Dáil Éireann - Volume 602 - 19 May, 2005
Landlord and Tenant (Ground Rents) Bill 2005: Second and Subsequent Stages.
Mr. Martin Mr. Martin
Mr. Martin: I move: “That the Bill be now read a Second Time.”
The Landlord and Tenant (Ground Rents) Bill 2005 is a short but vital Bill which proposes to protect the State’s interests in property that has been acquired for industrial development purposes by IDA Ireland, Shannon Development and Udarás na Gaeltachta by including these bodies among the State authorities that are not bound by the Landlord and Tenant (Ground Rents) (No.2) Act 1978.
Section 16 of the Industrial Development Act 1986 empowers IDA Ireland to purchase, lease and dispose of property for the establishment, development or maintenance of an industrial  undertaking but for no other purpose. This was amended by the Industrial Development Act 1995 to permit IDA Ireland to dispose of properties for other purposes but only with the express consent of the Minister for Enterprise, Trade and Employment. To comply with the requirement of the 1986 Act and for good estate management reasons, IDA Ireland adopted the practice of selling property by way of long lease, usually for a term of 999 years, with a covenant restricting the use of the land to manufacturing or the supply of internationally traded services. The leases also contain provision for rent review which removes them from the scope of the provisions of the Landlord and Tenant Acts that entitle a leaseholder to acquire the fee simple. Acquisition of the fee simple under the Acts would result in the covenant restricting the use of the land being extinguished. IDA Ireland estimates that it has entered into over 700 such leases.
In December 1981, IDA Ireland granted a lease of a unit in one of its industrial estates to a client company which subsequently erected industrial premises on the land. The original client assigned its interest to a second company in 2000 which, in turn, granted a sub-lease to a third company in November 2004. The following day a notice of intention to acquire the fee simple interest was served on IDA Ireland by the third company. It transpired that the sub-lease had been structured in such a manner — entailing a term of 50 years plus one day, the payment of a fee and no provision for rent review — as to comply with the conditions in the Landlord and Tenant Acts entitling a lessee to acquire the fee simple. The second and third companies are connected companies.
IDA Ireland contested the application when it was heard before the county registrar on 7 April 2005 and the hearing was first adjourned to 18 April and subsequently to 17 May. However, senior counsel advised IDA Ireland that the sub-lease conferred a statutory entitlement to acquire the freehold interest. This was confirmed by advice provided to the Attorney General. On the basis of this advice, the IDA decided to negotiate a settlement and agreed a price for the conveyance of the fee simple. Having been advised by the Attorney General, I decided to grant my consent to this settlement to secure the best return to the Exchequer in the circumstances. The county registrar was informed of the proposed settlement at the resumed hearing on Tuesday, 17 May.
This case, which was first brought to my Department’s attention on 2 March 2005, highlights that a legitimate scheme can be devised whereby sub-leases created by lessees can establish an entitlement for the sub-lessee to acquire the fee simple, thus extinguishing restrictive covenants in the head lease. This anomalous situation, whereby a sub-lessee can extinguish an agreement between the lessee and a third party, was noted by the Law Reform Commission in 1989 and again in 1992. This has serious impli cations for IDA Ireland both in the execution of its statutory functions and also in the possible loss of value to the State in any sale of its land assets. In addition, inquiries by my Department have shown that there are also similar implications for Shannon Free Airport Development Company and Údarás na Gaeltachta in the operation of their property functions related to their industrial development roles.
On learning of this issue, my Department immediately examined the matter, including initial examination of the legal and practical implications both in the specific case cited above and the general implications in respect of the impact on the role and effectiveness of the State’s industrial development agencies and the assets they hold on behalf of the State. When these became clearer, the matter was brought to my attention on 13 April and a process was put in place to remedy the situation. This has led to the Bill which I am presenting to the Houses of the Oireachtas today.
High standard property solutions, both business parks and buildings, for both inward investment and indigenous enterprises are crucial for regional industrial development in Ireland. To provide attractive locations for such inward investment and indigenous enterprise, elaborate master plans have been drawn up for such estates. If individual tenants are entitled to purchase the fee simple, thereby circumventing the covenants in the original head leases, then the agencies concerned will not be able to ensure that such property continues to be used for the legislative purposes for which it was provided. In effect, the agencies’ ability to control activities on their industrial estates will be undermined.
As well as giving rise to a situation whereby State assets are not being used for the purposes of each of the agencies’ industrial development mandate, the agencies will also be faced with estate management issues in that they will not be able to enforce covenants such as “quiet enjoyment” on their estates. It is also unlikely that a tenant will continue to pay service charges if another occupier is not paying similar charges. There will also be a loss in the value of State assets. Using the sublease mechanism, the private sector may be put in a position to make substantial gains from property, which was originally provided by Exchequer funding. There is a substantial difference in value between a freehold title and a leasehold title subject to covenants and it is clear that the valuation mechanism set out in the landlord and tenant legislation, which is based on a multiple of the ground rent, will not yield that value to the head lessor, in this case, the three named agencies.
The selling price sought by the agencies is determined by valuation, which is based on the existence of the restrictive user covenants. If the covenants cannot be enforced, the selling price of the land should be higher to reflect the freedom of the purchaser to use the land as he or she pleases. This may make the selling price unattrac tive to potential purchasers, including inward investment concerns, who intend to use the property for qualifying activities, and will consequently adversely affect the agencies’ ability to carry out their industrial development functions.
