary costs of conveyance; such costs will be borne by the lessee who is compulsorily acquiring the interest. I think this is fair. However, the lessee can go to the county registrar if he feels the costs are unreasonable and the latter can award costs against any party who has been unreasonable.

Very careful attention has been given to keeping the costs of settling disputes to a minimum. Because of the provision in the Bill for a maximum purchase price very few cases should have to come before any county registrar. In addition, a procedure by which the county registrar will decide the issue is provided which is as simple and inexpensive as possible. I think that this procedure should prove effective and satisfactory to all parties in the type of case which will come before a county registrar. By way of a safeguard, however, there is provision for an appeal against an award of the county registrar to the Circuit Court so that, in effect, the traditional jurisdiction of that court in landlord and tenant matters is being preserved. Finally, the provision that costs may be awarded against any party who has been unreasonable should go a long way towards keeping costs to a minimum. To sum up, what is being provided is, in effect, a simple procedure to enable parties to settle, by arbitration, disputes which in most instances will relate to small amounts of money in such a way as to avoid costs as far as possible; a procedure, moreover, which does not exclude recourse to the courts if this should prove necessary in any case.

I would now like to deal with the miscellaneous amendments proposed in the Bill. Perhaps the most important of these, from the practical point of view, is that which proposes to reduce the rent payable when a lease is renewed under the 1958 Act from one-sixth of the gross rent as defined in that Act to one-eighth of that rent. The gross rent, introduced in the Landlord and Tenant Act, 1931, and repeated with some modifications in the 1958 Act, is a national rent. It is not the actual open market rent but a rent arrived at by the court on the basis that the demand and the supply of the type of premises in question is in equilibrium and the tenant agrees to do all repairs, pay rates and take out fire insurance.

This formula should have produced, one might say, a level of gross rents which was not affected by the scarcity of premises for letting in recent years. A gross rent fixed this year should, for instance, be the same as a gross rent fixed back in 1958 subject only to an increase to compensate for the change in the value of money. In fact, however, the increases since 1958 have been much greater than the decline in the value of money. The Bill accordingly proposes to reduce the fraction mentioned in the 1958 Act from one-sixth to one-eighth. This is calculated to ensure that a rent under a reversionary lease fixed by the courts will be fair, having regard to the decline in the value of money and the corresponding rents being charged when the 1958 Act was passed.

The Bill also proposes that future alterations in this fraction may be made by way of a Ministerial order. To have effect, however, the order will need to be approved by both Houses of the Oireachtas. It is clear that the gross rent formula does not provide a static measure which will ensure a fair rent on reversion and that, accordingly, it is not unreasonable to envisage that periodical alterations in the fraction may become necessary and should be provided for. For such an alteration I think that to proceed by way of legislation would be unnecessarily elaborate and that the requirement of prior approval by both Houses of the Oireachtas enables the net issue involved to be fully ventilated beforehand.

It is also provided in the Bill that where a lessee proposes to change the user of premises or carry out minor improvements contrary to a convenant in his lease the landlord must not make any financial gain from giving consent. It is already provided in the 1931 Act that the landlord must not unreasonably withhold his consent and that he cannot make any financial gain from consenting to a change of user except where structural alterations are involved. The Bill also proposes, as a logical extension of these provisions, to enable a lessee who has already obtained planning permission for a change of user of minor alterations to go ahead with the work without getting the consent of the landlord. Taken together, these provisions mark the passing from private control to the control of the planning authority of any work which a house-owner wishes to undertake by way of a change of user of the premises or small additional buildings or alterations.

In this connection I would like to stress that the landlord's control over bigger works is not being affected. The `improvement' is defined in the 1958 Act to mean an addition to or an alteration of a building or the erection of ancillary or subsidiary structures but not including any alteration or reconstruction of the buildings so that they lose their original identity. While therefore a lessee who wants to put up a small front porch or any other subsidiary or ancillary structures would be free to go ahead once he gets planning permission, anybody who wants to build on a hotel or a factory or engage in housing development on the unbuilt-on land will still need the permission of his landlord if there is a covenant in his lease prohibiting change of user or the building of additional structures. Of course, in the latter case the lessee will now have the alternative of purchasing the fee simple if he cannot agree terms for relaxation of a covenant with the landlord.

