John Paul Phelan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

At the outset, I wish to acknowledge the former Ceann Comhairle. When I was a Member of this House, he was the Ceann Comhairle of the other House. I did not have any opportunity to cross him then and I do not think I will have any opportunity to cross him now. I also acknowledge the other people from Monaghan who are here; Councillor Campbell, whom I have known for years, and in particular the O'Gormans. I was actually studying land law in the King's Inns when the Shirley v. O'Gorman case was happening. I must state that I found the study of land law quite tedious even though I am a farmer's son. However, the facts, issues and matters that are contained therein are fundamental for Irish people. I refer to the ability to one one's own house or property and note the foundation of the State has its origins in the battle for the land, as it was, at the end of the 19th century, and the subsequent Land Acts that led to most landed estates being broken up.

Right across the country, however, not least in my own part of the south east, the issue of ground rents still remains contentious. I went to school not in County Kilkenny but in New Ross, County Wexford. The Tottenham estate still owns much of the ground rent in that particular town. I commend Senators Gallagher, Ardagh and Swanick on their proposal of this Bill, and state from the outset that the Government will not be opposing it. In principle, we agree with what the Senators are trying to address. It contains proposals to amend the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 to facilitate acquisition of freehold titles by lessees and ground rent tenants. I also acknowledge the efforts of Senator Coffey. The Minister for Culture, Heritage and the Gaeltacht, Deputy Humphreys, has been in contact with me about this before. While I am taking this Bill for the Minister for Justice and Equality, Deputy Flanagan, it is fair to say that the local government area for which I am responsible also encroaches on this area.

That said, I must admit a vested interest in this regard. I bought a house in Dublin before the economic collapse and am what one might term an accidental landlord. Senator Ó Clochartaigh's comments, likening people who are renting out private houses at present with the old British landlords and the ground rent landlords across the country, were outrageous. Lest we forget, many of the people who own these ground rents are Irish citizens, not British landlords. Some are British, as outlined by Senator Ardagh, but a lot of them are people who are residents or citizens here. However, it is correct and proper to amend this Act from 1978, the year I was born. Moreover, I commend the O'Gormans. It is good to see that they are here. They took a long legal road to assert their rights and they represent many citizens across the country who find themselves in a similar situation.

I add, however, that the Bill requires detailed scrutiny to ensure its consistency with the property rights safeguards in the Constitution, as well as coherence with other statutory provisions governing the purchase of ground rents. The Minister informs me that his Department is consulting with the Office of the Attorney General on these issues. Arising from this, he expects to be in a position to table a number of Committee Stage amendments in due course.

As Senators will be aware, the rights of tenants occupying property under long leases to acquire freehold title has been a contentious issue since at least the 19th century. Such tenants normally pay a small yearly rent to the ground rent landlord and the issues that arise are the nature and extent of the tenant's right to acquire the freehold title.

Statutory reforms since the 1960s have strengthened the rights of such tenants to acquire a freehold in the property.The Landlord and Tenant (Ground Rents) Act 1967 gave statutory effect to the principal recommendation of the report of the Ground Rents Commission chaired by Judge Conroy. Under the Act, certain ground rent tenants, including both business and residential tenants, acquired the right to purchase the ground rent in their property.

The Landlord and Tenant (Ground Rents) Act 1978 prohibited the creation of new ground rents in respect of dwellings. Leases after that date are only valid if they operate as a renewal of an existing lease. The Landlord and Tenant (Ground Rents) (No. 2) Act 1978 gave the Land Registry, now the Property Registration Authority, responsibility for operating a low-cost scheme for tenants acquiring the freehold of dwelling-houses.

To date, more than 80,000 ground rents have been bought out under this statutory scheme. These important statutes seek to establish an appropriate balance between a tenant's right to acquire the freehold title for reasons of public interest on the one hand, and the property rights of ground rent landlords, that are protected under Article 40.3 and Article 43 of the Constitution on the other.