The advice of the Attorney General was sought regarding the legislative action necessary to prevent the widespread use of the device employed in the case mentioned. The Attorney General has advised that an amendment be made to section 4 of the Landlord and Tenant (Ground Rents) (No. 2) Act, 1978, which states, “This Act shall not bind a Minister of the Government, the Commissioners of Public Works in Ireland or the Irish Land Commission”. The purpose of the amendment would be to include IDA Ireland, Shannon Development and Údarás na Gaeltachta among the “State authorities” that are not bound by the legislation.
IDA Ireland, Shannon Development and Údarás na Gaeltachta enter into leasehold arrangements in respect of their properties in the context of their industrial development functions. IDA Ireland has estimated its ownership of State property is at risk in regard to more than 700 leases. While the current application has been settled out of court, there is no guarantee that it will not act as a catalyst for similar cases. The Attorney General has advised that the proposed legislative amendment could not apply retrospectively where a notice of intention to acquire the fee simple in land leased from one of the agencies has been served.
Accordingly, considerable urgency attaches to securing early passage of the amending provision. I, therefore, urge all Members to support the Bill, the objective of which is to protect the interests of taxpayers and the State. I thank the Opposition Members I briefed last night and this morning for their co-operation and understanding. The Bill was introduced with a view to its passage through both Houses of the Oireachtas in one day, and Presidential signature without delay. In view of the circumstances outlined, this is considered to be of the utmost urgency and necessity.
The Bill is short, containing only four sections. Section 1 defines the relevant Acts. Section 2 provides for the amendment of section 4 of the Landlord and Tenant (Ground Rents) (No.2) Act 1978 by adding the Industrial Development Agency (Ireland), the Shannon Free Airport Development Company and Údarás na Gaeltachta to the list cited. The opportunity has also been taken to remove the reference to the Irish Land Commission, as it no longer exists. Section 3 provides the appropriate savers in respect of notice of intention or an application made regarding the acquisition of the fee simple before the passing of the Bill or any arbitration or appeal to the Circuit Court in respect of such a notice or application. Section 4 sets out the short title of the Bill and the collective citation. I commend the Bill to this House.
Mr. P. Breen Mr. P. Breen
 Mr. P. Breen: I welcome the opportunity to contribute to the debate on this rushed legislation. Fine Gael is fed up with the Government’s attitude to doing business. On the one hand, its attitude to the nation’s infrastructure reflects paralysis and tardiness, as a result of which airports take decades to build, motorways take years and stadiums do not get built at all. On the other hand, a flurry of emergency legislation continually passes through the Chamber and barely a week goes by without an amendment to the Dáil schedule. There is always a crisis. We recently dealt with the aftermath of the Minister’s incompetence and neglect of his duties on nursing home charges, about which the Supreme Court sent the Government packing. It does nobody a service to govern or legislate this way. The House is an instrument of scrutiny and its function is to hold the Executive to account and not to rubber-stamp the Executive’s demands, pat it on the head and say, “There, there”.
The Bill will be passed but it will not be taken in the manner it should following appropriate scrutiny, reflection and debate. However, I thank the Minister and his officials for their briefing earlier and I fully accept the legislation is urgently needed. The Bill covers IDA Ireland, Údarás na Gaeltachta and Shannon Development. The latter is a powerhouse of job creation in my constituency and in the mid-west generally. Shannon Development is a fine agency. It created more than 1,521 jobs in 2004 bringing total employment in the firms with which it deals to 20,000. The companies had a collective turnover of €4.4 billion last year, of which €3 billion comprised exports. It is a good agency and I will support legislation that protects it. The agency does excellent work on research and development projects, the Atlantic technology corridor, the digital media cluster, the western regional tourism initiative and so on, which I welcome.
I am at a loss to know what has happened in recent days to necessitate the Bill’s immediate passage. The Minister stated why the legislation must be passed today but we would have liked more time. In December 1981 the IDA granted a lease of a unit to a client company, which built an industrial premises, as was its right. The company subsequently passed on its interest to another company, which, in turn, passed it on to another in 2004. The three companies were linked. However, subsequently, a notice of intention to acquire a fee simple or freehold was served on the IDA. It beggars belief that the law permitted this to happen. It is amazing that a company can pay €7 million for a property, subject to restricted use, a rent review and long lease, and can then set up a puppet company to circumvent the law. The company attempted to rob the State, even though it did so in a legitimate fashion, and its owners should be completely and utterly ashamed of themselves. I can imagine their lawyers were rubbing their hands with glee when they noticed the flaw in the legislation, which allowed them to seize land designated for the pro motion of enterprise and industry and do as they wished with it. The company is based in Clonshaugh industrial park and it has taken all of us for a ride. In addition, the legislation cannot be made retrospective because an out of court settlement was made and, therefore, the company has got away with it.
The legislation is designed to prevent this and similar companies from legally but immorally stripping the State of its assets. I challenge the company owners, which, despite Dáil privilege, I will not name, though it does not deserve an ounce of kindness from the institutions of the State, to publicly state how it can justify their actions. How can they honestly say they did a good day’s work? How do they sleep at night? It is fair enough that the law was on their side. What moral compass do they use in their everyday lives that allows them to exploit this legislative flaw?
The company acquired the land from IDA Ireland in 1981. At that time, the country was on its knees. Inflation was averaging 20%, unemployment was creeping up to 20%, tax rates were high, emigration was part of everyday life and our debt to gross domestic product ratio was 100%. The economic situation was so bleak that it seemed that the future of the State itself was in doubt. The prospects for our economic improvement were not helped by the bombing campaigns of the IRA and the UVF in Northern Ireland. Against this background, the company in question sought assistance from the IDA. The IDA went to a very bare cupboard and gave the company assistance to make investment attractive.
