Wednesday, 4 July 1984
Seanad Eireann Debate
Minister for Justice (Mr. Noonan,: Limerick East): The special ground rents purchase scheme provided in Part III of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978 was given a life of five years and that life was extended for a period of 12 months, that is to 31 July next, by the Landlord and Tenant (Ground Rents) (Amendment) Act, 1983, subject to an increase in the fees payable under the scheme. The main purpose of this Bill is to extend the purchase scheme for a further period of three years, subject to a further increase in the fees.
Since 1967 ground rent tenants have had the right to purchase their ground rents under the Landlord and Tenant (Ground Rents) Act, 1967. The 1978 No. 2 Act introduced a special simplified scheme of purchase under which the Land Registry do the legal work at less cost to the applicant than would be involved in buying out under the 1967 Act. The scheme applies to dwellinghouses. In all, 44,465 dwellinghouse owners had applied under the scheme up to the end of May. Of these over 20,000, or 45 per cent had lodged their applications  since 1 January 1983. The arrears on hands on 31 May 1984 amounted to 16,968. These comprised 13,083 applications made with the consent of the landlords and 3,885 applications for arbitration.
Members of the House may recall that one reason for last year's extension of the scheme by one year was the large number of applications that were received by the Land Registry as the original five-year period drew to a close and the fact that, were the scheme not to be extended, many intending purchasers might have been unable to lodge completed applications in time. Moreover, the rate at which applications were being made was creating a situation where the Land Registry staff concerned would in any event have to continue their work under the scheme until well after the original termination date. The experience since is that the Land Registry have continued to receive fresh applications at a rate of about 400 per month. The Land Registry staff must therefore continue to be employed for some time — a time stretching to years rather than to months only — in processing the applications in hand, details of which I have given. Moreover, it is clear that there are still numbers of ground rent tenants who are anxious to avail themselves of the scheme and in all the circumstances the Government have decided to propose a further extension of the scheme.
The extension of the scheme raises the question of the cost of its operation. The fees that were originally payable by applicants under the scheme were little more than nominal, and were fixed so as to encourage the abolition by purchase of ground rents on dwellinghouses. However, those fees were substantially increased last year on the basis that, if the life of the scheme were to be extended beyond the original five-year period, the scheme must begin to pay its way. The 1983 Act sets out the fees that are at present payable by a purchaser who is in occupation of the relevant dwellinghouse. In the case of a dwelling where the person entitled to acquire the ground rent is not in occupation, the fees to be taken by the Land Registry are fixed by  regulations made under the 1978 No. 2 Act. Although last years' extension of the scheme was, as I have said, accompanied by an increase in the fees payable, public funds have continued to bear a significant part of the cost of the scheme mainly because of the large number of applications that were made at the old fees and that are still being processed. It is difficult to estimate what level of fees would actually cover costs if arrears did not come into the reckoning, but the best estimate that can be made is that an increase of 75 per cent in the level of fees is the minimum that is needed to cover costs in respect of new applications. Provision for an increase of that order is made in section 3 of the Bill so far as concerns applications from purchasers who are in occupation of their dwellinghouses. Corresponding increases in the remaining fees will be promulgated by way of a fees order, following enactment into law of this Bill. Since costs could change in the course of the proposed three-year extension of the scheme and since the increase of 75 per cent is very much a minimum estimate, it is necessary to make provision for further changes in the level of the fees so as to keep them in line with costs, and that is what is proposed in subsection (2) of section 3 of the Bill. It provides that the existing power to change fees by order will in future extend to all fees — up to the present some fees have been fixed by the statute and could not be changed by order.
Section 4 proposes certain changes in relation to the fee payable under the section 26 of the 1978 No. 2 Act. Section 26 of that Act gives ground rent tenants of housing authorities the right to buy out the fee simple, subject to certain conditions. The fee simple is vested in the purchasing lessee by way of a transfer order under section 90 of the Housing Act, 1966, and section 26 of the 1978 No. 2 Act fixes a fee of £5 for the issue of that transfer order. This fee has so far remained unchanged, despite last year's increase in the fees payable under the Land Registry scheme. It may perhaps be accepted that the considerations that apply in the case of the section 26 fee are not those that apply in the case of the  Land Registry fees. Nevertheless the lowest fee payable under the Land Registry scheme was also £5 in 1978, was increased to £15 last year and is now to become £26. In the circumstances it is only reasonable that the section 26 fee should now be increased to £20, and that it should be open to variation in the future by way of a fees order in the same way as fees generally may be so varied. Section 4 provides for these changes. Any fees order under section 26 of the 1978 No. 2 Act will, it is proposed, be made by the Minister for the Environment, since the section 26 fee is payable to a housing authority.
