When we adjourned the last day I was dealing with the compulsory purchase of fee simple and the constitutional aspects of it. There are other aspects, of course, concerning this which I would like to develop now.
It is frequently stated that the right to purchase the fee simple which was introduced in the 1967 Act has not been availed of to any great extent. There is a genuine difficulty in evaluating such statements. In the first place it is in the nature of things that a high proportion of transactions under the Act will never come to official notice. They are private transactions. Only those which have been the subject of some difficulty which needed solution by reference to the arbitration procedures provided for in the 1967 Act have come to attention. It is also true of course that even if the right to purchase the fee simple given in the Act were not availed of by people generally, this would not prove the Act a dead letter. The existence of a right can serve a useful purpose even if the right is not exercised. This may be particularly true in the case of ground rents where the existence of the right to purchase the fee simple may alleviate many people's dissatisfaction with the leasehold system itself. The tenant knows that he may exercise this right at any time in the future. The occasion might for instance be when he wishes to transfer the property to borrow money on it, to carry out a total reconstruction or at the stage when the lease is coming towards its end. In the latter case the tenant may be faced with a choice of buying the fee simple or renewing the lease at a higher rent.
We may speculate as to why the right to purchase the fee simple has not been availed of more fully. One of the reasons which has actually been adduced is that the legal expenses of purchasing were prohibitive. In some cases it appears that, on making inquiries concerning the matter from their landlords, tenants learned that the legal expenses of the transaction would be prohibitive and so were discouraged from exercising their rights.
I accept that there can in fact be cases where an intending purchaser can be prohibited or discouraged from purchasing his fee simple because of difficulties of this kind. It is for this reason that the Bill proposes a new procedure for the purchase of the fee simple. Under this procedure the tenant may apply to the county registrar who will, as arbitrator, carry out the full transaction. He will satisfy himself that the tenant is entitled to purchase. He will determine the purchase price and on receipt of the purchase money and whatever expenses are payable will give the fee simple to the tenant by way of a statutory vesting certificate. The purchase money will be lodged in court and the claims of the ground landlord and any other interests can be made against the money and the county registrar will pay it out of those interests as appropriate.
I think that this provision will meet the needs of people who genuinely want to buy the fee simple but who have been discouraged from doing so either by reason of title difficulties or by reason of vague fears of such difficulties and the likelihood of heavy legal costs.
Whether or not the provision will lead to a spate of purchases is another matter. I hardly think so, largely because there is room to believe that not that many tenants are really interested in buying out at all. Indeed I have been informed that one landlord who some time ago offered his tenants the fee simple for seven years' purchase plus £25 for legal expenses had only a negligible response. I am nevertheless convinced that the availability of this service will be fully justified even if it is availed of only by tenants with difficulties out of the ordinary.
I should like to say at this point that the intention is to confine the use of the new statutory vesting procedure to the fee simple of dwellinghouses. This is of course logical. I propose to introduce an amendment on Committee Stage to make this clear.
As I have mentioned, the Bill provides for arbitration by a county registrar as the method for the settlement of questions or disputes, with a right to appeal to the Circuit Court against any arbitration decision. This arbitration procedure is being extended to all the matters with which the Bill deals apart from certain specified exceptions as, for example, where the question of the award of damages arises under section 23 (4) of the Bill. In that type of case the determination of the matter is being reserved to the Circuit Court. This means that the simple and inexpensive procedure for the determination of disputes under the system of arbitration that has been operating satisfactorily under the 1967 Ground Rents Act will now be extended to all the landlord and tenant matters that are covered by this Bill.
The question of principle involved in solving disputes of the kind in question by arbitration rather than by court proceedings—including the constitutional aspect of the matter—was adverted to in the debates on the 1967 ground rents legislation. The general feeling then was that matters of this kind are in fact appropriate for arbitration and for arbitration by county registrars in particular. Nevertheless, in extending the use of arbitration into other areas of landlord and tenant, I have been careful to keep this question of principle in mind and it is for that reason that the Bill reserves to the courts the particular matters I have mentioned.
The remaining class of change which I mentioned initially as coming within the objectives of this Bill consist mostly of extensions or clarifications of the rights already available to tenants. These are based on recommendations of the Landlord and Tenant Commission contained in their two reports. There is quite a number of these changes and they are indicated in the explanatory memorandum which accompanies the Bill. They are essentially changes which we can discuss more fully on Committee Stage. I hope Deputies will not mind if I confine myself to the most important of them at this stage. If any of the changes which I do not touch upon now happen to be of particular concern to Deputies I shall of course try to deal with them in my reply to the debate on this Stage.
The Bill proposes a number of important changes of this kind which will affect the rights of occupational tenants, that is, those who do not own the "bricks and mortar". A tenant of this class is being given the right to a new tenancy of a dwelling after 20 years' continuous occupation by himself or by his predecessors in title. At present, there must be 30 years' continuous occupation without any sale of the tenants' interest during that period.
Another change is that where the arbitrator awards a new tenancy it will be for a 35-year term, unless the tenant opts for a shorter term, instead of the 21-year term which is usually granted by the court under the existing law. This change is related to the proposal that the rent on renewal will be subject to review at the instance of either the landlord or the tenant at intervals of seven years instead of remaining unaltered throughout the term of the new tenancy.
The commission recommended the introduction of such reviews to cater for the inflationary situation and the longer terms now proposed.