Now, when the Celtic Tiger is roaring and we have low tax rates, low inflation, higher employment and net inward migration, this company sees an opportunity to make a quick buck and attempts to take it. The motivation is unclear. Perhaps it hopes the land will be zoned as residential land and believes that a few more apartment blocks would not hurt anybody. It may hurt our industrial infrastructure to have apartments located in an industrial park, but the company does not care about this. Maybe the value of the site, zoned industrial, was a major attraction or perhaps this is a test case, with IDA Ireland the potential loser of millions of euro.
In this context, Fine Gael will act appropriately in a patriotic manner and support the Bill. The way business is conducted can be nasty, without a doubt. Despite my criticisms of the rushing of this legislation, I accept that it is a response to the instincts of some in business. I will not table any amendments to the Bill on Committee or Report Stage as I am aware that the Minister is anxious that the Bill be signed by the President before she leaves on a State visit.
My party is willing to trust the Minister and the Government on this legislation and I hope that trust is well placed. I also hope that this Bill covers other areas of concern, for example, industrial land owned by local authorities and semi-State bodies. Can the Minister clarify if such  lands are also protected under this legislation? I will not delay any further because I know that the Minister wants this Bill to be given a speedy passage through the House. Fine Gael will support his efforts in this instance, but I hope that we will not be presented with rushed legislation on a weekly basis.
Ms Burton Ms Burton
Ms Burton: This Government acts very strangely at times. There are a number of items which have been on the legislative programme for a long time, some of which are concerned with property rights, which the Government, perhaps because of an ongoing dispute between the two parties, is unable to address. For example, the Labour Party has been calling for the abolition of ground rents for some time. This Bill deals with property rights but it does not deal with the ground rents issue.
Another more important issue that has not been dealt with is the price of land for schools. When a local authority rezones land for housing purposes, developers benefit by tens of millions of euro through the automatic, follow-on rezoning of sites for schools. The Minister, as a former Minister for Education and Science, knows the extraordinary failure of the Government to take on land speculators regarding the enormous increase in the cost of sites for both houses and schools. School sites in Dublin now cost at least €1 million per acre and this is probably also true of the Cork area.
However, while the Government is aware of this crisis and school groups and communities have often protested outside Leinster House on the issue, this Administration cannot exercise any urgency in dealing with it. We have instead been presented so quickly with a Bill that when I sought advice on it, the only similar emergency legislation some of those to whom I spoke could recall was the Offences Against the State Act which was passed overnight in very different circumstances in 1985. It granted the power to seize identified funds held by the IRA in bank accounts to prevent that organisation from withdrawing moneys at a moment’s notice.
IDA Ireland owns approximately 700 commercial properties and the deal to which the Minister referred concerns one property in Clonshaugh in north Dublin. He informed the House that the purpose of the Bill is to protect the interest that the State holds in property acquired for industrial development purposes by IDA Ireland, Shannon Development and Údarás na Gaeltachta. This is another emergency Bill but it is very different from the British-Irish Agreement (Amendment) Act, which was introduced in a similar cloak and dagger fashion two weeks ago. There is no reference in the explanatory memorandum to a possible technical defect giving rise to this Bill. There was a technical defect in the original British-Irish Agreement legislation concerning Waterways Ireland, which is why the Labour Party supported the emergency amending legislation. It was clear that the Government had intended that the orig inal Act would treat North-South bodies as State authorities for the purposes of landlord and tenant law. It had not achieved its intention because of a drafting error. We supported that Bill because it was intended to restore what everyone understood to be the status quo ante.
Members of the Houses have not been given any explanation about a mistake in the original drafting of the 1978 ground rents legislation. No one could ever reasonably have assumed that IDA Ireland, Údarás na Gaeltachta and the Shannon Free Airport Development Company had, or were ever intended to have, the benefits of State authority status under that Act. No one could have believed that IDA Ireland was a Minister or an authority in the now defunct Land Commission or the Office of Public Works. What is being attempted is a surreptitious amendment to substantive law to correct the case to which the Minister referred. Added to this, the Bill confers substantial new and additional benefits and perhaps it is correct to do so. However, the manner of the Bill’s introduction has not afforded Deputies the opportunity to consult or discuss the merits of conferring these additional benefits. As Deputy Pat Breen said, all Members support IDA Ireland and want to see its status and position protected but we have not been given the opportunity to tease out the substantial additional rights conferred by this Bill.
Policy issues are involved that deserve greater consideration. The Labour Party opposes ground rents and would support any mechanism for their abolition. They are an unnecessary and anachronistic relic of bygone times and serve only to act as an irritating obstruction to the otherwise complete capacity to sell, bequeath and dispose of domestic property. It is only ground rents we are talking about, not normal arms’ length commercial leases. The 1978 Act creates a right to buy out the landlord’s freehold interest where one of a small number of alternative conditions set out in the Act is satisfied. The most generally relevant condition is that the lease is for not less than 50 years and the annual rent is for less than the annual rateable valuation of the property. At a briefing this morning, I understood it is IDA policy to grant 99-year or 999-year leases. How many multinationals could conceivably enjoy the benefits of that sort of tenancy agreement? The agreements covered in the 1978 Act apply to domestic dwellings.