Mr. E. Ryan: I would like to welcome this Bill, or certainly welcome the part of it which extends the time for making these applications. I am very glad, indeed, to hear from the Minister that so many people have made application over the years and that, in fact, far from the applications diminishing they are still quite considerable in number, and there is still a steady flow. I hope this will continue. If it is necessary to extend this Bill again sometime in the future, I have no doubt that this House would be agreeable to do so.
This Bill and the original Bill in 1978 are the proper way to deal with the problem of ground rents. I have never been convinced of the merits of the ground rents abolition campaign quite apart from constitutional difficulty, which is an insurmountable difficulty unless a fundamental change is made in the Constitution. The campaigners said that there are unusual cases, hardship cases, and so on, and, of course, there are unusual cases. It is very easy to arouse a certain amount of emotion by talking about absentee landlords and that kind of thing, but they are exceptional and, as time goes on, they are more and more exceptional. The campaign is not relevant to the vast majority of cases.
This is the proper and sensible way to deal with this problem. The Bill which was introduced by Fianna Fáil in 1978 was intended to meet this problem. There  was a great deal of agitation and discussion about ground rents and all parties at the time undertook to make some effort to deal with the problem. What was introduced in the 1978 Act did not satisfy everybody but nevertheless it was a very good effort to meet this problem.
The important parts of the 1978 Act were, first of all, to make the procedure simple and, secondly, to make it as cheap as possible and, by so doing, to defuse the agitation for the abolition of ground rents. The fees were small in 1978 and there was very little complaint at that time in relation to the fees. It is fair to say that some increase in the fee might be justified at this stage, but the position is gone beyond that. It is no longer a nominal fee. A nominal fee was one of the essential ingredients of the Act. Now the fees are rather formidable and are such that people will think twice about adopting this approach to the ground rents problem and, instead of doing so, will be liable to join the ground rents abolition campaign, which would be most unfortunate.
The Bill not only introduces specific increases in the fees but also gives the Minister unlimited power to increase fees in the future. Having regard to the fact that the ground rents campaign is still going on, that there is still a certain amount of agitation, and that this rather futile campaign is still being promoted, it is unfortunate that the fees were increased to the extent provided for in the Bill and that power is given to increase them further. There are many Bills on which the Minister or the Government would be entitled to say the State is providing certain services and the fees for these services should have some relation to what they actually cost, and to the effect of inflation, but this is a different Bill. This is a Bill to deal with a very difficult situation, many people feel it is a rather fundamental situation, and the Government should go out of their way to try to deal with that problem, to defuse that agitation and to ensure that the fees paid are purely nominal ones.
If my suggestion is adopted it will cost the Government more than the actual  fees paid. Nevertheless, to deal with this most unusual problem it would be well worth while for the Government to continue to charge what could be regarded as nominal fees, and to encourage people to adopt this means of dealing with their ground rent problem rather than the other means — agitation and campaigns to try to abolish the whole system. Whereas I welcome the extension of the time for applying under this Act, it is regrettable that the fees have been increased to the extent to which they have been increased under this Bill.
Mr. Ferris: I welcome the extension of the time for applicants under the old scheme and, indeed, new applications arising from this extension. I do not necessarily agree with Senator Eoin Ryan that the campaign is futile. I ask the Minister to continue his efforts to overcome legal or constitutional loopholes in the area of ground rents. It is a highly emotive subject particularly in Dublin city where large numbers of householders have refused to pay their ground rents as a matter of principle.
