I am pleased to have the opportunity to address the Seanad on the Second Stage of this important piece of legislation. Senators will recall the passage, during 1978, of the two Landlord and Tenant Bills which became law as the Landlord and Tenant (Ground Rents) Act, 1978 and the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978. The Bill now before the House represents the third and final instalment of a trilogy of measures to give effect to the Government's current proposals in the area of landlord and tenant law. This will bring about the modernisation and, in considerable measure, the consolidation of the post-1922 landlord and tenant code.
Assuming enactment of this Bill the code will consist of the three Ground Rents Acts, one of 1967 and two of 1978, the Landlord and Tenant (Amendment) Act, 1971, which deals mainly with sporting leases, and the present measure, and will collectively be cited as the Landlord and Tenant Acts, 1967-1979. Perhaps I should explain why the consolidation in a single enactment of this body of legislation is not just now being proposed. It would have been possible to bring in a Bill that provided for the repeal and re-enactment of all the Acts I have mentioned so that the post-1922 landlord and tenant code would be contained in a single measure. However, it is desirable that this Bill should reach the Statute Book without avoidable delay because of the urgency of one particular provision which I will deal with later. The consolidation of all the Landlord and Tenant Acts would have involved a very substantial Bill that would almost certainly have entailed much delay. Moreover, a single consolidated measure could perhaps be of somewhat limited value in the light of the circumstances that the Landlord and Tenant Commission are still sitting.
Almost all of the changes proposed in the Bill emerge from recommendations of the commission and they may have further recommendations for changes in these Acts in the not too distant future. This raises the possibility that further legislation may be necessary to bring to a conclusion the work of the commission in this area of the law. Even then it is to be anticipated that the commission will go on to deal with further items that fall within their terms of reference, that is, Deasy's Act, and may recommend changes in that area also. At that point the question would arise of having further legislation. Only then could we envisage the possibility of a full Landlord and Tenant Bill that would provide for the consolidation of all the statute law of landlord and tenant.
Senators will appreciate that this Bill is, by reason of its subject matter, necessarily one of considerable complexity even though care has been taken to frame the proposals in as straightforward a manner as possible. It might be useful at this stage, therefore, if I were to outline for the House, in a general way, the purpose of the measure and the background to it.
The purpose of this Bill is to up-date the Landlord and Tenant Act, 1931 and the Landlord and Tenant (Reversionary Leases) Act, 1958 on the basis of changes that have been recommended by the Landlord and Tenant Commission. Certain provisions of the Rent Restrictions Acts and of the 1963 Planning Act are also involved but only as a matter of consolidation. The subject matter of the Bill extends to two main areas, that is, the terms and conditions attaching to the renewal of occupational tenancies and to the award to a departing occupational tenant of compensation for improvements he may have made—this is the area covered by the Act of 1931—and the renewal of ground rent leases—this is the area covered by the Act of 1958.
As to the general background, the Act of 1931 was of course a landmark in the regulation of the relations between landlords and tenants. The terms "landlord" and "tenant" have certain unpleasant historical connotations in Ireland and, indeed, for much of the last century and the earlier part of this century this particular social area was one of bitter acrimony. Thankfully, this is now a thing of the past and the change was due, in no small measure, to the 1931 Act which it is proposed in this Bill to up-date and amend. The 1931 Act effectively set the pattern for the statutory regulation of relations between urban landlords and tenants by recognising for the first time the right of an urban tenant to be protected against dispossession on the expiration of his tenancy. It conferred on such tenants the right to a renewal of their tenancies. In the context of landlord and tenant legislation such a renewed tenancy is referred to as a "new tenancy" where an occupational tenancy is concerned. Where the renewal is the renewal of a ground rent lease the renewed lease is referred to as a "reversionary lease".