There are a number of constitutional questions. The sole purpose served in introducing this Bill without notice and seeking to have it enacted in one day is to prevent any person paying ground rent to an industrial development body from escaping the application of this measure by serving a notice of intention to acquire the fee simple of his or her property. Has the Attorney General advised whether the statutory entitlement created by the 1978 Act, the right of a property owner, including a domestic property owner, to enlarge his or her interest in that property, is not to be character ised for constitutional purposes as being a property right and so protected from arbitrary interference? Has the Supreme Court judgment on the Health (Amendment) Bill been taken into account?
I call attention to what the current authors of the late Professor Kelly’s textbook, The Irish Constitution, say:
If a statute without little self-evident justification were to exempt the State from legislation regulating ordinary private rights and duties — such as, for example, the landlord and tenant Acts — then its constitutionality would surely be open to question in the light of the specific reservation to this effect contained in Mrs Justice Denham’s judgment.
I am not a lawyer but this is precisely the sort of legislation we are being asked to pass today as speedily as possible and without any opportunity to consider the justification of extending the exemptions from ground rent legislation to include bodies such as IDA Ireland. To be honest, the Minister is leaning on the good will of the different parties in the House who, without exception, are in favour of protecting the interests of the agency. However, we are not lawyers, were not elected as such and have had no time to consult on the matter. This is a bad principle. This is the second time in three weeks that the Government has introduced legislation in a rushed manner to the House.
The Bill will also create another distinction, possibly arbitrary and unjustified, between those tenants who may have commenced the procedure to enlarge their interest before the enactment of this legislation and those who discover today that such an avenue is being shut off. Is that discrimination constitutional? The impression is being given, with which I agree, that we are trying to block a loophole which was found by some clever lawyers who are either property owners or advisers to property owners.
Another question arises. IDA Ireland receives significant amounts of State money, the State spends fortunes on lawyers’ fees and the Attorney General has a very well staffed office. If this was a problem, why was it not noticed? Has the Attorney General conducted a review of similar owners of property who are State-subsidised or State-sponsored bodies in some way, for example, vocational education committees, county councils and so on? Is this provision simply a result of diligence on the part of civil servants in the Department, which would be to their credit, or is it a general point on which the Attorney General has advised? We need information in that regard.
Will section 70 of the 1980 Landlord and Tenant (Amendment) Act, a subsequent provision which modifies the general exemption of State authorities and creates a right to buy out the fee simple in the case of dwelling houses, subject to the right of a State authority to prevent alienation of property where it considers that the public  interest so requires, also apply to these three bodies? Deputies on all sides of the House would be familiar with cases where people acquired property from the State as a result, for example, of being in the employment of the State as soldiers and so on. Have the ramifications of this legislation been checked out and has the Attorney General done a thorough review? If the answer is “No”, one of the three listed bodies will be able to block a tenant from acquiring the fee simple in a dwelling house if it certifies that it is satisfied that such acquisition would not be in the public interest. What precisely does this mean? Is the public interest equivalent to that of the body? Is the maintenance of a body’s property portfolio in the public interest? If so, does it outweigh the importance of the public interest in the effective operation of socially progressive legislation designed to relieve the population from the remnants of an outmoded property interest?
I point this out as a member of the Labour Party because in 1973 when I was a student, Dublin was still reeling from the housing crisis as a consequence of houses falling down in the 1960s. The then Labour Minister for Local Government, Jimmy Tully, gave local authority tenants the right to buy out their houses. This was fundamental reform for the country which has benefited local authority tenants everywhere. We have a progressive attitude here that where people have a long-standing tenancy, particularly in a private dwelling house, they build up and acquire rights to acquire the property. I am not challenging the Minister’s concern with regard to the bodies, such as the IDA, which fall within his remit and his desire to protect their interests, but what ramifications does this have with regard to rights to acquire property in a socially progressive manner from the State in certain circumstances? Have the ramifications been examined?
Although this Bill is very short, introducing such legislation at the last minute means it could go wrong. I am sure the Minister has not forgotten the Department of Health and Children to the extent that he cannot remember the recent legislation which was introduced, the Health (Amendment)(No.2) Bill 2004, which was intended to plug the ongoing exposure of up to €2 billion as a result of the nursing home situation. That was bells-ringing emergency legislation, but despite that, it was still presented to the House on a Monday and debated on the following Thursday and Friday. If the Minister has been aware of this problem and his Department clearly has been for some time, it is not good enough to give the House just a few hours in which to consider it.
Mr. Boyle Mr. Boyle
Mr. Boyle: I wish to share my time with Deputies Morgan and Connolly.
Dr. Woods Dr. Woods
Dr. Woods: Is that agreed? Agreed.
Mr. Boyle Mr. Boyle
 Mr. Boyle: Once again we are here on a Thursday afternoon at the end of a Dáil week discussing emergency legislation. Not only is this is a repetition of a process we went through two weeks ago, it is something that has happened regularly in the life of this Government. I suspect that any analysis would show that this Government has processed more emergency legislation than any previous Government. It is unsatisfactory that we have had many debates on emergency legislation, at short notice, at the end of the Dáil week.
The Landlord and Tenant (Ground Rents) Bill 2005 has been introduced in a similar fashion to a Bill that was debated in the House two weeks ago. We need to ask whether the Government has got its act together in this regard. I refer to the British-Irish Agreement (Amendment) Bill 2005, introduced by the Minister for Community, Rural and Gaeltacht Affairs two weeks ago. It was clear that certain cross-Border bodies were facing difficulties in acquiring the fee simple of properties because the UK legislation in this area was far more progressive than that in this jurisdiction. We needed to amend our legislation to ensure that people could not compromise properties belonging to cross-Border bodies, particular Waterways Ireland, by taking commercial advantage of them.
