Seanad Éireann - Volume 97 - 16 April, 1982

Housing (Private Rented Dwellings) Bill, 1982: Committee and Final Stages (Resumed).

[593] SECTION 5

Question proposed: “That section 5 stand part of the Bill.”

Mrs. Robinson: This section refers to the laying before the Oireachtas of regulations made under this Bill, subject to the possibility of them being annulled. The Minister, in reply to earlier questions on Committee Stage said he hoped to have regulations drafted, in so far as they were his responsibility, in time for April 25. I should like to ask the Minister if the Bill which we passed on the last sitting day has, in fact, been signed by the President.

Minister for the Environment (Mr. Raphael Burke): It was signed on the 12th.

Mrs. Robinson: So to that extent the position is that the continuance legislation could continue until 25 July.

Mr. Raphael Burke: That is the theory of it. The Senator will be aware of the legal difficulties and problems we have. In theory it is there until the 25th.

Mrs. Robinson: I am sure the Minister is aware, as I am, that it is not always that easy to get into court to challenge something. Nevertheless the 25 April deadline is no longer a relevant one. We have a potential 25 July deadline. Is that correct?

Mr. Raphael Burke: No, it is no longer absolutely binding, but 25 April is the desirable deadline. It gives us a little leeway.

Mrs. Robinson: This is necessary because, if there were amendments that this House felt were an improvement in the Bill, there would be plenty of time to return to the Dáil, if required.

Mr. Raphael Burke: It is doubtful and undesirable that——

[594] Mrs. Robinson: Doubtful and undesirable to improve the Bill or——?

Mr. Raphael Burke: Doubtful and undesirable that I should not be in a position to give the type of protection that both Houses and the Senator herself are anxious to give to the tenants. The Senator is aware that the previous continuance Bill is being challenged and I have no doubt that this Bill will be also. The best legal opinion is that it just would not stand up to a challenge. That, of course, is not for me to say but in the best interests of both landlord and tenant and, in particular, the tenants in this situation, it is preferable to have this Bill passed. This, I believe, has been accepted as a broad principle by all sides of both Houses.

Mrs. Robinson: Briefly, it is worth noting again that we are in a situation where a Bill which has just been passed by both Houses and signed by the President is referred to as being of doubtful constitutionality. It highlights some of the points I made on the last occasion that we are in a unique situation where we have passed a constitutionally doubtful Bill. I still wish to make the point that we are now in a different position from that on the last sitting day in relation to the first part of Committee Stage, in that we have the leeway to which the Minister has referred because even if a challenge were to be mounted, it would not be mounted before the Dáil could quite easily be convened or, indeed, before the Dáil will be meeting, in any case, towards the end of April. It would be possible to consider any amendments which are deemed by the Seanad to be improvements to this Bill. It is better for the Seanad to examine the provisions of this Bill without being in the impossible situation in which the Seanad sometimes finds itself, where the Dáil has adjourned and cannot be recalled in time. We now do not have that constraint and that is important in relation to any proposed amendments.

I have one other question on section 5. I assume that this section also extends to regulations made by the Minister for [595] Social Welfare, in relation to the allowances under this Bill. Has the Minister been in discussion with the Minister for Social Welfare and is that Minister in a position to confirm that those regulations would be ready in or about 25 April, if that is the date on which the Minister still wishes to bring this Bill into effect?

Mr. Raphael Burke: First, on the suggestion that we have time now, in theory we have until 25 July, but in practice we do not. There is already a challenge to the previous temporary Bill. There has been a request for an emergency time in the court. The Taoiseach referred in the Dáil to the inadvisability of relying on the temporary Bill and this was accepted by the leaders of the other parties. If the Seanad were today to pass an amendment to this Bill, it would mean an immediate recall of the Dáil. If the Dáil decided that they could not accept the amendment, then it would be a question of coming back to the Seanad. If the Seanad further press their amendment, we then find ourselves in a situation of the terms of the Constitution being brought into force with regard to the number of days that lapse from amendments being passed et cetera. I think 90 is the exact number.

The main argument and disagreement of the Bill as I understood it were with regard to rent tribunals. I have given the Senators a commitment on that and I gave the same commitment to the Dáil. With regard to the regulations being brought into force, these will be ready in time. The Department of Social Welfare have the preparation of the regulations well under way and I would appeal today to the Seanad for consideration of the Bill in its present form. This is in the best interests of both landlord and tenant but, in particular, in the tenant's interest because of the present feeling of insecurity that was referred to in the debate both in the Dáil and in the Seanad. So many of these older tenants have this worry with regard to the situation in which they find themselves resulting from the Supreme Court's decisions both in June and recently with regard to the constitutionality of the previous Coalition's Bill.

