I move:
That Dáil Éireann calls upon the Government to honour without delay its commitment to abolish existing residential ground rents.
The subject of ground rents is an emotive one in this country over the centuries. We have had a long history of landlord and tenant agitation. In the last century this was mainly concerned with the rights of tenant farmers. Most of us, particularly those like myself coming from a rural area, were reared on stories of the Land League, the three Fs, the Boycott campaign, the Ashbourne and Wyndham Land Acts and the early Land Acts. All this is in the past, but one cannot forget the problems and difficulties connected with the payment of land annuities—something roughly equivalent to ground rents—particularly during the Economic War years of the thirties. The agitation today is related mainly to ground rents on residential properties, the system whereby householders have to pay an annual sum to their landlords, the system whereby the householder does not own the freehold of his own house.
Earlier this year the National Coalition introduced the Landlord and Tenant Bill, 1977, which provided for a prohibition on the creation of future ground rents. The Fianna Fáil manifesto included a commitment to provide a scheme which will lead to the abolition of existing residential ground rents. The then Opposition spokesman, now Minister, Deputy Collins, wrote to ACRA, the central body for residents' associations, on 24th May last, promising to introduce the necessary legislation within six months of the formation of the Government. So far no such legislation has been introduced. Neither before nor since the election has any indication been given by Fianna Fáil as to how they intend to honour this commitment. Furthermore, in reply to a question of mine on 27th October last, the Minister did not even know the annual ground rent income in the country. One is driven to the conclusion that Fianna Fáil had and have no idea how ground rents could be abolished.
One thing is certain, whatever interpretation the Government now try to put on their commitments, whatever effort they may now make to draw back from, to split hairs, confuse or otherwise welch on that commitment, the residential ground rent tenants of this country expect that they will not have to pay more ground rent and that the Government will foot the bill to enable that aim to be achieved. I see it as my job as Opposition spokesman to ensure that these thousands of householders will not be disappointed in that regard. For that reason, I propose this motion on behalf of the Fine Gael Party.
The amendment proposed by the Minister seems to be a clear attempt to buy time so that he can think up something to get himself off the hook. Let the Minister and the other members of the Government be quite clear about this: he and his colleagues will be reminded of their manifesto obligations to the public at every opportunity and the Minister for Justice will not be let off the hook. Too much passion and emotion have been aroused by this issue to permit the hopes and aspirations of so many to be dashed in disillusionment. We already have an indication that Fianna Fáil have neither the will nor the ability to deliver on their election promises. Already their credibility in this regard is suspect, as has been shown by the few taken in by the promise of the £1,000 grant on houses. If the Government press their amendment it will be a further indication that election promises are for the purpose of securing votes and not for implementation. The electorate expect and deserve better. I urge the Minister to withdraw this amendment and to accept our motion, which merely asks the Government to honour their election commitments. If they fail to do so they are exposed as shams of the first order.
To return to the terms of this motion, it is necessary to trace the development of landlord and tenant legislation over the years. Only in that way can the Fianna Fáil commitment on ground rent be seen in proper perspective and in its true context. One of the early developments of modern landlord and tenant law was the practice whereby the freeholder of land in or near a town leased it at a low rent for a number of years and the lessee undertook to erect a specified number of houses on the land. The lessee made his profit by selling his interest in the houses or by subletting them to occupying tenants. Up to the present century there was no standard practice as to the length of such a lease. In some cases leases for lives were given; in others the lengths of the term varied from 70 to 150 years. In isolated cases leases for 999 years were given. In a number of Irish towns prior to 1900 houses were erected on lettings for 20 years or even on yearly tenancies. The lengths of the term is normally 99 years. In 1906, after a long agitation, tenants of town houses got some relief. We had the Town Tenants Act of 1906, which gave tenants of houses on tenancies of not less than a year compensation for improvements and for unreasonable disturbance.
The final report of the Meredith Commission in 1928 marked the next step. This report introduced a fair rent definition which bears a great resemblance to the gross rent definition in the Landlord and Tenant Act of 1931. This Act was an extremely important piece of legislation because it effectively set the pattern for the statutory regulation of relations between the urban landlords and tenants. It was called a tenants charter in that it introduced for the first time protection for urban tenants against dispossession on the expiry of their tenancies. It gave them the right to renewal of tenancies. Prior to this an urban tenant whose lease expired had no legal right to remain on in the property and the landlord was entitled to recover possession. This was so even when the tenant had put up the building. The 1931 Act was also of considerable importance in the sense that it introduced the statutory concepts of building lease and proprietary lease as opposed to occupational tenancies.