Prior to the 1931 Act, an urban tenant whose lease expired had no legal right to remain on in the property and the landlord was entitled to recover possession even where the tenant had constructed the buildings himself, that is to say, even where a ground rent lease was involved. The Landlord and Tenant (Reversionary Leases) Act, 1958 extended the rights of tenants in the type of case where the the tenant had constructed the buildings himself or had otherwise paid for the buildings.
Before going further, perhaps I should clarify some of the other terms that fall to be used in this discussion. An "occupational tenancy", which may arise by way of a lease or any other form of agreement, is one where the landlord owns the "bricks and mortar" interest, for example, a tenancy of a business premises or of a shop. The tenant's interest is related primarily to his occupation of the premises. The rent charged in such cases is, of course, higher than a ground rent and is commonly called an "occupational rent". The other kinds of tenancies with which this Bill is concerned could be grouped together under the generic description of "ground rent tenancies". The rent charged—a "ground rent"—is lower than an occupational rent and reflects the fact that the "bricks and mortar" interest in these cases belongs to the tenant. The 1931 and 1958 Acts identified ground rent leases under the categories of "building lease" and "proprietary lease". A "building lease" in its simplest form is a lease under which the landlord leases the tenant a plot of land with a covenant in the lease that the tenant will build a house on the land.
A "proprietary lease" is a sub-lease under a building lease. The Act of 1958 had already identified so many different categories of "building lease" that these categories had become somewhat unwieldy even before a number of new kinds of "building lease" were identified by the Landlord and Tenant Commission. The 1978 No. 2 Ground Rents Act has already extended the right to purchase the fee simple to the lessees under all such leases, and has done so under a much simplified classification. This gives the opportunity, which is taken in this Bill, of simplifying also the law relating to the grant of a reversionary lease—that is, a renewed building or proprietary lease—as at present contained in the Acts of 1958 and 1971, and of getting rid of the expressions "building lease" and "proprietary lease" which have out-lived their usefulness.
I now turn to the main changes in the law which are being proposed in this Bill and which, as I have indicated, stem for the most part from recommendations of the Landlord and Tenant Commission. Senators will readily appreciate that this is very much a Committee Stage Bill and will, I am sure, excuse me if I do not go into great detail in regard to the various proposals on this Stage of the Bill. This Bill runs to no less than 82 sections. They deal with a great number of separate issues—many of them of a technical detailed nature. I would, perhaps, be trespassing on the time of the House if I were to attempt to describe the Bill section by section, or even to deal with each Part in any considerable detail. I will, of course, be only too willing to elaborate on any particular points which Senators may raise.
I will deal first with the proposed changes in the law in Parts I, II and IV of the Bill which are of concern to occupational tenants, that is, those who do not own the "bricks and mortar". The right to a new tenancy is being given to business—or part-business—tenants of three years' standing in all cases, regardless of the term for which the existing tenancy was granted and this right will apply even where there has been an unplanned temporary break in business use during the three years if the court considers it reasonable to disregard that break. At present, business tenants who hold on less than a yearly tenancy, or than a lease for at least one year, must show not only three years' continuous business use immediately prior to the termination of their existing tenancies but also continuous occupation during the seven years preceding that termination, in order to have the right to a new tenancy. Moreover, the provisions of the law as it stands make no allowance for any break in business use during the qualifying period.
The other type of occupational tenant is, of course, the tenant of living accommodation, and a further change proposed in the Bill is that an occupational tenant 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 accupation without any sale of the tenant's interest during that period. In addition, provisions are being included to ensure that a tenant will not inadvertently lose the right to a new tenancy through failure to claim that new tenancy within the time-limits provided: the onus will be on the landlord to give notice of the termination of the previous tenancy and the tenant's right to claim a new tenancy will survive until after that notice has been given.