[596] I will try to answer the points made in the amendment. I am not now in a position to accept the amendments, for the reason that I gave and others which I will be giving, and I would ask for the understanding of the Seanad on it. I will be as forthcoming with my explanations as I can. I am asking for the co-operation of the Seanad.

A further complication is this: if the Seanad decided to pass amendments here today, which can be done with the voting strength, as we have just seen, the Bill will go back to the Dáil. The Dáil, one way or another, will then decide what to do. The Bill is then referred to the President. If the President refuses to sign the Bill that then means a further 60 days' delay while the Supreme Court consider the Bill, if it is referred to the court. We are then right up to the 25 July date which is the problem date for us all, even if the temporary Bill stands up. I know that the Members put down these deeply-considered amendments with a view to having them passed. I know that they hold strong views on the amendments which we will be discussing later, but I would appeal to the Members of the Seanad not to leave the legal situation in the present mess.

Question put and agreed to.

Section 6 agreed to.

SECTION 7.

Question proposed: “That section 7 stand part of the Bill.”

Mrs. Robinson: This section starts the Part of the Bill which relates to the particular tenancies about which we are most concerned. I would like to draw attention to a section which I welcome in part but the necessity for the precise wording of which I regret. I refer to subsection (2) (b) which extends the scope of a family and provides that a person is a member of a family if such person is adopted by the tenant under the Adoption Acts, 1952 to 1976, or is the illegitimate offspring of the tenant, being the mother or the reputed father of such offspring.

It is a step forward that we are carefully including illegitimate offspring in such [597] situations but it is a sad reflection that we have to put in such clumsy bracketed words because there is no legal concept of a reputed father in a sense of the father having legal links with the child. A reputed father is a very doubtful precise concept. It may be a situation where affiliation proceedings have been taken out, or it may be where it is the acknowledged father who has placed himself on the birth certificate and who supports and lives in a family context with his natural child, or children. Nevertheless, there is no legal relationship and there is no method of having a legal relationship between that father and his child. Therefore, in so far as we wish to include as part of a family, as I believe we most definitely should, natural children of a tenant, we have to do it in this clumsy and special way. We have to make special provision for them. I should like to ask the Minister when the Government are going to remove the necessity for this by removing the legal discrimination against illegitimate children and making it unnecessary, in those circumstances, to have this kind of provision so that we would have an interpretation of child or children as including natural children. This is all the more important because of the large number of second and third relationships which exist in Ireland and which are not based on marriage and also the relationship of the mother and her child where the mother is not married. We are building up a very severe social problem by not changing the law. Although I welcome the express provision here, it is a reflection on the lack of a sound legal base which is compatible with the constitutional guarantee of equality before the law and of treating all citizens equally. I hope the Minister will give me some commitment on this point.

Dr. Whitaker: I wish to raise two points on the section but, before I do so, as I was unable to be here last week, I should like to take the opportunity of saying a word of good wishes to the Minister on his resumption of the Environment portfolio.

My first point concerns the very wide definition of the family in subsection (2) (a) [598] which includes, as one might say, “Uncle Tom Cobley and all.” It would have been prudent and, at the same time, would have in no way shown a significant lack of social concern, if the definition were limited to the more immediate family circle, say, father and mother, brother and sister, son and daughter. I do not know what the justification is for extending it so widely. If I may, I will develop this point when we come to section 9 where the purpose and effect of the definition become more apparent.

My second point concerns subsection (2) (b). I sympathise with the point made by Senator Robinson but mine is a different one. I read and re-read that subsection wondering how the illegitimate offspring of the tenant could be the mother or the reputed father of such offspring. Clarity would be restored if the words “the tenant” were inserted immediately inside the bracket and before the words “being the mother or the reputed father of such offspring”. If it is agreed that clarification is necessary, this is one of those technical corrections which could be made without any formal amendment.

Mr. J. Harte: I am a little confused about the necessity for this provision. Under subsection (2) (a) we define exactly what members of the family are. We then come to the “reputed father” or a person who is in bona fide residence with the tenant. I cannot see the necessity for even reference to the reputed father. If there is a child or any person living in that house who has been reared by the family, then that child can be described as a bona fide person in residence.

Mr. Raphael Burke: I accept fully Senator Robinson's concern about clarification of the situation with regard to illegitimacy. I am not in a position to give the Senator the type of information which she is requesting.