In general, a building lease was one under which the landlord leased the tenant a plot of land with a covenant in the lease that the tenant would build a house on that land. The proprietary lease was a sublease under a building lease. The essential thing with both kind of leases is that it is the tenant who owns the bricks and mortar. The landlord therefore has only a minor interest in the whole property which is normally represented by the fact that the rent was low. The rent in the case of this type of lease has come to be known as a ground rent. This is as opposed to an occupational tenancy where, in effect, the landlord owns the bricks and mortar and the tenant's interest is related primarily to his occupation of the premises, and normally his rent would be much higher than under a building or proprietary lease. The 1931 Act, Part V, provided a procedure for getting a reversionary lease in the case of property held subject to ground rent. The rent payable on the granting of a reversionary lease was to be a quarter of the gross rent. The theory of the 1931 Act was that a lessee who had improved a bare site by erecting buildings on it or who had acquired the builder's interest should get a reversionary lease unless the landlord proved that it should not be given for certain specified reasons, mainly involving redevelopment and good estate management. The main point was that the rent payable should only be in respect of the site value and should contain no element attributable to the buildings erected on the land.
With the passage of time there were certain flaws in the 1931 Act. An attempt was made to remedy these in the Landlord and Tenant (Amendment) Act, 1943. The next step resulted from the Rents and Leaseholds Commission, which reported in 1954 with certain recommendations which were embodied in the Landlord and Tenant (Reversionary Leases) Act of 1958. This Act extended considerably the right to a reversionary lease on the part of ground rent lessees. The portion of the gross rent attributable to the ground was reduced to one-sixth and under the terms of the Landlord and Tenant (Ground Rents) Act, 1967, this proportion was further reduced to one-eighth. The 1967 Act introduced for the first time a measure of leasehold enfranchisement, that is the right to certain leaseholders and tenants to acquire the freehold of their properties. The 1971 Act extended to new classes of tenants the rights given in the 1958 Act to get a reversionary lease and in the 1967 Act to purchase a freehold.
It is important to remember in the context of this motion that the right to purchase freehold has been in existence for more than ten years. The cost of purchase was at a sum to be fixed by the county registrar, bearing in mind certain specific provisions of the Act. In certain cases, which would apply to the majority of modern residential ground rents, the price should not exceed the amount which is invested at the date of purchase in the most recent Government long-term loan which would give a gross annual return equal to the amount of the ground rent.
The most recent long-term Government loan was 13 per cent Finance Stock, 1997 to 2002, which gives a multiplier of 7.692 per cent. I should point out that because of the improvement in sterling and other international economic factors, interest rates have fallen very much in recent times. The most recent UK long-term loan was issued last Friday, the 10 per cent Treasury Stock, 1992. Normally one would expect that any new Government loan here would be issued at approximately the same terms, and this would increase the multiplier to 10 per cent. Therefore, one must bear that in mind when considering the overall cost of ground rent abolition.
The evidence is that the right to purchase the freehold which was introduced in the 1967 Act has not been availed of to any great extent. One of the major problems involved was the necessity to track down the title, not alone in reference to the interest of the most recent landlord but all the superior interests back to the freehold owner. Considerable trouble and expense could have been experienced where a pyramid of interests occurred, and it was my experience as a practising lawyer that this was the most usual situation, rather than having a ground rent lessee holding direct from a freehold owner. Further complications arose when owners of superior interests were infants or persons of unsound mind or other complications of a similar nature, and in general the considerable legal expense that would be involved in tracking down the various title interests was a discouragement to prospective purchasers of freehold interests.
Then, in 1977, the Minister, now Senator Cooney, introduced a Bill in February. The Bill sought to resolve this problem in a very simple way. Under the procedure proposed, a lessee merely had to apply to the county registrar who would carry out the full transaction. After satisfying himself that the lessee was entitled to purchase, the county registrar would determine the purchase money, and on receipt of it he would give the freehold to the tenant by way of statutory vesting certificate. The purchase money would be lodged in court, and it would then be up to the various landlord interests to prove their various titles and to make their claims against the moneys lodged in court.