The only other matter of real importance arising on this Bill is the question of restrictive covenants generally. The Ground Rents Commission recommended that convenants protecting the amenities of a district should run with the land following purchase and should be enforceable by the planning authority and by the former landlord in certain circumstances. This is a matter to which I have given very close attention. I am satisfied that under planning legislation the planning authorities have sufficient powers to achieve the desired measure of control formerly exercised by means of such covenants and that a specific provision enabling them to enforce these covenants would be superfluous. Making former landlords responsible for the enforcement of such covenants would be ineffectual and would, in most cases, be unwelcome to such landlords.

Accordingly the provision in the Bill on this matter is that the amenity covenants will lapse on the purchase of the fee simple and that the purchaser will be the fee simple owner in the fullest sense. There are only two cases where I have considered it reasonable to make an exception to this principle. I refer to covenants which protect the lessor's own personal amenities and covenants which are required to enable the lessor to comply with a statutory liability imposed on him. Such a covenant might, for example, specify that the lessee will not build over a certain height so as to obstruct the view from the lessor's own residence; or, say in a lease of railway lands, there might be a covenant allowing the lessor access to the lands so as to maintain bridges, drains, etc. as required of the railway company under statute. The distinction between this type of covenant and the ordinary covenants designed to protect the general amenities of a neighbourhood is that the restrictions imposed in the first case are specific in operation, are reflected in the rent reserved under the lease and cannot be satisfactorily provided for by planning legislation. The covenants normally inserted in leases to protect neighbourhood amenities, such as covenants as to user and the erection of further buildings, are general in their operation and planning legislation caters for them substantially.

In connection with covenants which will survive purchase, I would like to mention that I propose to introduce, on the Committee Stage, an amendment which will ensure that section 27, which proposes that a lessee may change user or carry out minor improvements without the lessor's consent, will not operate to nullify the provisions which propose to preserve these particular covenants.

I hope that the explanatory memorandum will be of assistance to Deputies. Some of the provisions in the Bill are, of necessity, complex and it has been difficult to envisage all the specific problems of a practical nature which may arise when the Bill becomes law. This is particularly so because of the great variety of leases and tenancies which exist. For this reason I would like to stress that any suggestions for detailed amendment of the provisions of the Bill will be most carefully considered. As I see it, the general principles in the Bill are acceptable to all of us; but as it is a measure which is concerned with a great deal of matters of detailed procedure, that this will be — I think Deputies will agree with me — a Committee Stage Bill. I look forward to a very useful discussion of the various provisions at that stage.

In conclusion, I would like to repeat how pleased I am to bring before the Oireachtas a Bill which marks so definite a break with the traditional concepts underlying the relationship of landlord and tenant, namely the introduction of the doctrine of leasehold enfranchisement. Irrespective of the extent to which the rights given in this Bill are used, their very existence will be of the utmost significance in the future. I am very conscious of the great work which was done in the investigation of this problem by the Ground Rents Commission under the chairmanship of Judge Conroy. Despite the many difficulties involved, the Commission succeeded in recommending unanimously in favour of giving these rights to leaseholders. I should like to take this opportunity of expressing my appreciation of their valuable services and I am sure I am speaking for all Deputies when I say this.

I ask that the Bill be given a Second Reading.

Mr. M.J. O'Higgins:

The Minister is right when he says there is no disagreement with regard to the principles of this Bill. I should like to join with him in the compliment he has paid to His Honour, Judge Conroy, and the Commission over which Judge Conroy presided in dealing with and reporting on this question of ground rents. I suppose it would have been naïve politically to expect the Minister to extend similar congratulations to this Party and the Labour Party for their advocacy of this measure over the years. I am proud to record that as far as my Party are concerned before ever the Ground Rents Commission was established, we advocated this change in the law. I think, although I do not seek to speak for them, the same is true of the members of the Labour Party.

Generally speaking, the Minister is right when he says that a Bill of this sort is essentially a Committee Stage Bill, particularly when there seems to be broad agreement on the principal object to be achieved. But I feel the Minister shrugged the matter off rather lightly when he said in effect he did not propose to go into the arguments to justify this measure. He need not justify the measure to me. But it would be a mistake for the Minister or for any Deputy to get the impression that there is not another point of view with regard to ground rents and with regard to the leasehold system in this country. The Minister should have gone on record to give the arguments which, in the first place, justify the report of the Ground Rents Commission, and secondly, justify the introduction of the measure here.