There has been a well documented and well orchestrated campaign against the principle of ground rents. Many of us share the view that they are an old and outdated means of taxation on people and on property which they legally own apart from the actual ground on which the house is built. There is something intrinsically and fundamentally wrong with a system which allows old landlords and, indeed, absentee landlords throughout the world who will probably never come back to this country again, technically and legally to have access to land on which Houses have been standing for well nigh 100 years. I hope the Minister, who is progressive in many areas of legislation, will continue to use his ingenuity to overcome whatever legal problems exist. The Government should have the courage to deal with whatever constitutional problems there may be in this area. Pending that, the extension of time must be welcomed. I am not sure about the actual date on which these increases will apply.
Mr. Ferris: I see. I presume also that applicants who have already instructed the agents of landlords and submitted money to them, although they may not necessarily have applied yet to the Land Registry, will be dealt with under the old scheme of fees. It is a matter for the agents of landlords to process the application through the Land Registry Office. I know some people who have been forced into this situation and who have surrendered some money to the agents of landlords. I am particularly thinking of the Smith-Barry estate in Tipperary who were extensive landlords in that area, going back to the historical building of the new town of Tipperary. People's leases are running out and they are being asked for extraordinarily high figures. They are trying to negotiate with the agents of the landlords.
The other section of the Bill which concerns me a little is the one dealing with the amendment of section 26 of the Act which refers to tenancies which have been purchased by housing authority tenants. These were vesting and house purchase schemes and all of us had asked tenants to avail of them. It is everybody's aspiration if at all possible to own their own house. I notice in quite a lot of the vesting orders that there is a small fee of 5p per year written in which maintains some control over the actual legality to the title. It is in that area I presume that the Minister under section 90 of the Housing Act is allowing the tenant to purchase out that fee simple over a number of years. He is suggesting that a fee of £20 would be charged for this type of application to the Land Registry. We are now dealing with people who are certainly not the owners of very exclusive houses but who made an effort to acquire their houses under a purchase scheme with the Department of the Environment. I would like that every facility be given them to acquire complete and full ownership of their houses, to the title and to the land on which their houses were built at as nominal a figure as possible. While I do not think that £20 is an exhorbitant  figure, I do not think it is in keeping with the type of house that we have been dealing with and I ask the Minister to leave such applicants alone. They are the lowest in the bracket of people wanting to acquire their own houses.
Other than that I welcome the Bill which will deal with a rather large number of applicants, something like 17,000 people, who are in arrears. I have no doubt there will be more applicants until such time as this Government come to grips with the constitutional problem of ground rents.
Mr. B. Ryan: I am glad that the provisions that were made initially to enable people to buy out their ground rents are being extended and continued but I would throw in a little caveat. People like us refer to sums of £20 and £30 as nominal sums and they are for us. However, there are many people who perhaps would find £20 to be far from a nominal sum.
I support what Senator Ferris said in his concluding remarks. Ground rents are a relic of feudalism. The idea that somebody can retain some claim to a piece of property ad infinitum, and the idea that we as a community cannot legislate that out of existence because of the state of our Constitution should cause us great concern. We have a great need to have a Constitution which protects the rights of individuals, including may I say, the right of an individual to security in the ownership of his or her property. I have no ideological problem with people having security of ownership of their property. That right to own property is enshrined in many constitutions including, offhand, the constitution of the People's Republic of Cuba but to suggest that that can be extended so that absentee landlords and all sorts of extraordinary individuals can claim a constitutional right either to ground rent or to compensation for it is pushing what is a necessary and proper provision to the point of extreme ludicrousness. I simply say again that if we are to have a proper balance in our social legislation and a proper balance in our general attempts to regulate the inter-relationship between property ownership  and the community, then the whole question of this extraordinary narrow and conservative constitutional protection of ownership of property and the right to own property which preserves rights such as this with almost absolute certainty and without qualification will have to be tackled sooner or later.
Unlike my namesake, therefore, I am very pleased that there is a ground rents campaign going on. I hope it will be successful and I hope at the end of the day that its final objective will be achieved, which is the constitutional amendment to ensure that what is an extraordinary relic of feudalism will be once and for all abolished. The idea that some sort of lasting title exists because of historical circumstances shall be abolished once and for all.