The Minister for Enterprise, Trade and Employment, two weeks later, is trying to plug a similar loophole that affects IDA Ireland, Shannon Development and Údarás na Gaeltachta. I wonder whether we will find at a later stage that other loopholes need to be plugged. Do we need to legislate to give similar protection to assets owned by other State agencies and Departments? I refer to the VECs and the Health Service Executive, for example.
Given that the Government has panicked by producing two Bills to plug two loopholes, it is clear that it does not know what part of the dyke it will have to stick its thumb in next. The Minister needs to respond proactively on this issue. It is not as if the Government has not been forewarned about the issue of property rights. Although 13 months have passed since the All-Party Committee on the Constitution produced its report on property rights with great fanfare, no legislative action has been taken to try to improve this country’s property law.
The Oireachtas is about to pass the second of two emergency Bills, but the many people who continue to live under the “anachronism” of ground rents, as Deputy Burton called it, will not benefit. Such people will continue to suffer as a consequence of the Government’s failure to issue an appropriate legislative response. My house has a ground rent, which is payable to a local authority. Perhaps I should learn a lesson from the British-Irish Agreement (Amendment) Bill 2005 and today’s Bill by turning my household into a limited company and challenging Cork City Council. That might provoke the Government into taking the necessary action. I will discuss  such an approach with my wife when I get home later today.
Mr. Morgan Mr. Morgan
Mr. Morgan: The Deputy will be thrown out of his home.
Acting Chairman Acting Chairman
Acting Chairman: I agree that the Deputy should consult his wife about the matter.
Ms Burton Ms Burton
Ms Burton: Perhaps he should also consult a lawyer.
Mr. Boyle Mr. Boyle
Mr. Boyle: Other aspects of the State’s ownership of buildings and properties may be open to challenge. What about the new forms of ownership the Government proposes to foist upon us? The Minister, Deputy Martin, is familiar with the use of public private partnerships from his time as Minister for Education and Science. The Government has considered the possibility of using such partnerships in areas like the development of roads and the health service. Do questions of property and ownership arise in that regard? I suggest that Deputies might have to return to this Chamber to plug further loopholes of that nature.
It is unfortunate that we are not considering the wider value for money aspects of IDA Ireland’s management of its property portfolio in the context of this debate. IDA Ireland has taken out long-term leases on advance factories that have never been used or have been vacated not long after being occupied. It is costing the State millions of euro. Although we might save money by plugging this loophole, such ongoing problems will continue to exist. I hope the House will have an opportunity to discuss such matters properly as part of a wider debate.
Mr. Morgan Mr. Morgan
Mr. Morgan: Deputy Ó Caoláin outlined Sinn Féin’s position on this legislation on the Order of Business this morning. Sinn Féin will not oppose the Bill because it understands that it is urgently needed. I acknowledge that the Minister for Enterprise, Trade and Employment contacted Opposition spokespersons yesterday evening to brief those of us who were able to attend the meeting. The Minister and some of his officials met those who were available again this morning to provide a fuller briefing about this emergency legislation.
I was pleased when I discovered this morning that the Landlord and Tenant (Ground Rents) Bill 2005 was to be discussed in the House, because I thought the Government had finally introduced legislation to deal with all aspects of the ground rent issue. There was not much chance of that, however. I quickly realised that I was engaged in wishful thinking.
I have reiterated Sinn Féin’s demand for the abolition of ground rents on many occasions. My party set out its stall on this issue in the submission on property rights it made to the All-Party Committee on the Constitution. It seems I need to make that case again because legislation on this matter has failed to materialise, despite a  commitment from the Government. I will take this opportunity to do so. Ground rents, which are a form of feudal tax, represent an ongoing injustice against the people of this State. They are a hangover from the days of British colonial rule in Ireland and their abolition must be facilitated. Ground rent landlords should not receive compensation if ground rents are abolished. As a legacy of colonialism, ground rents have been unjust from the start. Therefore, to compensate would legitimise what is manifestly unfair.
It is to the shame of consecutive Governments that this issue has not been dealt with in more than 80 years, since the establishment of the Twenty-six Counties State. Various Ministers have given the excuse of possible constitutional difficulties as a reason for putting this overdue legislation on the long finger. I ask the Government to introduce legislation now and to allow it to be tested in the Supreme Court, as was done with Part V of the Planning and Development Act 2002. If such legislation is unconstitutional, we can have a constitutional referendum to allow for improved legislation.
Householders whose leases are about to expire are placed in an unacceptable position when they are forced to choose between buying a freehold on their house for one eighth of its value or signing a new lease for a drastically increased rent. As the value of houses is increasing, people whose leases are due to expire are justifiably angry and concerned. The alternative for those who cannot afford to buy out the expired lease is to sign a renewal of the lease for 35 years.
In 1997, the Minister for Transport, Deputy Cullen, who was then in Opposition, commended a Fianna Fáil Private Members’ Bill on ground rents to the House. He said “all Members accept that its preparation involved an enormous amount of teasing out and discussion to ensure its provisions were justified on constitutional grounds.” If the Bill was constitutional when Fianna Fáil was in opposition, why is it unconstitutional when Fianna Fáil is in government?
