I think the Seanad is aware that a Commission was set up some years ago to inquire into the relations between landlord and tenant with regard to what, roughly, may be called town property. In 1906 an Act was passed regulating the relationship between these two classes of the community. That Act, in its working, was not completely satisfactory. In consequence, this Town Tenants Commission was set up. It brought in a report, and on that report the present Bill is founded. The Bill follows the report of the Commission very closely indeed.
I heard Senator Sir John Keane say a moment ago that this was an attack on the freedom of contract. What precisely is meant by the freedom of contract is never quite clear, because people do not always define what they mean by it. Freedom of contract means one thing to one person and something else to another. But what freedom of contract means is that both parties are free from external pressure and are in a position so that they can fairly contract. In the wide sense, the statement that this does not leave it to landlords and tenants to make, in all circumstances, the hardest bargain that either the one or the other can drive with his co-bargainer is quite correct. Where landlord and tenant are satisfied, it leaves it entirely to them—it encourages them—to come to an agreement, and it discourages, as much as possible, their going to court. It provides new machinery for this purpose. It is only as a last resort that the resources of the court shall be sought. That is to say, when a landlord and tenant cannot themselves agree upon the terms of a letting, the value of improvements or things of that kind, where they are not satisfied to abide by the report of the Commissioner of Valuation, they can go to court.
A new principle is brought into this Bill. It will be found running all through it, namely, that a report can be had both by the landlord and the tenant from the Commissioner of Valuation before they go to court. In that way they will be able to get the impartial views of an expert. I venture to think that, in almost all cases, the landlord and tenant will accept his view or modify it only to some slight extent, and that the number of appeals to court will be nothing like the number that Senator Sir John Keane seems to visualise.
I will now go through the Bill in some little detail. This is a Bill in which the details are practically all in all. To go through the Bill section by section would be a wearisome task. The Bill, I think, is more suited to discussion in Committee than to a Second Reading speech. With the permission of the House, I will just deal with the main principles which underlie the Bill, and leave the details for consideration in Committee. First of all, I would like to point out the class of houses to which the Bill has application. The word "tenement" is used throughout the Bill. The definition section states:
the word "tenement" means land or premises complying with all the following conditions, that is to say:—
(a) it either—
(i) is situate in an urban area and consists either of land covered wholly or partly by buildings or of a defined portion of a building, or
(ii) is situate elsewhere than in an urban area and consists of land not exceeding one statute acre in area and having a house thereon, and
(b) if it consists of land covered in part only by buildings, the portion of such land not so covered is subsidiary and ancillary to such buildings, and
(c) it is held by the occupier thereof under a lease or other contract of tenancy express or implied or arising by virtue of a statute, and
(d) such contract of tenancy is not a letting which is made and expressed to be made for the temporary convenience of the lessor or of the lessee and (if made after the passing of this Act) stating the nature of such temporary convenience.
Therefore premises to which this Bill applies must be premises which are either a building with some little land attached or portion of a building; that is to say one building may contain more than two tenements. For instance, a ground floor might be one shop, the next floor another shop and the third floor might be an office of some kind. Each would be regarded as a separate tenement. It must be situate in an urban area or if outside an urban area there must be only a limited amount of land—one statute acre— attached. I should say here that that last amendment to the Bill was made in the final stages in the Dáil and it will be necessary for me in the Committee Stage to ask the House to consent to an amendment of the Long Title of the Bill, the real difference being if there are roadside houses to which there is no land attached, and I do not think there will be many of them, roadside houses which are purely business premises, dwelling houses which have been occupied so that they would come under the Bill, that they should have the benefit of this Bill. I do not think there are very many in the country but there may be some. There are certain exemptions in the Bill, labourers' cottages and houses of that class, which have been built out of public funds to house a specific class of person, that they should be continued to be used for that specific class of person.
I may as well now deal with the question of the Court. The Court will be the Circuit Court, with of course an appeal from it, but in all instances where the premises are a new letting and where compensation for improvements or any other sum of that kind has to be ascertained, the Court will and, if asked by one of the parties, must, call in the assistance of a commissioner of valuation who will furnish a report which will be available to both persons.
The Bill is divided into several parts. I will deal first with Part II—Compensation for Improvements. The scale of compensation for improvements is this: what will be the capitalised value of the improvements after the letting, such capitalised value not to exceed fifteen times the increased letting value. You consider first what is the increased letting value due to the improvement, then capitalise it, and that is the full sum which is payable to the tenant on leaving his tenancy. The procedure is that the tenant sends in an improvement notice setting out what improvements he proposes to carry out, and the landlord answers that either by an improvement consent, saying he agrees to it being carried out, or by what is called an improvement undertaking—that is to say, he will undertake to carry out improvements himself, adding so much to the rent to recoup himself for the amount of the improvement, or he may lodge objection denying the right to the tenant to make the improvements at all as not being suitable to the holding. Each intermediate landlord, when he receives notice from his tenant, will serve notice on his immediate landlord. When the intermediate landlord's time expires he will be entitled in turn to claim from his superior landlord the value of the improvements on the date of the termination of his tenancy. If the landlord and tenant cannot agree as to whether the improvement should or should not be carried out, or as to what the cost of that should be, or anything of that kind, then, and then only, will they have recourse to the court. There is one case in which a landlord's objection as an improvement objection is final. That is where the tenant holds under a tenancy for a period less than five years, or has been in occupation for a period of less than five years. So much for improvements.