I welcome the Bill. I am not going to get into too much of an argument about the fees. For most property owners they are not unreasonable. However, as society has developed, as middle-aged people lose their jobs and as redundancies extend, the sort of fees that are mentioned could become quite a severe penalty for somebody who has a very limited income. It might be well to have a look at a provision for people of limited income to be able to get around this. There is something extraordinary in somebody with a very limited income having the option either of paying £50, £60 or £70 or more to buy out their ground rents or else having to pay ground rent indefinitely to somebody who is vastly more wealthy and more secure than they are themselves. That is why I suggest that there should be review of the position of people on low incomes in this context. While it is not a large sum to us, there are many people to whom £40 or £50 is probably as big as their total weekly income. We should look at things like that in their perspective and not in ours.
Mr. Durcan: If this Bill is enacted it will extend for a further period of three  years the operation of the special ground rents purchase scheme introduced by the 1978 Landlord and Tenant (Ground Rents) Act. It will also increase the fees payable in respect of such applications to the Land Registry. It is interesting to note that the operation of the 1978 Act was extended for one year in 1983 and that a mere 12 months later we are faced with another amending statute which extends for a further period of three years the operation of the provisions of that Act. The reason for that probably has to do with the lack of staff in the Land Registry. Rather than be faced with a situation where we will be extending this legislation again in three years time, the Minister should ensure that additional staff are made available within the ground rents section of the Land Registry to allow outstanding applications to be disposed of at the earliest possible date.
Reference has been made here to the ground rents abolition campaign and the publicity which that campaign has achieved in the past. It is a pity that State bodies like the Land Registry do not resort to a little publicity at times when they are trying to promote particular schemes such as the scheme operating under this legislation. By examining the way that State-sponsored bodies like Bord Telecom Éireann and An Post have publicised schemes operating within their confines a lesson could be learned. It is a pity the Land Registry do not take steps to ensure that the operations of this scheme is made available to everybody who would be interested. I make that point despite the fact that the Land Registry appears to be over-burdened with applications of this nature. The existence of the scheme should be publicised to try to get the problem cleared up to the maximum possible extent within the next three years.
I also think that the mapping section of the Land Registry so far as applications for the purchase of ground rents in rural areas are concerned should prepare scheme maps. I say this from experience of the towns of Castlebar and Westport where ground rent interests vest in the estates of the missing Earl of Lucan and the current Marquis of Sligo respectively.  These interests are by and large registered in the Land Registry on freehold folios owned by the holders of these estates, but when a person wishes to apply to purchase the ground rent interest he has to take steps to employ his own engineer to map that interest on the ground in accordance with Land Registry regulations. The cost of doing that in practical terms could amount to about £50 in each particular case. It would be of benefit for everybody in situations of that nature if master scheme maps were made available for towns where particular ground landlords hold substantial interests. That would certainly cut out an amount of cost in the case of the older ground rent interests.
The increase in fees in respect of this legislation is understandable. Some people speak here as though the State should subsidise every aspect of man's activity including the purchase of a property interest. I am amazed that people occasionally come into this House and attack the rights of property and at other times make suggestions that the State should subsidise people to acquire a right in property. The purchase of a ground rent interest is the purchase of a right in property. The ground rents section of the Land Registry should operate, as far as possible, on the basis of the minimum cost to the State.
The whole question of ground rents is an emotive one. In recent years it has become a political issue and certain political groups have peddled the issue for the purpose of achieving maximum political advantage. As Senator Eoin Ryan said, there are constitutional difficulties with regard to the abolition of any property interest and this applies here even at local level.
In my part of the country this issue is being peddled for political advantage. People have been suggesting that it is not possible to purchase ground rent interests in the Earl of Lucan's estate, but that is not the case. Reference has also been made here today to the fact that these are interests by and large held by absentee landlords and Senator Brendan Ryan used the phrase “a relic of feudalism”.  The impression created in people's minds is that all these interests are owned by people who have no commitment to this State and who are not Irish. If one were to carry out a survey on extant ground rent interests one would find that the great majority of them, particularly in the cities, are owned by Irish people and have been created in recent years. It is quite amazing how the wrong impression can be conveyed regarding the ownership of these interests.
I fully support this Bill and I hope that the Minister will take account of the points I made regarding expediting applications of this nature within the Land Registry, making additional staff available to deal with them and publicising the operation of this scheme.