That procedure would have represented a far-reaching innovation and would have gone a long way towards resolving difficulties which were preventing ground rent tenants from purchasing. In effect, the tenant would not have had to bother chasing the various landlord interests or investigating the title of such interests, many of which incidentally might have been defective. The whole onus would have been transferred from the lessee to the landlords. That Bill proposed certain other additions which would have favoured tenants, including the right to purchase the freehold. That was to be extended to new classes of lessees and yearly tenants. The Bill would have given the right of perpetual renewal of long leases, with the alternative right of outright purchase of the freehold, to ground rent tenants of every known kind. It would have extended a simple and inexpensive form of arbitration by the county registrars. As already mentioned, it provided for prohibition of the creation of future ground rents on dwelling houses. That was provided for in section 108 of that Bill.
That Bill of course contained many other provisions which I will not go into at this stage. They were provisions designed to improve the lot of tenants of other types. Unfortunately, the Bill died with the Dáil dissolution. As time goes on I will be pressing the Minister to implement many of the other provisions of that Bill, which had a great welcome from tenants of all types all over the country. I regret that the general reform of landlord and tenant law is in abeyance and I will confine my remarks tonight to the subject of ground rents only. I will be returning to the other matters at a later stage as opportunities arise.
The problems in relation to the creation of future ground rents and of an easier and more inexpensive method of purchase were dealt with in the 1977 Bill, and it is very important that both factors should be borne in mind when one tries to interpret Fianna Fáil's commitment in this respect. It is in that context that Fianna Fáil's commitment to provide a scheme leading to the abolition of existing ground rents must be construed. That commitment was given in the Fianna Fáil manifesto and in a letter to ACRA on 24th May last. In that letter, the Minister for Justice, Deputy Collins, confirmed that commitment. He committed his party to introduce the necessary legislation within six months of the formation of a Government. In reply to a question in the Dáil on 27th October last, the Minister indicated that a short Landlord and Tenant Bill would be introduced at an early stage providing for the prohibition of the creation of future ground rents on ordinary dwelling houses. Such a Bill would, of course, be merely doing what was provided for in section 108 of the earlier Bill.
In passing, I urge the Minister to bring this to a conclusion with all possible haste. Incidentally, he has not given any explanation as to why future prohibition and abolition of existing ground rents are not to be dealt with in a single Bill. There does not seem to be any reason why this should not be done, but perhaps the answer is obvious.
To get back to the question of the abolition of existing ground rents, the Minister has not given any indication as to how it would be done. It seems to me that it is possible to implement that commitment only by way of confiscation or compensation. Dealing first with the question of confiscation, Article 43 of the Constitution provides for the protection of private property rights. It would therefore appear to be unconstitutional to terminate landlords' interests without compensation, and any Bill providing otherwise would probably be declared by the courts to be unconstitutional. The Constitution could be changed by a referendum; but the Taoiseach, on the opening day of this Session, indicated that the only constitutional changes proposed were in relation to bail and adoption. Accordingly, I can only assume that such a course of action is not intended.
However, it is no harm to mention that, if such a course of action were suggested, the ground rent lessees, the tenants themselves, who would appear to initially benefit from such a move would, because of the diminution in the rights of private property involved in such a change, find that the very thing they were seeking would thereby be lost. In effect, their legitimate aspirations to the ownership of their houses and property would not be constitutionally guaranteed.
Having disposed of the question of confiscation, we turn our minds to what was promised by the present administration in their manifesto. We already had a system whereby the ground rent lessees could purchase by paying a certain sum to the landlords. While not pretending that the 1977 Bill would abolish existing residential ground rents, the Coalition Government provided for a cheaper and more effective way of purchase by the tenants.
The Fianna Fáil commitment is to abolish existing ground rents. In other words, according to the dictionary definition, to do away with them. The only reasonable interpretation that can be drawn from this commitment is that the Government will provide appropriate compensation. I suggest that this commitment cannot be construed in any other way.
How seriously the costs of the operation have been investigated by Deputy Collins and his colleagues is evidenced by the fact that, on 27th October, in reply to a question of mine, the Minister was not even aware of the total annual ground rent income. At that date, having stated that he did not have this information, the Minister said that he would send it to me in due course if he could get it within his Department. This information has not yet come to hand so presumably it is not yet available to the Minister. Can he or his Government be taken seriously in relation to this commitment?
Since the Minister was not able to tot up the bill, I thought I should provide some help in this regard. I have attempted to obtain estimates of the amounts involved. Because I have not access to official sources, the figures that I quote must of necessity be very rough estimates. Despite that fact, it is proper and right that these figures should be put on the table at this stage. If the Minister is in a position to put forward more official figures, I am quite prepared to listen to him. The best estimate I have been able to obtain is that the annual ground rent income for residential properties is of the order of £12½ million to £15 million. To get an idea of the capital purchase cost involved I have worked out rough maximum and minimum figures. Taking the lower income figure of £12½ million per annum and using the present multiplier of 7.692 per cent we end up with a figure of nearly £100 million. If we take the upper income figure of £15 million per annum and the 10 per cent likely multiplier resulting from the issue of any new Government loan, we end up with a capital sum of £150 million. In addition to these figures, consideration must also be given to the substantial administrative costs involved in any Government-organised abolition scheme.