I should now like to refer to what is perhaps the most important single area of change that is proposed in the Bill, that is, in relation to the terms on which a new tenancy will be granted where those terms fall to be fixed by the court in the absence of agreement between the parties. At present, where the court fixes the terms of a new tenancy, that tenancy is normally for a 21-year term; under the Bill it will be for 35 years unless the tenant opts for a shorter term. In addition, the rent on renewal will, under the Bill, be subject to review at the instance of either the landlord or the tenant at intervals of five years instead of remaining unaltered throughout the term of the new tenancy. The Landlord and Tenant Commission recommended the introduction of rent reviews at seven-year intervals to cater for the inflationary situation and the longer terms now proposed. Reviews at intervals of five years or even less are, however, much more usual in tenancies currently negotiated between tenants and landlords and, hence, reviews at intervals of five years are proposed in the Bill.
Senators who are familiar with this field will be aware that the present state of the law in this area is satisfactory neither to landlord nor to tenant. The decision of the Supreme Court given in 1977 in the case of Byrne v. Loftus means, in effect, that while the tenant can obtain the grant of a new tenancy for a 21-year term at a fixed rent, that rent may nevertheless be very high at the time it is fixed. It is higher, and it may be very much higher, than it would be under a tenancy that provided for reviews of the rent at regular intervals and, accordingly, that fixed rent may represent a real burden on the tenant. The need for a change here is an important reason for pressing ahead with this Bill in the form in which it is before the House, that is, without proposing in this Bill the consolidation of all the Landlord and Tenant Acts.
A further change that is proposed 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. It is now proposed 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. This should have important benefits in terms of security of tenure.
Other proposals, in Part IV of the Bill, concern changes in the law relating to the procedure to be followed where a tenant wishes to carry out improvements and where he is to qualify for compensation for those improvements in the event that he is leaving when his tenancy terminates. At present an occupational tenant is not entitled to such compensation where he has failed to serve an improvement notice on his landlord. The Bill proposes that compensation be allowed even where that notice has not been served, provided certain conditions are satisfied, of which the one I may mention is a condition that the landlord has not been prejudiced by non-service. It is also proposed that a tenant should be empowered to carry out improvements, even where the landlord objects, except where the landlord is due to recover possession of the premises within the following five years.
Changes of a more or less technical nature that are proposed in Part I of the Bill will extend the right to a new occupational tenancy to Government Departments, charities, sporting or cultural organisations and to business tenants of housing authorities, and will make it clear that that right extends also to local authorities as tenants.
Part IV of the Bill includes—in section 60—a proposal for a new kind of provision in the public interest, in the wider sense, rather than in relief of tenants. This is a proposal to enable a landlord, subject to certain rather stringent conditions, to terminate an occupational tenancy so as to regain possession, before the lease expires, of buildings that are obsolete or are in an obsolete area. 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 court to make an order terminating a tenancy in a case like this. It also provides very stringent safeguards for the tenant. First of all, 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.
I have been dealing with the changes in relation to occupational tenancies that are proposed in Parts I, II and IV of the Bill. I should now like to deal with the changes in Part III. Part III of the Bill concerns reversionary leases, that is, the area of the law at present covered in the main by the Landlord and Tenant (Reversionary Leases) Act, 1958. The proposals in Part III of the Bill involve two main changes in this area of the law. The right to a reversionary lease is being extended to all classes of ground rent lessees who have the right to purchase the fee simple under the 1978 No. 2 Ground Rents Act. This includes not only the classes of lessees who have that right under the Acts of 1958 and 1971 but also the additional classes of lessees who are given the right to purchase the fee simple by the Ground Rents Acts of 1967 and 1978. It is true that the creation of future ground rent leases on dwellinghouses is, in effect, prohibited by what I may call the No. 1 Ground Rents Act of 1978 and it might be considered by some to be inconsistent with the general purpose of that legislation to enable ground rent tenants to renew their expiring ground rent leases, be they either the newly-recognised classes of ground rent lessees or be they those ground rent lessees who already have that right under the Act of 1958. However, if ground rent lessees have not the right to a reversionary lease they are effectually in the position of being forced to buy out their ground rents and their freedom of action is taken away from them. It was never the intention that ground rent legislation should manoeuvre tenants into the position of being forced to exercise their rights of purchase. Moreover, it would be both invidious and unfair to seek to remove the right to a reversionary lease from those classes of lessees who under the Acts of 1958 and 1971 already have that right. In consequence, the Bill proposes the preservation and the extension in scope of the right to a reversionary lease in the manner I have described.