It is a coin that has two sides. When the Minister decided to come down on one side — and I am not in disagreement with what he has decided — even as a matter of courtesy to those who take the other view, he should have taken the trouble to explain the arguments which justify his decision. He should have made it clear that in this country, not only in recent times but over the years, there has been a genuine desire amongst Irish people to be the owners of the homes in which they live and the land they work in the real sense. They want to exercise the right of ownership without feeling that they must be beholden to anyone else. That was one of the matters brought home before the Ground Rents Commission and one of the matters commented upon by the Commission in their report — the fact that that strong desire was there, a desire which had its roots in the past. It is probably one of the things which for so many centuries provided the inspiration possibly needed from time to time in connection with the land struggle in this country.

The Minister also might have endeavoured to satisfy those who would feel apprehensive about this measure with regard to enforceability of covenants by dealing with that matter a bit more fully than he did. He said towards the end of his remarks words to the effect that he was satisfied that the town planning legislation we have at present, generally speaking, gives planning authorities the necessary authority to enforce desirable covenants with regard to user and so on. One of the matters that will give rise to most apprehension under this Bill will be not so much in connection with what on the face of it might appear to be interference with a person's general right of property but the possibility that with the removal of the check that is there by reason of covenants in leases, you may have widespread development of an undesirable and haphazard character in neighbourhoods, the amenities of which up to now have been preserved principally by means of covenants in the leases.

It is undoubtedly true to say that in the case of some estates, there has been excellent management from a civic point of view in preserving the character of particular neighbourhoods and the amenities in those neighbourhoods. One of the fears that will be expressed, I am quite sure — and it was probably expressed before the Ground Rents Commission — is that with the introduction of legislation of this type, with the removal of the restraint imposed by these covenants, this question of haphazard development, and so forth, may get completely out of hand.

I do not think there is any real basis for that fear, and the reason I do not think there is any real basis for it is the operation of the planning authorities under our existing scheme of things. However, there are some people who feel that that is not sufficient and that the individual owner or the landlord who has control, by means of these covenants, of a neighbourhood has no interest in preserving the character of the neighbourhood and its amenities. For what it is worth, I think, first, the fear is there and, secondly, that it was up to the Minister to dispel these doubts, instead of which he shrugged them off to some extent by saying he did not intend to go into the arguments for and against leasehold enfranchisement.

There will be different views with regard to the methods by which payers of ground rents should be entitled to purchase out their ground rents. The Minister has decided on a particular method under this Bill which enables arbitration to take place before the county registrar and which allows an appeal from the decision of the county registrar to the Circuit court. I do not understand why the Minister felt it was necessary to go to an officer such as a county registrar rather than either a judge, or a district justice, for that matter, to decide on these questions. I do not know the Minister's reason for deciding that he will have nothing to do, except by means of an appeal, with the judiciary in connection with the question of fixing whatever the appropriate price will be.

I recognise there may be difficulties very often in connection with fixing the purchase price. One possible solution which occurred to me — and I am not particularly wedded to this as against the system proposed by the Minister — would have been to establish a tribunal to which applicants should apply for the purpose of having a purchase price fixed, and that purchase price would then obtain for a certain period. If the right to purchase out was not exercised within that period, then it would be fair to require a further application to be made in order to fix another purchase price because of the changing value of money over the years. The method the Minister has adopted may well turn out to be a more satisfactory method.

There are some matters, however, that are bound to arise, and I am not sure whether the Bill is strong enough to deal with them. I have in mind, for example, the difference between the case of a lessor who has made leases of building sites and relied entirely on the creation of ground rents and that of a lessor who has made leases of building sites and who, in addition to obtaining the ground rents, has obtained a substantial purchase price or site fine in respect of those building sites. I hope the Bill as it stands enables that kind of matter to be gone into by the county registrar as one of the relevant factors. The Minister will be aware that there has been a very substantial increase over the years in the amount of the site fine that is charged in respect of sites for new houses. Some years ago such sites comparatively near the city, although I suppose outside the city boundary, were fetching prices of £100 or £200; similar sites today are fetching prices of more than £1,000. There again, it seems to me there must be some distinction in fixing the purchase price.