The next thing is the right to a new tenancy. The old Act, as I have no doubt the Seanad is aware, was divided into the right for compensation for improvements and the right of compensation for disturbance. There is an exception here. For practical purposes you may say the right to compensation for disturbance has been almost swept away by this Bill and in lieu of the right of compensation for disturbance the right to a new tenancy has been introduced. The right to a new tenancy is in Section 18. In order that a tenant should have the right to a new tenancy certain things are necessary. The first deals with business premises and in business premises if the tenant has beenbona fide carrying on business for three years and if he holds under a lease or contract of tenancy from year to year or under a lease for any higher period than a year he is entitled to a new tenancy or if he holds under any tenure whatever, a quarterly tenancy or a monthly tenancy, and has been carrying on business bona fide for three years or has been in occupation for a period of seven years he also is entitled to a new tenancy. So much for the business part of it.
In addition to that there are certain cases in which residential holdings come under the right to a new tenancy. The first of these is where
(a) such tenement was, during the whole of the three years next preceding the termination of such tenancy,bona fide used by the tenant for the time being thereof wholly or partly for the purpose of carrying on a business and, immediately before such termination, either was held by the tenant thereof under a tenancy from year to year or under a lease or other contract of tenancy for a term of not less than one year or a lease for a life or lives or had been for not less than seven years continuously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title, or
(b) such tenement was during the whole of the period of forty years next preceeding the termination of such tenancy continously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title, or
(c) at the termination of such tenancy the reversion of the landlord in the tenement does not exceed three years and such tenement was, during the whole of the period of fifteen years next preceding such termination continuously in the occupation of the person who was the tenant thereof immediately before such termination or of his predecessors in title or
(d) improvements have been made on such tenement and the tenant would, if this Part of this Act did not apply to such tenement, be entitled to compensation for improvements in respect of such improvements and not less than one-half of the letting value of such tenement at such termination is attributable to such improvements.
Those terms, of course, are in a way rather arbitrary, except the last. The term of forty years, for instance, is rather arbitrary, and the other one about the shortness of the landlord's reversion is also, to a certain extent, arbitrary. But these terms have been taken from the Report of the Commission. The Commission has completely agreed and said that nobody giving evidence before it claimed that mere occupation gave a person the right to have a fair rent fixed in the renewal of his tenancy. It did say if a person had been for a very long time in possession, or if he had become really more owner of the premises than the person to whom he had paid rent because he had spent so much on improvements, he ought in those circumstances have the right to a new tenancy. When a person has been for a very long period in a house, and has come to regard that as his home, and possibly it has been his people's home before him, it is rather rough that at the end of a period of time when he is willing to pay the full value of the premises he should be disturbed from it. In certain cases compensation for disturbance is still the measure and not a new tenancy. In business premises the normal measure is the grant of a new tenancy. In exceptional cases that is departed from, and the tenant receives compensation for disturbance instead. Those cases are when the landlordbona fide intends or has agreed “to pull down and rebuild or to reconstruct the buildings or any part of the buildings included in such tenement, or that such landlord requires vacant possession of such tenement for the purpose of carrying out a scheme of development of property which includes such tenement, or that for any reason the creation of a new tenancy in such tenement would not be consistent with good estate management.” In those cases compensation for disturbance is what the tenant gets, and not a right to a new tenancy. The compensation for disturbance varies from the compensation for disturbance which used to be awarded under the 1906 Act. It is measured by Section 22, which says:
"Where the court awards to a tenant compensation for disturbance the measure of such compensation shall be the pecuniary loss, damage, or expense which such tenant sustains or incurs or will sustain or incur by reason of his quitting the tenement in respect of which such compensation is awarded and which is the direct consequence of his quitting such tenement."
When an application is made to have a new tenancy the court decides as to whether the applicant is or is not entitled to have such new tenancy. The court has full power to fix the terms of the tenancy. Section 28 is the section which gives the power to the court. It fixes the duration of the new tenancy and the general terms of it, and in the fixing of a new tenancy the important matter really to be considered is the question of the rent which shall be payable. It always, of course, has been a matter of great difficulty to decide what is a fair rent. The definition which we have taken of a fair rent is practically the definition from the Town Tenants Report. As a matter of fact, when the Bill was first introduced it contained a definition from the report of the Town Tenants Commissionverbatim, but it has been slightly modified in the actual wording, without altering the meaning. The rent is fixed first by ascertaining the gross rent and then subtracting from the gross rent the value of the tenant's improvements. The gross rent is ascertained in this fashion:
"the gross rent shall be the rent which in the opinion of the court a willing lessee not already in occupation would give and a willing lessor would take for such tenement, in each case on the basis of vacant possession being given, and in such circumstances that the supply of similar tenements is sufficient to meet the demand and the competition therefor is normal and having regard to the other terms of such tenancy and to the letting values of tenements of a similar character to and situate in the vicinity of such tenement but without regard to any goodwill which may exist in respect of such tenement."
In other words, the court looks around and sees how similar houses in the neighbourhood are letting, and then considers what the value would be if there were a reasonable supply of houses to go round, and a reasonable supply of persons to look for them. That of course would, on the one hand, have the effect of killing monopoly value. As Senator Sir John Keane has pointed out, if a landlord happens to be in the position of being a person with only one house in the neighbourhood, in that way of course it would hit the landlord who, taking advantage of the tenant's position would demand a higher rent than in equity he ought to ask for that house. On the other hand, if houses happen to be in a particular place very plentiful and the tenant has the right of picking and choosing, the Bill goes the other way entirely in the landlord's favour. In other words, what the court is asked by this section to do is "do not let either party take advantage of the very great need of the other party. Try and do what is just, and give what is, as far as you can get it, the true letting value of the premises."