The ninth progress report of the All-Party Committee on the Constitution to which Deputy Boyle referred, recommended that legislation be introduced to abolish ground rents. Why has the Government failed to act on that recommendation, especially as we have been told that it is a Government priority? When can we expect to see legislation on the abolition of ground rents before the House? Sinn Féin will continue to hound the Government until ground rents have been abolished and the subjection of citizens of the State to unjust tyranny from ground rent landlords has been brought to an end.
As I appreciate the urgency of the Bill before the House, I will not oppose it. This matter should have been dealt with in the context of a single ground rents Bill that deals with all the outstanding issues I have mentioned.
Mr. Connolly Mr. Connolly
Mr. Connolly: I understand and accept that there is sometimes a need for emergency legislation to be brought before the House at short  notice. In this instance, I received much less notice than Deputy Morgan. The debate on this Bill has replaced the discussion on suicide that was to take place this afternoon. I wonder whether the decision to cancel the debate on suicide betrays the attitude to the problem of suicide that is found at a high level. Ten young people lose their lives to suicide each week. There are more than 220 instances of self-harm each week. While I accept that there is an urgent need for the Landlord and Tenant (Ground Rents) Bill 2005, I suggest that the House should have considered extending its sitting hours today or meeting tomorrow to accommodate this emergency legislation. I have mentioned the existing attitude to suicide. I regret that the debate on the issue of suicide has been put on the back burner.
With regard to the Bill, the availability of industrial land is the most important factor in attracting new business ventures to rural or regional areas. In recent years, the private sector has taken up the slack and has been willing to buy property where a profit is likely. It is that prospect of economic gain that drives the private sector. However, areas must also attract public sector agencies.
Three major public sector agencies are involved in the provision of industrial property for the purpose of achieving economic growth, either nationally or in regional and peripheral areas. IDA Ireland provides industrial land and property in the pursuit of national and industrial development objectives, Shannon Development uses industrial land to achieve its primary target of economic growth in the Shannon region and Údarás na Gaeltachta provides industrial property to increase employment in Gaeltacht areas as a means of preserving and extending the use of the Irish language.
These three agencies not only need to maintain their current land supply but also to acquire and develop additional land to be able to meet future demand for industrial sites. This is a vital activity, particularly for IDA Ireland, which concentrates on selling serviced land for development by private sector contractors. However, it can happen that these agencies may have more land on hand than may be required to meet demand in certain areas. In the past IDA Ireland and Shannon Development held lands that were in the wrong places or unlikely to be used in the foreseeable future.
Prices paid for lands by the agencies are generally, although not always, felt to be reasonable, but the indicative costs of development land are generally higher for the agencies than the private sector would normally be willing to pay. In the past 50 years, IDA Ireland, in particular, has a history of assisting the private sector to invest in the provision of industrial buildings. The peripheral nature of the areas served by the other agencies makes it more difficult for them to encourage private sector involvement.
Due to the growth of the greater Dublin area, attention should be given to providing the physi cal infrastructure to accommodate development corridors in a sustainable manner and in appropriate locations, including along national primary routes. In that regard, I would like to see development take place along the routes to counties Cavan and Monaghan, which now have much improved access to Dublin. Developing individual centres should not be considered in isolation, but should be linked to coordinated policies by the three agencies throughout the country.
In my constituency, a case has arisen involving a landlord, JES Holdings, on behalf of the Shirley estate, which has taken High Court action against the State and a leading businessman who is a leaseholder in Carrickmacross. Leaseholders number almost half of the town’s businesspeople and this appears to be a test case against them. The Shirley estate has had a long-running gripe against the State, which it claims denies it the constitutional right to own and keep its own property.
This follows a successful test case taken against the landlord by the business people in an attempt to purchase the respective freeholds on their Main Street properties at market value. The Shirley estate leases affect a total of 50 businesses in the town, and the issue is a major bone of contention in Carrickmacross. If the High Court decision in favour of the business people is again upheld, the floodgates may then be open for all qualifying 99 year leaseholders to purchase their respective leaseholds.
This is a situation where the landlord abused leaseholds in 1991, when leases came up for renewal. In one case, that of the former post office, the rent soared from 35 a year to 10,500 a year, despite the tenants having carried out renovations to the property. These enormous and exorbitant hikes have been instrumental in stagnating business development on much of the west side of Carrickmacross. Many Shirley leaseholders in Carrickmacross are now afraid to spend money on their premises because they are unsure whether any improvements would be for their own benefit or for that of the Shirley estate.
Stagnation has been caused in Carrickmacross, which is a good market town. The tenants live and work in the town but are unsure whether to develop their businesses. If they do so, they must keep pace with rent increases. They are caught in a catch-22 situation.
Ms F. O’Malley Ms F. O’Malley
Ms F. O’Malley: An uncharacteristic harmony has descended on the House, which I do not wish to disrupt. I refer to two aspects of the Bill: the necessity for the rush to bring it before the House and its content in regard to provision for our industrial development agencies.
Like other speakers, I regret that Bills come before the House at short notice because hasty legislation does not always make for the best legislation. However, I accept that the Government does not have much option when issues are highlighted at short notice. In protecting the State’s assets and interests, the Government must act with haste in this instance. It is commendable  that we have moved so quickly and found time in the schedule of the House to deal with the Bill.