There is another matter with which I should like the Minister to deal. I cannot see that this is covered by the Bill, although subsection (2) (d) of section 3 may cover it to some extent. I refer to the case of a person whose lease has already expired. As a man who has been a practising lawyer, the Minister is aware that from time to time a person who has had a lease will let the lease expire inadvertently without applying for renewal, that he will not have his mind fixed on the particular date as to when the lease terminates, and it expires. Section 3 (2) (d) does deal with the case of a person who has been a yearly tenant over a long period, I think, 50 years, and puts that person on the same basis as a person who is the owner of an interest under a building lease or a property lease. It does not seem to me to deal with the case of leases that have fallen in a short while ago, where the former owner of the lessee's interest is still in occupation of the premises and is there now on the basis of a tenancy from year to year. I would ask the Minister to consider that case between now and Committee Stage.

In dealing with the question of the costs involved to the lessee who proposes to purchase out the fee simple under the machinery provided here, the Minister said there were a number of matters which would affect costs. He is, of course, quite right. You will have the case of the single simple transaction in which the owner of the lessee's interest holds directly under the owner of the fee simple. There is a simple single transaction involved there. Consequently, costs will obviously be less than in the more complicated case. There will be a number of complicated cases, the kind of cases in which, according to the Commission's report, a pyramid of interests arises. There is a concession the State could make here. It would not cost the State any money and it would be a real contribution so far as the purchasers of these rents are concerned. The State might waive the stamp duty on the conveyances necessary in order to purchase out the interests. That simply involves the State in not imposing a further burden on these people. It will not cost the State anything by way of subsidy or anything like that. The State will not have to provide money and, at the same time, this would be a real contribution to those who want to buy out their head interests.

I take it the Minister has examined the question of the constitutionality of the provision whereby the county registrar is being put in the position of giving what seems to me to amount to judicial decisions. I should imagine this is a matter on which the advice of the Attorney General has been obtained. I should like the Minister to assure the House that that is so.

Generally speaking, the Bill is one for a Committee discussion rather than a Second Reading debate. I should like the House — I am sure the Minister feels the same way about this — to have a very full opportunity of dealing with this Bill in Committee and of considering amendments between now and Committee Stage.

Mr. S. Dunne:

Deputy O'Higgins joined hands with the Minister and talked about their common professional interest as practising lawyers. It often seems to me that lawyers in power are very like civil servants in power. Can you imagine civil servants as TDs? There is a danger lawyers may develop along the same line. If the Members of this House were to approach this piece of legislation with a lawyer's mind, I do not think that would be desirable. It would certainly be far from entertaining.

Ground rents have their origin in the economic despoliation of this country and any discussion on ground rents in an Irish Parliament would be inconceivable to me without at least some formal bow to the shades of Lalor and Davitt. It can be said that Lalor was one of the first men to give lucid expression to the idea that absolute ownership of land did not reside in any authority outside the Almighty; and Davitt, as we know, worked a revolution, possibly the major economic revolution in the history of this country, by his organisation of the tenant farmers and by the securing of the purchase of the land from the landlords.

It is an odd thing, but from the early part of this century, the whole problem of ground rents seems to have lost interest for the Parliamentary Party of that day. Right up along, even during the years which were celebrated within the past month, this fundamental question at the root of every economic problem besetting this country never seems to have been effectively approached or, indeed, even talked about to any great extent.

This Commission was set up in 1961 subsequent to my introducing a Private Member's Bill to bring about the abolition of ground rents. The Commission of course would have been set up, had I never put down the Bill. The report of the Commission indicates that right up to that time, contrary to what might be thought, there was no great clamour evidenced in this House for the ending of this pernicious system. There was only one person, one famous person, to whom due credit should be given in history, who took an interest in this problem. I refer to Captain Redmond. He appears to have been the only one to have taken an interest in this problem of ground rents as it affected urban properties apart from agricultural land.

Down through the years, no great thought was given to the problem apparently and it is only since the war, for very good reasons, very sound political reasons, that the pot has, as if it were, come to the boil. If one looks into it, one finds the explanation. In 1948, when the inter-Party Government came into office, they started what was to become an intensive and most successful programme for the encouragement of house building in the towns and cities throughout the country. Lack of housing at the time constituted a major problem. In that year there began unprecedented speculation in land. Suddenly, land which was no more than agricultural land, and bad agricultural land at that even judged by the standards of agricultural production, became, by reason of the intervention of these speculators who wanted to build and sell in a booming market, a goldmine. All of us know of instances of land around Dublin city or around Dublin county, which ordinarily would have sold for agricultural purposes for anything from £80 to £140 an acre, which suddenly became available at figures such as £1.500 an acre and more, depending on its proximity to what were considered desirable building areas. This, of course, was the much-lauded law of supply and demand which has been espoused by the major Parties in this country as Holy Writ, regardless of what hardships it might work upon the people. In any event, that was the situation.