Such reviews are, of course, now common in tenancies negotiated between tenants and landlords. Another change relates to the time when a new tenancy may be obtained. Under the 1931 Act the right to a new tenancy can arise only in or about the time of termination of the previous tenancy. The Bill proposes that a new tenancy may be claimed and granted as soon as the necessary conditions are satisfied, although the new tenancy is not to commence until the existing tenancy has terminated.
A further change concerns compensation for improvements. At present an occupational tenant is not entitled to such compensation where he has failed to serve the appropriate advance notice on his landlord. The Bill proposes that compensation be allowed even where the notice has not been served, provided the landlord has not been prejudiced by non-service.
In addition to these changes the conditions for the grant of a new tenancy are being relaxed. It is proposed, in particular, that the right to the new 35-year tenancy should be given to business tenants even where there has been a break in the required period of use for business, if it would be reasonable to disregard the break.
These are the main changes proposed in relation to occupational tenants. As regards ground rent tenants the right to purchase the fee simple given by the 1967 Act is being extended to new classes of lessees and yearly tenants. Those include, in certain cases, persons holding under leases for 50 years or more, instead of 99 years or more as at present. Moreover, the right to purchase the fee simple and the right to a reversionary lease are generally being made alternative to one another. One effect of this will be to extend the right to a renewed lease to certain classes of lessees and yearly tenants who, under the 1967 Act, have only the right to buy the fee simple. The provision will not enable tenants who are given the right to a sporting lease under the 1971 Act the right to buy the fee simple.
Also in relation to ground rent tenants a change is proposed whereby improvements carried out by the tenant will be taken into account in determining the new ground rent on the grant of a reversionary lease. At present such improvements count only in the case of occupational tenancies. Perhaps I should mention at this stage that while the creation of new ground rents on dwellinghouses is being prohibited under the Bill, this prohibition will not extend to ground rents under reversionary leases. Such an extension of the prohibition would amount to forcing tenants to buy out their ground rents rather than exercising the alternative right to get a renewed lease.
One of the changes proposed is exceptional in that it is not in relief of tenants but is in the public interest in the broader sense. This proposes to enable a landlord, in certain circumstances, to have an occupational tenancy in obsolete buildings terminated before the lease expires. The Landlord and Tenant Commission in their first report describe the situation which sometimes arises when a sitting tenant will not give up possession except for exorbitant compensation or cannot be induced to move at all. In this way he can hold up redevelopment or reconstruction schemes for whole areas. The Bill proposes to allow the arbitrator to make an order terminating a tenancy in a case like this but goes on to provide very stringent safeguards for the tenant. First, it must be reasonable to make the order terminating the tenancy. In addition the relevant tenancy must have not less than three years and not more than 25 years to run. Compensation must be paid for loss of the tenancy and for any further hardship to the tenant. The tenant is to be paid a share of the financial benefit that accrues to the landlord from obtaining possession of the property. At least six months' notice of termination must be given to the tenant and every termination order would be subject to a stay of one year. In every case the landlord will be required to have a development scheme that includes the property and for which planning permission has been granted and either the buildings themselves must be obsolete or they must be in an obsolete area as defined in the 1963 Planning Act.
There is one other change which I feel I should mention. The Bill proposes to rectify what one might describe as technical anomalies which have arisen under the present law. These are essentially of two kinds. First, tenants using premises for charitable and sporting purposes do not at present qualify for the right to a renewed tenancy because use for such purposes does not amount to use for business. The Bill proposes to amend the definition of "business" so as to include such purposes so far as concerns occupational tenancies. The second kind concerns particularly the Office of Public Works who, under the present law, are not entitled to renewal of their tenancies because they are not themselves actually in occupation of the premises. The Bill also proposes to rectify this defect.
These then are the main changes proposed. As I have indicated already the Bill provides for a number of lesser changes. Because of the technical and detailed character of these I feel that it would not be appropriate to comment on them at this stage.
To summarise, this is what the Bill proposes to do. It would give us a comprehensive modern statute containing the bulk of landlord and tenant law. It would up-date that law in a number of very important respects. It would put an end to future ground rents on dwellinghouses. It would effectively give the right to the perpetual renewal of long leases, with the alternative right of outright purchase of the fee simple, to ground tenants of every known kind. It would extend to landlord and tenant matters generally the simple and inexpensive system of arbitration by county registrars that at present operates only under the 1967 Ground Rents Act. It would enable tenancies in obsolete buildings to be terminated so that development can proceed.
Before I conclude I should like to pay tribute to the Landlord and Tenant Commission whose work laid the foundations for the proposals for change contained in the Bill. I think it is only fitting that an acknowledgement of their work should go on the record of this House and that, in particular, recognition should be extended to the work of Mr. Justice Conroy, the chairman of the commission. Judge Conroy has during the past quarter-of-a-century acted most ably as chairman of a series of commissions dealing with various landlord and tenant matters. No one could be better fitted to guide to a successful conclusion the work of the present commission. The commission are currently concerned with a review of the only remaining law of landlord and tenant which falls outside the scope of this Bill. That consists of the non-statutory and statutory provisions dating from before the inception of the State. Should legislation be needed to implement the commission's recommendations in this area, it will complete the task of which this Bill is the major element. We would then have a full, modern and thoroughly researched code of landlord and tenant law.
I trust that the Bill meets with the approval of the House and ask that it be given a Second Reading.