This haste begs the question as to how the House orders its business. Ground rent is an issue that everybody talks about, like draining the River Shannon. However, many other Bills have been waiting for time in the House, which operates for just three days at a time. I accept that there was an urgency to introduce particular provisions to tighten up in this area so nefarious practices would not be accommodated. However, one would wish for a system whereby all legislation is constantly monitored, and Members had time to check for loopholes in legislation, rather than having loopholes found on behalf of property developers. Members, who are on the inside, so to speak, should consider legislation as it is being drafted or debated. They would spot any loopholes fairly quickly.
We should have a programme for reform of legislation. In my short time in the House, there has been quite a good deal of emergency legislation. All Members, including those on the Government side, regret that we have to bring in such rushed and hasty legislation. Nonetheless, when the purpose of legislation is to protect State interests and assets, we cannot but act in that way. Therefore, I welcome the harmony in the House in dealing with the Bill. It is magnanimous of the House that there does not appear to be opposition to it. We are doing our duty in protecting the possessions and assets of the State.
The Minister for Finance, Deputy Cowen, this morning described the situation as a “legal lacuna”. Given that this legal void exists and has been identified, it is of the utmost importance that the Bill is passed quickly. It is our duty in the House to protect the State’s assets from any potential nefarious practices. We do not know whether such practices would ensue but it is likely they would. However, we need to close loopholes when they are found.
The matter only came to Cabinet yesterday, where it was agreed time was of the essence. I commend the Minister for making a genuine effort in this regard. He is no doubt grateful that Members have acknowledged that he facilitated them with relevant briefings. As stated on the Order of Business this morning, those Members of the House who have been in Government in the past will recognise that a matter such as this requires an urgent response from all sides of the House, in particular when it serves to protect the interests of the House. Unfortunately, the House must act in haste at times.
On the specific content of the Bill, the industrial development agencies listed — IDA Ireland, Shannon Development and Údarás na Gaeltachta — play a necessary and valuable role in promotion and development in their respective areas of concern. I am sure all Members will join me in commending the work they have done over the years. They deserve and are entitled to expect the protection of the State.
The settlement to which the Minister referred earlier has serious implications for the IDA in  terms of the execution of its statutory functions and the possible loss of value to the State in any sale of its land assets. There are implications for Shannon Development and Údarás na Gaeltachta in the operation of their property functions related to their industrial development. We have a duty to safeguard the ability of these valuable agencies to control the activities on their industrial estates and we must also ensure that the State’s assets will be used for the purposes for which the agencies have been mandated. We must allow the agencies the ability to enforce other covenants and requirements while not being hampered in any way.
I welcome the Bill, but rather than have bits and pieces of amended legislation we must try to take a holistic approach to Bills and legislative reform.
Mr. Ring Mr. Ring
Mr. Ring: I am grateful for the opportunity to speak on this Bill. I do not like rushed legislation, of which we have had much recently. Rushed legislation is bad legislation and usually results from such. This Bill is some 30 years too late. I call on RTE’s “Prime Time” to do a programme on IDA land bought since the foundation of the State. I could provide it with information about my town and surrounding areas where the State bought IDA land for development purposes and there are now hotels, private houses and apartments there. Údarás na Gaeltachta had land in north Mayo and now there are mushroom factories and all sorts of development on land paid for by the taxpayer.
A new scandal is brewing because the developers got all the land they could from Údarás and the IDA and are now looking to the county councils. The Minister should amend the Bill to tie in local authorities using taxpayers’ money to buy land for the State. A number of local businesses set up an industrial estate in my town and did a great job. However, there are always wise guys, builders and investors and they bought the estate on the condition that if they did not have planning permission within six months they would return the property to the local authority. People are now letting, reselling and letting again and this should be stopped. Now that the Minister has initiated the legislation, he should include an amendment to curtail local authorities so that they cannot give land to somebody unless they immediately set up their industry and adhere to every clause. What is currently happening is wrong and should be dealt with.
There is already a national scandal, which the Minister and his predecessors continue to stand over. There is a factory in Ballinrobe that has been empty for 19 of the past 20 years and the IDA renegotiates a deal every five years. The people who own the factory are getting €160,000 per year for an empty factory. This is a great country if we can afford to pay people such amounts for nothing.
My town is about to lose approximately 300 jobs and the Minister gave a commitment that he would come and visit. I hope he keeps his prom ise. We have a problem in the west of Ireland in terms of unemployment and the IDA has failed in that regard. The Government has directed that there must be a bias towards the west with regard to Objective One status. The IDA is not filling its quota in terms of supplying jobs to the BMW region. The Minister should immediately put pressure on the IDA to ensure that it honours the Government’s commitment and the provisions of this legislation to ensure that a certain quota of jobs go to the west of Ireland. There is an overflow in Dublin city and people cannot live there any longer.
Many industries have worked well in the west, such as Allergan, even though there has been a bit of a setback. Some 300 people will leave that company over the next two weekends. I ask the Minister to visit Mayo to ascertain what can be done. He should bring the State agencies with him because we do not see much of them. We want a commitment from the Government that every effort will be made to honour it’s promise that a percentage of jobs will be created in the west of Ireland.
With regard to this Bill, I hope the Minister will include an amendment covering the local authorities. Land the State bought is not used for the purposes for which it was bought. Nobody should be allowed to build shops, apartments, houses or factories on industrial land bought with taxpayers’ money. That land should be used for industrial purposes and employment. There is no excuse for somebody else getting the land. There must be 16 or 17 legal advisers in the Attorney General’s office. We should be able to include amendments so that when companies coming to Ireland receive IDA land paid for by the taxpayer they are not allowed to build houses, apartments hotels or factories on it. That should be corrected in this legislation.