As the years went by since 1948, more and more houses were being built on the perimeter of the city under the Small Dwellings (Acquisition) Acts. At a conservative estimate, the corporation of Dublin and the county council of Dublin have advanced in the form of loans under the Small Dwellings (Acquisition) Acts, £15 million to £16 million for house purchase. I imagine the figure is much more but I am being very conservative. That £15 million or £16 million is to be seen in the tremendously wide swathe of suburban purchase type houses. All the house-holders in these schemes, these worthy people who have sacrificed much, most of them, before they got married in order to get the deposit to put down for their house and who, as we well know, are an acquisition to any community and are people who should be cherished and encouraged have had this problem of ground rents imposed upon them because the system of ground rents has operated since King John landed at Waterford, if he did, in fact, land at Waterford and if it was King John. However, it was around that time.

I do say, with some authority, that there was a gentleman named Strongbow who was the Earl of Pembroke and he had one thing in common with Nelson — he had only one eye. He stood, according to the chronicles, on the hill which is now called Mount Merrion and he was told that, as far as he could see, that land was his. It must have been a wonderful eye because the estate, which still bears his name, mind you, and still works, has property running, if I do not make a mistake, from Bray Head to the middle of North County Dublin, represented so ably by my learned friend, Deputy P.J. Burke——

Mr. Corry:

Hear, hear.

Mr. S. Dunne:

——which brings us to the question which has not been referred to at all of the moral authority upon which ground rents are based. I do not think that they have any base in justice. I do not think that any person can seek to make any argument for them except the fact that they are there and that there also exists the innate conservatism of Governments. The fear of change ordains that they must be left there and meddled with as little as possible. I am not clear from the Minister's statement, or the Bill, as to whether, if a person does succeed in getting over the various fences he must clear in order to become a freeholder, he will not in fact be in a position to recreate ground rents himself.

I am not clear that this Bill does, in fact, what I have no doubt the Minister intended it should do, namely, mark the beginning of the end of ground rents. I think there is a danger that it does not. This vast number of people, of purchasing tenants, to whom I have referred, who live in the suburban areas of Dublin, Cork and the larger cities and towns, who have availed of loans to build houses for themselves, model citizens, have suffered most under the impact of this system of ground rents and it is because they have become so numerous over the years that steps are at last being taken to do something about the whole problem. With all due respect, a Leas-Cheann Comhairle, the steps envisaged here are the very minimum steps that could be taken if an effort is being made at all to placate what might be described as an irate tenantry. These people, paying very large interest on their loans, have, in fact, no rights of ownership at all because the superstructure in which they live, known as the house, sits on land which is owned by somebody else, perhaps owned by a number of other people. The report of the Commission referred in a happy phrase to "the pyramid of interests" surrounding the ground rent and involved in ground rents. You can have landlords, head landlords, all kinds of interests, intervening between the person who is the descendant, legal or otherwise, of the original robber baron and the ordinary John Citizen of today who must pay the bill. All kinds of interests can intervene and do intervene here —"a pyramid of interests", it is called. It is on the basis of the possibility of hardship being caused at some levels of this pyramid that argument is made for amelioration, for any steps in regard to abolishing ground rents.

What about the interest of the person who is principally concerned, the person who must foot the bill, the person living in the suburbs of the city or the person buying the house who must pay the bill? What kind of a salary would he need today to buy a house? I do not want to go into that because it leads one to lose one's temper when one thinks of the way the people are being scourged and robbed with house prices as they are today. But take the situation as it is, with people living in houses. Here, they have paid, many of them, large sums of money since first they went into these houses. Since 1948, ground rents have been £10, £15 and £20 per annum and these people have paid out these moneys over the years. There is no suggestion whatsoever in this Bill that they will get any credit whatosever for these moneys they have paid. There is no suggestion that there should be any consideration in respect of moneys already paid.

I think that is wrong. I think an allowance of some kind should be injected into this Bill in respect of the many thousands of purchasing tenants of houses in the suburban areas of Dublin and elsewhere. Some provision should be made whereby these people will get credit for the money already paid in respect of this piece of what is no more than robbery, money extracted, for no purpose whatever but a false presumption of ownership, from people who are hard set to live and cope with their ordinary problems. It does not matter whether the amount is small or large: the principle is that it is ill-gotten money so far as the landlords are concerned.