Mr. Fitzsimons: I welcome the Bill. Like other Members of the House I am totally opposed to the principle of ground rents. It is unfortunate that there has to be such an increase in the fees chargeable as the changing and increasing of fees by order might cause disquiet. If the fees were deliberately nominal it would be an encouragement to people to purchase their ground rents and it is a pity that this incentive, to some extent, will be lost.
The extension of the scheme for one year was, as the Minister said, very necessary. Many people at that time felt one was not sufficient and I would like to ask the Minister if he feels that this three-year extension is long enough. Everyone agrees that the flow of applications has been satisfactory and I hope that, through this Bill, it will continue to be so.
Mr. Harte: It would be hypocritical to say that I welcome the Bill because when you do not believe in the concept of ground rents, there is no point in saying that you welcome a system that encourages people to purchase ground rents which they should have acquired when they purchased the property. I do not agree with ground rents and I know the problem that faces people in this regard. I have to live with it, it is a fact of life and a way if dealing with an awkward situation.
 Quite a few people are in agreement that ground rents should be abolished and that there should not be any future problems in this regard. On the other hand, people want an extension of the option to purchase. That is a contradiction. You are either in favour of this or you are in favour of going all out as hard as possible to get the Constitution changed. The Labour Party believe that there should not be any ground rents. But we have not been able to get any legal support for having the Constitution changed. I do not propose to argue the question of whether you charge a fee, since I think they should be abolished. The Minister mentioned increasing the fees. If we are going to have further extensions the whole idea of buying out the ground rents will go.
It is not a question of idealism on my part. I never denied anybody the right to own property but I believe when you buy a house you should own the ground it stands on. I will vote for the Bill but I will support the campaign for the abolition of ground rents.
Minister for Justice (Mr. Noonan,: Limerick East): I should like to thank the Senators for their contributions and their general support of the measures undertaken. The cost of purchasing grounds rents is based on a sum of money which one would invest in the most recent national loan which would throw up an interest equivalent to the ground rent. When the Bill was introduced in 1978 the multiplier was around 13 times the ground rent. For example, if the ground rent was £15, which is the most normal one in suburbia, you multiply that by something over 13. As interest rates go up, naturally the multiplier comes down. At present the multiplier is about 7.2. So you are talking about seven times £15 which is £105 and a fee which was £15 and is now going to £26. So even though the percentage increase in the fee is quite large you are talking about an increase of £11 on what is by far the most common case where there is purchase by consent.
That is the theory but as any of us who are familiar with the situation know, what happens on the ground is different. Many  ground landlords find it increasingly difficult to collect ground rents. They are very happy when a residents' association approaches them with a proposition to purchase. They will make an arrangement for far less than the multiplier of seven. I have heard of cases where they will sell down as low as three times the ground rent. It is quite common to make an arrangement with a multiplier of four or five. We are talking about four times £15 — if we take £15 as the most common ground rent or indeed £20 — making £60 plus £26, that is a total of £86. If we move away from the percentages and look at the global figures that is what we are talking about.
A number of Senators have said that they disagree with the principle of ground rent and that we should make changes to abolish ground rent completely. The difficulty is, as Senator Brendan Ryan pointed out, that people have a constitutional right to private property. Like all constitutional or fundamental rights the right is indivisible. We cannot pick and choose to whom the rights of the Constitution apply. The entitlement to ground rent is a form of private property. We may not like that, we may not like the idea that people can collect ground rent; we may not agree with the principle that people can collect ground rent. But the Constitution guarantees the right to private property. I do not think we should go down the road where we would suggest making changes in the Constitution to protect the rights of some just because we agree that they should have such rights but would not protect the rights of others because we did not like the nature of their activity. That would be a very dangerous position.