The Private Members' Bill we are discussing today seeks to address what are seen as adverse consequences for ground rent tenants arising from the Supreme Court ruling of 2012. On 2 February 2012, the Supreme Court delivered its judgment in the protracted legal proceedings of Shirley vO'Gorman, which concerned the right of ground rent tenants to purchase ground rents in their properties in certain circumstances. The case arose from an application to acquire freehold title in Carrickmacross, County Monaghan. While the tenant's application in this case was ultimately successful, the manner in which the Supreme Court interpreted certain technical provisions of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 effectively narrowed the scope of the ground rents purchase scheme under that Act. The ruling means that certain ground rent tenants who had been eligible to acquire the freehold title in their properties may no longer be able to do so. This narrowing of the grounds on which a ground rent tenant is permitted to acquire freehold title affects other ground rent tenants in Carrickmacross and elsewhere in the State. As mentioned earlier, a ground rent tenant's right to acquire the freehold in property, that is, to purchase the ground rent, was first introduced in the Landlord and Tenant (Ground Rents) Act 1967. While this legislation remains relevant in the case of many commercial properties, the later Landlord and Tenant (Ground Rents) (No. 2) Act 1978 contains the statutory rules that generally apply to acquisition of the freehold title in the case of dwellings.

Sections 9 and 10 of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978 specify the criteria that determine a ground rent tenant's eligibility to acquire the freehold title in the case of dwellings. Section 9 provides, inter alia, that such tenants have a right to acquire freehold title where there are permanent buildings on the land, these buildings are not an "improvement" within the meaning of the Act, and one of the conditions set out in section 10 also applies to the property.

One of the most widely used conditions in section 10, condition no. 2, is where the lease in question is for a period of less than 50 years and the annual ground rent is less than the rateable valuation of the property. Moreover, while this condition recognises that there were buildings already on the land when such a lease was granted, there is a statutory presumption arising from the fact that the rent is at a low level to the effect that the buildings were not erected by the ground rent landlord or the landlord's predecessor in title. However, that presumption may be rebutted in any particular case.

In its ruling in the Shirley vO'Gorman case, the Supreme Court took the view that the ground rent tenant is ineligible to acquire the freehold unless all the buildings had been built by him or her and not by the landlord. The court also ruled that the definition of "predecessors in title" should be interpreted in a wide manner to include works by all previous owners, that is, not only the ground rent landlord but also any earlier tenants of the property in cases in which the landlord had taken repossession between tenancies.

The overall effect of the ruling in the Shirley vO'Gorman case is to narrow the scope of the ground rent purchase scheme. The Private Members' Bill before the House today seeks to address the matters arising from the Supreme Court in this ruling by means of amendments to sections 9 and 10 of the Landlord and Tenant (Ground Rents) (No. 2) Act 1978. In Section 9, the Bill proposes to repeal both subsection 1(b) and subsection 2, which contain the "improvement" conditions. Instead, the Bill proposes the insertion of a revised definition of "permanent buildings" in a new subsection 6. It would provide that the right to acquire the freehold would in future apply where additions, alterations or extensions to the original buildings had caused it to lose its original identity or had caused an extension in its usable area by not less than 50%.In addition, the Bill proposes an amendment to condition 2 in section 10 that would seek to make it clear that the reference to "predecessor in title" would exclude any building works carried out by any previous tenants of the property.

There is merit in the Bill's objective to broaden ground rents tenants' right to acquire the fee simple of property and that is why the Government has decided not to oppose it today. In fact, we are quite supportive of what the Bill seeks to do. However, as I mentioned earlier, a number of references in the Bill require careful scrutiny to ensure that they do not clash with existing ground rent legislation. The Minister refers particularly to references to "extension of its usable area" and "previous holder of the lessee's interest". The Minister is, of course, anxious to ensure that any amendments to ground rents legislation will not lead to further litigation challenging its constitutionality. That is why I have indicated that certain Committee Stage amendments may be required following completion of the examination that is currently taking place in the Office of the Attorney General.

As I have stated, the Government supports broadly the policy objective in terms of the gaps the Bill seeks to fill and will not be opposing it on Second Stage. Moreover, any future amendments that may be tabled at later Stages will seek to ensure that the Bill's provisions are coherent with other ground rents legislation and consistent with the Constitution.