I do stress that my figures are approximate. However, they are something to be working on pending official figures from the Minister. One way or the other, the capital cost is enormous. It seems that, in order to procure the votes of ground rent tenants, Fianna Fáil committed the Exchequer to the payment of a sum of that order. In passing, it is fair to mention that on that basis these must have been the most expensive votes in the history of democratic politics. Whether the compensation is provided by way of cash or bonds would seem to be immaterial. Bonds are worthless unless they can be redeemed for cash.
I should make the position of my party very clear. The Government committed themselves to the abolition of existing residential ground rents and it is our job to ensure that the Government do not welch on their promise and that they fully implement it. We will fight on behalf of the tenants to ensure that there is no backsliding in this regard. At no stage did Fianna Fáil spell out how they were to effect the abolition of existing ground rents. I have gone to some lengths to sketch the background in an effort to put the matter into proper perspective. It seems that the Fianna Fáil commitment is to provide the necessary compensation to enable this to be effectively done. Otherwise there will not be an end to the existing ground rents system. I have given an estimate of the cost solely because this aspect seems to have been totally neglected by Fianna Fáil either before the election, when the commitment was given, or since assuming power. Having made an estimate of the cost, I now present the bill to the Minister for Justice for payment by calling on the Government to implement without delay their commitment to abolish existing residential ground rents.
The Minister has put down an amendment asking this House to express its confidence in the Minister for Justice to introduce at an early date a scheme leading to the abolition of existing residential ground rents. The Minister's amendment must be seen for what it is. I can only interpret it as a delaying tactic, a cover for a nonexistent plan, something that is unworthy of a responsible Government. In the light of the facts outlined the Minister has failed miserably to inspire confidence in his ability to deal with this matter. Does it inspire confidence to give a commitment to abolish ground rents when it is obvious that the Minister has not a clue of the cost involved? Does it inspire confidence when the Minister refuses to accept a motion in what could be termed the dying days of 1977 to have his commitment to ACRA of 24th May to introduce legislation within six months honoured without delay?
I wonder why the Minister cannot accept this motion and why he feels it necessary to put down an amendment. I suppose the weight of the seven dozen apostles trooping through the lobby may give the Minister an impression of confidence, but I would say to him that he can be assured that this confidence will not be shared by many thousands of disillusioned householders.
In the circumstances I urge the Minister to play this one the honest way. A commitment was given in the manifesto and it is unequivocal. The manifesto states that Fianna Fáil will provide a scheme which will lead to the abolition of existing residential ground rents. A further commitment was given that legislation in this regard would be introduced within six months of the formation of the Government. In those circumstances it is difficult to understand why the Minister put down an amendment. This session will end in a few weeks' time and the House will not meet again until the middle of January and by that time the six months will have elapsed. Therefore, the Bill should be introduced in the next few weeks if it is the intention of the Minister to honour his commitment. If the Minister is serious about his commitment and intends to implement his promise why does he not accept our motion? In fact it is a motion that should have been put down by the Govenrment if they intended honouring their commitment.
Suspicions rise in my mind that the Government do not intend honouring their commitment. If that is so I presume the Minister will come clean and enlighten the House and the many thousands of ground rent tenants about the situation. If it is the intention of the Minister to honour his commitment he must be in a position to outline his proposals. I accept that the drafting of a Bill is a slow process but the proposals must have been worked out before the election. The Minister should tell the House the headings of his proposals. If the Minister does not accept our motion I suggest it is because the Government do not intend honouring their promise, that they are backsliding on their commitment. How can the Minister expect us to express any confidence in him or his intentions bearing in mind that background? Expressions of spurious confidence are not and will not be acceptable to ground rent tenants. For that reason I ask the Minister to withdraw his amendment and honour his commitment now. He should abolish ground rents and retain some credibility. If the Minister fails to do so and rejects our motion it can only be interpreted as showing Fianna Fáil in their true colours, a party of all promises and no action, a party without credibility sowing another seed of defeat which I suggest will grow and flourish over the next few years and come into full flower at the next general election.