Mr. Noonan: (Limerick East): It would be a very dangerous basis from which to proceed towards constitutional change. Take another example, the right to vote. Suppose we decided that we would apply the right to vote only to people we liked, or we departed from our own jurisdiction  and looked at other jurisdictions that do not have the same kind of homogeneous society and denied the vote to blacks or to people of different religions because we did not like what they stood for or we did not like their political activities. Take the right to life. If we suggested we would diminish constitutionally the right to life because we felt in certain circumstances there were people to whom the right did not necessarily extend——
Mr. Noonan: (Limerick East): I am making the point here that because of that difficulty — and I would be surprised if a majority of the Seanad advocated that we would change to allow the right to private property to some and not to others — the position then is that the only way we can abolish ground rent is to abolish it by compensation. I do not know what the compensatory figures would be, but I have been given figures which range between £30 million and £60 million. I am quite sure also that, if it came to compensation, we would not be talking about a residents' association agreeing to a multiplier of four with the landlord; we would be talking about the landlord holding out for the last decimal point of the multiplier under the purchase scheme of the 1978 Act. No new ground rents on dwelling houses have been created since 1978; they cannot be. We are talking about houses built prior to 1978. For the purposes of the argument and for the purposes of the Bill, we are talking about private houses. We are talking about people who own an asset ranging from somewhere between £30,000 and whatever ceiling you like to put on the type of house, £80,000, £90,000, £100,000. Those who advocate abolition by compensating  landlords for the loss of their interest are really saying that there should be a transfer from the taxpayer to relieve the burden on people who already own their own houses. In the other House I have heard people putting forward that argument from an ideological position which I thought would have differed from their most advertised ideological position. I cannot see how anybody can sustain an argument which says that every time a PAYE worker, an old age pensioner or the poor, buy anything on which there is VAT, or every time that they pay income tax that money should be transferred so that people who already own their own houses should be compensated to the extent of giving them an extra benefit which ranges between £80 and £120 in general terms.
Senators argued about the increase in the fees, and I argue along the same lines. Why should the general taxpayer subsidise the administrative costs of ground rent purchase in the Land Registry? Why should the general run of the taxpayers be put in a situation where some of their money is transferred into the Land Registry so that administration can be carried out not at real cost but at a nominal fee to enable people to acquire that total interest in their houses, in their own assets? I do not think that stands up to any serious argument either.
The scheme introduced in 1978 was in response to a particular situation and the attempt was to abolish ground rents by purchase. A five year period to give people the opportunity to buy out their houses was mentioned and the charge of a nominal fee was justified. Now we have come into the areas of extensions I think there should be a fee which compensates the Land Registry and the taxpayer for the administrative costs. We are not talking about huge fees; we are talking about an increase from £15 to £26 in the most common cases where there is purchase by consent. Remember, we are talking about people who own their own houses and who want the fee simple. On the local authority side the fee was £5 and it is now £20. Again, we are talking about people who are purchasing their houses  under one scheme or another. They are becoming property owners. They want the exclusive right to that property by getting the fee simple as well. This has an administrative cost and it is more appropriate that the administrative cost should be borne by the purchaser rather than by the taxpayer. That is the particular issue in the increase in fees.
Some people seemed to think that it was a one year extension, but it is a three year extension. Senator Fitzsimons asked would this be long enough? There are certain difficulties emerging in the purchase scheme on the vesting certificate side. Some lending agencies have questioned the vesting certificate. I will probably be back again at some stage with more extensive proposals amending the 1978 Act because there are some flaws emerging in that Act. The extension period will allow the purchase scheme to continue and will provide adequate time for my Department to study the situation which is now emerging and to see if they can come up with appropriate amendments to the 1978 Act.
Senator Ferris asked when the current one year scheme will run out. That will be from 1 August. Anybody who applies in the meantime will have it at the old fees, and I hope that there will be applications. The powers to vary the fee by the Minister on regulation is not a power solely to increase; it is a power to very. I know I would be greeted with horselaughs if I suggested the Minister might vary down as well as varying up the fees, but I would be prepared to do that if, for example, it emerged that over the next 12 months very few people were availing of the purchase scheme. If the level of fee being charged seemed to be the inhibiting factor, then I would be prepared to vary the fee downward. I would be anxious that the maximum possible number of people would avail of the purchase scheme, and would continue to avail of it, so that ground rents, and the annoyance of ground rents for those whom they annoy, would be removed as an irritant by purchase.
Mr. Noonan: (Limerick East): Yes, of course. Senator Durcan talked about the Land Registry. I will take up the point he made about mapping in certain areas, especially in Mayo where there seems to be a particular difficulty. I do not think there was any other general point raised. Thank you.
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