I do not like rushed legislation and hope our senior spokesman is up early this week to put down the necessary amendments to ensure that this provision is included. The days are over where industrial sites were given to big builders and industrialists to use for a year or two, close down the factories and start building what they like after that. This legislation is rushed but necessary. As we are passing it through the Houses, let us do so correctly. Let us cover the local authorities, Údarás na Gaeltachta and the IDA to make sure that what has happened will not happen again. These people made a fortune.
I want “Prime Time” to investigate to see what has happened to Government property bought by the State.
Mr. Martin Mr. Martin
Mr. Martin: I thank the Deputies for their contributions to the debate and for facilitating this urgent and immediate emergency legislation. Nobody likes to bring in legislation at such short notice. However, it is designed to protect State assets and the policy context within which the IDA, Shannon Development and Údarás na  Gaeltachta operate in terms of the utilisation of these assets and industrial parks and the application of those assets for the benefit of creating jobs.
Deputy Pat Breen raised issues about the case that acted as a catalyst for the publication and formulation of this legislation. I appreciate his assertion that Fine Gael will support the Bill because of its desire to safeguard State assets.
There has been a correct policy of endeavouring to manage estates properly and control the type of developments and investments that take place. This sometimes requires patience because estates are not always developed as quickly as some would like. We have all seen examples of how badly managed industrial parks and estates can turn away investment and make a location unattractive. The IDA has been largely successful in applying this policy in respect of lands within its ownership by placing covenants to secure manufacturing, restricting the land from manufacturing or international traded services. People have, from time to time, questioned and called for a review of the policies, and Deputy Burton alluded to this in her contribution. Notwithstanding the passage of this legislation, those policy issues can still be considered and debated again. This legislation does not preclude such a discussion of the idea of policy in terms of the most effective utilisation of land within IDA ownership.
The IDA has a very active property portfolio. It has been in the business of selling some of its property and creating new, more modern industrial, business and technology parks, which are more fitting and appropriate for the attraction of inward investment. It has always had to do that with the consent of the Minister of the day in accordance with statute and legislation. There is nothing underhand in that kind of exercise or transaction.
In the context of Deputy Burton’s contribution, the Attorney General has advised that the section 4 amendment is the most appropriate mechanism to deal with this situation as it has arisen, and that is in the constitutional and legislative context. The Attorney General has advised on this issue and the Office of the Attorney General has been closely involved with both the individual case and with the more general issue that has arisen from that case.
In essence, the purpose of the Bill is to exclude the IDA, Údarás na Gaeltachta and Shannon Development from the operation of the Ground Rents Acts save in the special case of dwelling houses which, in the case of these bodies, is not relevant in any event. This legislative amendment to the Ground Rents Acts would solve for these three bodies the difficulties highlighted in the individual case that has given rise to this legislation. The legislation does not apply to any notice of proceedings under the Ground Rents Acts in existence prior to the enactment of the Bill. I understand that has been an ongoing issue in terms of the abolition of ground rents. It was the previous occupant of the Chair who brought  in the far-seeing and progressive Bill in Opposition in 1996 or 1997 to abolish ground rents but my understanding, and it is not within the remit of my Department, is that constitutional issues have been put forward as a barrier to the introduction of legislation that would, in effect, abolish domestic ground rents although I realise there are arguments on both sides of that debate. For the purposes of today’s legislation, however, while the opportunity was correctly taken by Deputies to raise that issue we do not propose to deal with it in the context of this legislation.
On the question of local authorities buying land, local authorities are at one remove from the centre. This issue has arisen at Government level and it falls to other Departments to examine their positions in terms of making a risk assessment of their individual property portfolios. In regard to Deputy Ring’s suggestion that I would attempt to bring the local authorities within the ambit of this legislation, that would not be appropriate and in any event local authorities have their own legislative template for the disposal of properties. I understand it is the reserved function of elected members to dispose of properties, not just the executive of the county council. On another day that would be construed as an outrageous interference in the democratic rights of elected representatives on councils throughout the country. It is open to councils to put qualifications and restrictions on the use of any land. It is within reasonable parameters and I do not propose to do that.
On the Deputy’s wider issue about IDA land in the past being used for different reasons, there was a strong policy in the 1980s of developing advanced factories throughout the country. That policy ceased in more recent times but it has led to the moving on of that property and its utilisation for different purposes. That is the backdrop.
Thirty-five year leases were entered into in the 1980s, some of which were for advance factories. That was a policy decision taken at the time. There is difficulty renting out those factories now as modern industrialists want more flexible, custom built facilities and they do not necessarily believe those advance factories suit their needs and concerns.
In terms of the BMW region generally, the IDA’s target is to have 50% of all new greenfield jobs in Objective One regions by 2006. To date it has achieved a 42% target, which is a significant achievement. Addressing a recent conference on the BMW region I received information to the effect that, for the first time in a long time, jobs were created at a faster rate in the BMW region than in the south and the east. It might be argued that people are commuting and so forth. We will also take up the wider issues raised by Deputy Boyle.
I thank Deputies for their contributions. Ministers do not like to bring in urgent legislation such as this but we had to act when the situation was presented to me. Clear decisions had to be taken to protect the State asset and that is what we are doing.
 Question put and agreed to.
Bill reported without amendment, received for final consideration and passed.
Dáil Éireann 602 Landlord and Tenant (Ground Rents) Bill 2005: Second and Subsequent Stages.