A friend of mine who was in London recently went into a West End publichouse and met there a well set up young man who seemed to have nothing to do but had plenty of money. He was introduced, and on hearing the young man's name, my friend said: "You are my ground landlord. When were you over last?" The young man said: "Over where?" My friend said: "In Ireland." The young man said: "I was never there in my life." That may just be an exception but, to my mind, it lights up in a dramatic way the falsity of this business of ground rents. We all agree that we must get rid of them but I do not see in this Bill power sufficiently strong to enable us to get rid of them quickly enough or that we are taking power sufficient to do justice to the people from whom these ground rents have been extracted over a long period.

For instance, there is no retrospective effect whatever. What of those who have been paying ground rent for 50 years in some of the residential areas, people on fixed incomes, for instance, whose leases expired a year or two ago and who have no rights whatever under the Bill? It seems the legislation is overloaded, with all due respect to the Minister, with consideration for the landlord interest. One is liable to get that kind of result when one is too concerned with the niceties of legal verbiage. The most effective social reform has been secured all through history by people who approach problems of this kind with a firm, if not fanatical, conviction that something had to be done but with no great knowledge of how to do it. It was when the technicians of the law got at the intention of the idealist that the reforms were whittled down, in many cases, to mean nothing. I suggest we want as little as possible of legal technicalities discussed here.

The Labour Party will have a number of amendments based generally on the matters to which I have drawn attention, when we come to Committee Stage. There are many aspects of this measure which need clarification and amendment and we shall deal with those in Committee. Suffice to say now that we are not persuaded that the method of determining the purchase price is in any way a just one for the tenant purchaser of the type I mentioned. There is also need for some form of purchase to obviate the apparent necessity in the Bill of putting down a lump sum. There should be some method of purchasing when eventually the Bill becomes law, in whatever form it becomes law, by means of instalments because very few people of the type I have in mind, the best people in the country, those who try to help themselves, try to be thrifty and build their own houses, can find £100 or £200. In fact, very few people outside a certain element can find that kind of money.

I am glad to see some steps being taken towards the reform of the ground rent system as one of the very few — I think there was only one other and myself — who brought in a definite legal instrument and tried to have it passed in this House so as to bring about the end of this feudal anachronism.

Mr. Moore:

I wish to congratulate the Minister on introducing the Bill, because, as Deputy Dunne mentioned, this is something that Irishmen have sought for many years, from the days of Fintan Lalor and Michael Davitt. The Minister is to be congratulated on being efficient and fortunate enough to have the honour of introducing this Bill. Deputy Dunne who, I know, has a very deep interest in this matter, mentioned that this was probably the first step. Some 20 years ago, I think, the House passed a Bill which enabled port authorities to extinguish the right of a private landlord, if they wished to do so. In some parts of the city, certain land was acquired which had been held by a foreign estate for over 700 years. I suppose the Government could have introduced just as drastic a power in this Bill.

As Deputy O'Higgins said, there can be arguments on both sides. Take, for instance, a landlord who provides ground for SDA dwellings, such as Dublin Corporation. They put £10 or £15 ground rent per year on such houses but that does not go into any coffers but is used to develop further sites for more houses. I am sure local authorities will fall in with the aim of the Government to abolish ground rents but we may find ourselves then in the same position as in England. There one day I went to a housing estate and I questioned the developer about the ground rent. I found there was no ground rent but that there was an additional charge of £300 per house instead. We may dislike ground rent but at the same time our people could hardly find £300 to get a site for a house. Perhaps some brain more brilliant than mine can get around that.

Another issue which I hope the Bill will solve is the problem of the absentee landlord. Nobody likes paying ground rent but one feels all the more aggrieved at having to pay it to a foreign landlord. If this Bill will help to end that type of thing it will have justified its existence, if it never does anything else.

Deputy Dunne asked would the Government forgo any stamp duty on transactions under the Bill. I do not know whether that is possible but I would make a plea that on the next Stage the Minister would provide that the expense in connection with acquisition of ground rent should be kept as low as possible so that as many of our people as possible may benefit under the Bill.