The second main change is one on which I have already touched, namely, that the expressions "building lease" and "proprietary lease" are being dropped from the law and are being replaced in Part III of the Bill by reference to the simplified classes of ground rent lessees that are set out in the 1978 (No. 2) Ground Rents Act.
Certain other changes are proposed in relation to the grant of a reversionary lease, of which the following may be mentioned. The rent to be reserved by the reversionary lease will be determined with due allowance for any improvements that may have been made by the lessee. Furthermore, the refusal of a reversionary lease by a landlord on the grounds that he has rebuilding or development plans will not be upheld by the court unless the landlord has obtained planning permission for the work—this parallels a similar change that is proposed where the refusal of a renewed occupational tenancy is in question. Finally, an applicant for a reversionary lease is no longer being required either to obtain the consent of any under lessees who also have the right to a reversionary lease or to exclude from his application the lands comprised in any such under leases.
Part V of the Bill re-enacts with drafting changes the provisions in Part VI of the Landlord and Tenant Act, 1931, which provide certain reliefs for tenants against covenants in leases of tenements. The expression "tenement" is defined in section 5 of the Bill.
Part VI includes, in section 69, a provision that may be regarded as completing the work of the No. 2 Ground Rents Act of 1978 by giving to ground rent tenants of the State the right to buy out the fee simple of their dwellinghouses under the purchase scheme provided by that Act, subject only to the public interest. The same right is also being given to ground rent tenants who hold under leases given by a harbour authority or by the Commissioners of Irish Lights and who have not that right under the law as it stands. Ground rents on dwellinghouses held from the State or from the other bodies I have mentioned did present a difficulty at the time last year's ground rents legislation was in progress, and the Minister for Justice expressed his intention at that time of finding an acceptable solution. When I myself last spoke in this House on the question I promised the House that the matter would be considered in connection with the Bill that is now before it. What the Bill proposes is that ground rent tenants who hold their dwellinghouses from the State, or from one of the other bodies I have mentioned, shall have the right to buy out the fee simple except where the State authority concerned are satisfied that acquisition of the fee simple by the ground rent tenant would not in a particular case be in the public interest, and where the State authority certifies accordingly.
One other change that I should mention is that, while the Landlord and Tenant Act of 1931 is being repealed in full, section 60 of that Act is not being re-enacted. Section 60 of the 1931 Act provides for the grant of long leases of building ground in urban areas in certain circumstances. The section is highly complicated and the terms of any lease that might be granted under its provisions are uncertain. Moreover, its provisions do nothing to protect the security of tenants and they are something of an oddity in the landlord and tenant code. In fact, section 60 has never been operated and its non-re-enactment will remove an unused provision from the law.
The foregoing are the main changes that the Bill proposes. A number of lesser changes are also proposed and it will be appropriate to deal with these as they arise on Committee Stage. As I have mentioned, most of the changes stem from recommendations of the Landlord and Tenant Commission and I would be remiss if I did not here pay tribute to the painstaking work of the members of the commission. In particular, I should like to record a special tribute to Mr. Justice Conroy, chairman of the commission, for his diligent work as chairman of a series of commissions dealing with landlord and tenant law. The commission are, as I indicated earlier, still engaged in an examination of certain aspects of the post-1922 landlord and tenant code and following that they will, I expect, go on to review both the non-statutory and statutory provisions of landlord and tenant law which pre-date the foundation of the State. I look forward to a successful conclusion to the commission's work with the prospect in due course of a major Bill which will propose a comprehensive, modern code of landlord and tenant law.
I commend the Bill to the House.