Mr. T.J. Fitzpatrick

(Cavan): By and large, I approve of this Bill. It is a Bill that we on this side of the House have been advocating for some time. As a matter of fact, I remember going on a deputation from the Association of Municipal Authorities to the Minister for Local Government on a number of matters, including a proposal that ground rents should be abolished or that lessees should be given the right to purchase. That was several years ago. I gathered from the Minister at that time that while he was in favour of it, he was having difficulty in persuading the Government to accept his point of view. We asked him then: “What is the difficulty in introducing a one-section Bill prohibiting or making more difficult the creation of future ground rents?” The Minister appeared to be in entire agreement with us but nothing was done.

As far as existing ground rents are concerned, I approve entirely of giving lessees the right to purchase them, and the Bill does that. I also approve as far as existing ground rents are concerned of giving a fair purchase price to the landlord, some of whom may be widows or persons who bought these ground rents in order to secure an income for themselves for the rest of their lives. It is reasonable that they should get a fair purchase price, and I think the Bill does that. The formula worked out for purchase of ground rents is in or about the present market value of ground rents. Therefore, I am satisfied with that.

Like Deputy O'Higgins, I am not too happy about handing over to county registrars the right to adjudicate in disputed cases. This will now be done apparently in chambers. For years back the circuit judge has been adjudicating in matters of this sort fairly, expeditiously and with comparatively little expense. It would have been a better idea to leave the decision with the circuit judge.

There is a great deal in what Deputy Dunne said. The Minister says that he hopes to be in a position to sponsor legislation which will mark the end of this thorny question. I know that he is there speaking about leases in general. But, this Bill does not even begin to deal with the abolition of ground rents. As a matter of fact, it contains the machinery for creating new ground rents. Speaking for myself, I believe that the creation of future ground rents should be discouraged. The day that the ground rent is created the amount of it is fixed and the purchase price of it is also fixed because the amount required to buy it out will depend on the amount of the rent.

The Minister in this Bill also has made provision for the granting of reversionary leases and an extraordinary situation can arise there. There are in the city of Dublin leases of 200 years granted under the Amery grant which deals with a lot of property along the Liffey and these ground rents at present amount to about £2 10s. perhaps per plot of land granted a couple of hundred years ago. These ground rents are at present owned by Dublin Corporation and when they fall due for renewal under this Bill, a £2 10s. ground rent could very easily be increased to £100 because it can be one-eighth of the actual letting value, not of the land but of the land plus the buildings on it, and that could jump from about £2 10s. to about £100.

I know that the fraction is reduced from one-sixth to one-eighth but still it could be a very hefty increase.

I think the Minister should have put something into this Bill to discourage the creation of future ground rents. In that way he could not be said to be inflicting hardship on anyone. A lot of these ground rents that are being created at present are being created by people who buy a tract of land in and around a town where not very much development is necessary and then proceed to lease it out on 99 year leases at quite considerable ground rents. That should be discouraged. There was an argument in favour of leases some time ago when we had no town planning. It was necessary that the owner of a building should be able to keep control of the entire property and he could do this only through a lease. It was necessary to keep control so that he could ensure that the amenities of the district were not reduced or done away with. Town planning sees to that fairly effectively now.

Therefore, in my opinion, it is a pity that something was not done in this Bill, at least, to discourage the creation of future ground rents. We hear ground rent talked about here as something that is most undesirable, something that people have been fighting against for many, many years — Lalor, Davitt and Dillon — to get the right of the people to own their own houses and their own land. A lot of these leases are for 99 years. When 30 years of 99 have gone, and it does not take long for 30 years to go, the lease starts getting short and the property which is built on it is not as easy to sell, especially when the ground rent, as under this Bill, can be considerably increased on the expiration of the lease.

A number of Deputies dealt with the question of stamp duty and suggested that the Minister should do something to lighten the burden of duty payable on the purchase of a ground rent. Undoubtedly this measure will lead to an increase in conveyancing, an increase in the amount of property that will change hands and in the amount of stamp duty that will have to be paid. Are Deputies aware that the Budget of a short time ago increased in a very careful way the registration fees payable on transactions of the kind contemplated by this Bill by 100 per cent? Before the Budget, the maximum registration fee payable to the Land Registry on a transfer of property was £30. That was changed overnight, without any warning, to a maximum of £60. Are Deputies aware that if a young married man goes to buy a house for £2,500, which would be a modest house and not a new house, the stamp duty would amount to £75 and the registration fee would be £19?

Mr. B. Lenihan:

Are the provisions of the Budget relevant to this Bill?

Mr. T.J. Fitzpatrick

(Cavan): I am appealing to lessees to exercise their rights under this Bill.

An Ceann Comhairle:

I am sure the Deputy will keep to the provisions of the Bill.

Mr. T.J. Fitzpatrick

(Cavan): I hope to do that.

An Ceann Comhairle:

I am hoping that you do.

Mr. T.J. Fitzpatrick

(Cavan): When you tell me that I am not doing so, I will bow to your ruling with the greatest respect. This Bill should normally lead to an increase in the transfer of Land Registry property. The Budget increased Land Registry fees from £30 to £60 at the maximum. When we reach the Committee Stage, I would ask the Minister to introduce an amendment exempting from stamp duty and the increased registration fees imposed in the last Budget, property which is transferred under this Bill. The solicitors' expenses of £50 are reasonable compared with the stamp duty of £75 and the registration fee of £19.

I agree that this is a Committee Stage Bill and the topic I have been dealing with can be dealt with in Committee, but seeing that the Minister is the only Deputy who can introduce a measure which will impose a charge on the Exchequer, it is not open to Deputies on this side of the House to put down an amendment to relieve transactions under the Bill from increased registration fees and stamp duties. For that reason I am appealing to the Minister to put down such an amendment. If an Opposition Deputy puts it down, it will be ruled out of order.

Mr. Norton:

I would like to welcome this Bill which is one of the most vital and important measures introduced in this House in recent years and is one which should be welcomed, particularly in the towns and cities where ground rents and leases are in force. The Bill tries to provide a fair and reasonable solution to this awkward and unfortunate problem of leases and ground rents. It has treated the landlords pretty fairly and the provision that the purchase price will fluctuate with the market and that the landlord will not take any drop in his income is fair. I would not think that the landlord should be victimised too much. Many of them are trustees for small and unfortunate people and I would not like to see these people penalised. This Bill has gone a long way towards meeting this point of view.

However, it is not being fair enough in some cases where the tenants are concerned. I do not like the provision with regard to the situation where a lease has 25 years or more to run. There is a considerable number of leases in this city which will not be covered by that 25 year provision and it is unfortunate that a large number of people are going to be excluded from the benefits of the Bill by this provision.

I recently put down a Parliamentary Question asking how much the cost of living had increased since 1916 and I was told that it had gone up four-fold in the past 50 years. There are many leases which are falling through now and the tenants are being asked to pay six, eight, ten and more times the price which they paid for the original lease 50 years ago. If the landlord is to be protected, the tenant is also entitled to be protected. Where a lease falls in, it is unreasonable that the landlord should look for a price in excess of the equivalent in money values to the original price. This is a matter that should be considered by the Minister and some maximum figure should be fixed. The maximum rate the landlord ought to be allowed to seek is the equivalent of the original purchasing power of the money paid when the lease was first given or the ground rent fixed.

I should also like to see some retrospective effect given to these ground rents and to see some adjustment being made for the tenant who has had his rent increased unfairly, as it has been in many cases, and to see some provision whereby he can come along and say: "In regard to my rent, relative to the original lease, I am now paying too much; in buying it out over a period of years, I am paying too much for it." There should be some justice for the tenant as well.

Other than that, I think everybody will welcome the provisions. This is something which is many years overdue and I am delighted to see it. I congratulate the Minister on introducing it. I hope he will be amenable to the suggestions made in this House, such as I have made myself. We may not all be as familiar with the law as Deputy Dunne is, and the legal Members of the House, and I hope the suggestions made by the ordinary laymen will be considered and as far as possible justice done to the tenant as well as to the landlord.

Mr. Corry:

There is an old saying that everything comes to him who waits and I welcome this Bill after waiting for it for 34 long years. Away back in the happy days when I was young, I asked, on 12th July, 1932, the then Minister for Justice if he had received complaints from the town tenants' organisations in Cobh and other towns in the Saorstát, in reference to the exorbitant ground rents charged there, and if it was his intention to introduce a Town Tenants Bill or to set up a rent court or adopt some such means to deal with these rents. The answer was unsatisfactory and I raised it on the Adjournment. On the Adjournment, I was enabled to give a picture, even though it was only a small picture, of those ground rent landlords and to show what they mean to a town. I will give a few instances. There were 25 holdings and when the first lease expired, the landlord claimed the property and raised the rents on the 25 from £100 a year to £1,862 per year and compelled the tenants at their own expense to build according to the specifications of the landlord's architect in regard to any improvements that were required.