Mrs. Robinson: Would it be available?

Mr. Raphael Burke: That is not part of this morning's discussion. I have gone as far as I can to protect the interests of the people involved. It is the same as the [599] 1960 Act. On the point made by Senator Whitaker with reference to subsection (2) (a), again it is the same as the 1960 Act. The Senator is anxious that it be tied to the inner family but it does not confer any benefit on the list of relations there. There has to be residence in the house or flat before benefit is handed on.

Regarding the question of parentheses raised by Senator Whitaker the qualification involved there refers to the tenant and not the offspring. As far as Senator Harte's point is concerned I was anxious in the definitions to make them as wide as I possibly could and to give the greatest possible protection. It was not possible to extend the list further because there would have been the problem of comparison with earlier legislation and it could give rise to further constitutional problems which we are all anxious to avoid.

Mr. S. O'Leary: I refer to section 7(1), the definition of improvement. This has relevance in conjunction with section 15 under which a tenant is quitting the premises. He is entitled to compensation in respect of improvements. Improvement is defined in this section as being an addition or alteration to a dwelling carried out by a tenant or his predecessors in title after 31 December 1960. I would like to ask the Minister, why 31 December 1960? As far as I am aware some of the tenancies involved or predecessors of tenancies involved here could have gone back quite considerably before 1960. For that reason, if a substantial improvement was made to the property in 1959 surely there is no legitimate reason why the tenant should not be compensated for that, bearing in mind, of course, that the tenant is only to be compensated under the terms as laid down in section 15 which we discuss later. Why does it not stretch back further than 1960 in view of the fact that these tenancies would stretch back further than that? In many cases these properties have been almost abandoned by the landlords for good reasons and the tenants have carried out substantial improvements to the property for which they are now entitled to compensation. I do not see why a tenant should not be [600] entitled to compensation for all improvements carried out from the commencement of the tenancy. There may be some technical reason but I should like the Minister to explain it.

Mr. Raphael Burke: I share the broad principle that the Senator is aiming at. For that reason I extended the scope of improvements to a far wider area than the previous Bill of 1981. The significance of 31 December 1960 is that it is the date, as the Senator is aware, that the Rent Restrictions Act 1960 came into operation putting the rent restrictions legislation on a permanent basis for the very first time. It is considered that going back to 1960 is the furthest that is reasonably possible to go. Improvements made earlier would be difficult to prove at this stage.

Mr. Magner: I was not here last week and I would like to take this opportunity, possibly my last, to extend to Deputy Burke my congratulations on his becoming a member of the Cabinet and to wish him well. Senator Whitaker says that in paragraph (a) of this section they threw in Uncle Tom Cobley and all. When Senator Whitaker, who is an expert on officialese, is confused, I suffer for the public.

I was called some time ago to a small enclave of houses in Cork, most of which were 150 to 200 years old, occupied by people whose ages ranged from about 68 to 93 and who were under the kind care of a landlord who would make Shylock look like St. Francis of Assisi. In between the Bills that went forward and the Bills that were affected by the holding operation of the previous Government, this landlord attempted to evict a 93 year old man because he would not pay the rent she now asked him for. All the other people in the enclave were absolutely terrified. For example, through sheer terror one woman who did not smoke for 15 years was puffing merrily while I was sitting in her kitchen. I then got in touch with the Department of the Environment and they explained the current state of affairs. However, the residents would not accept that. So, as there seems to be some [601] aura of authority conferred by the harp on a piece of paper, I typed out and had copies made of what I got from the Department and gave it to them. This was almost like a passport and they took it that they had some protection. I appeal to the Minister to issue a leaflet in a very simple form explaining the current state of affairs. I understand that this Bill goes to the President and that he may accept or reject it. I appeal to the Minister to issue the leaflet to the local council or to have it made available at local post offices so as to give those people an idea of what their rights are. I do not want to brand all landlords as unscrupulous but, I know that there is a large element in for the quick kill.

Professor Murphy: I support Senator Magner's suggestion. A great deal of legislation needs to be explained to people and the functions of the Health Education Bureau could well be extended in other directions. On a matter of great public concern where we have heard repeated evidence of the plight in which people are in, I think it should not be beyond the bounds of Government imagination to have a spokesman on television to fill in a five minute gap after the 9 o'clock news to let people know the situation.

On a more specific point on subsection (2) (b) may I ask through the Chair what is the significance of the phrase “no less than six years?” How is that arrived at?

Mr. Raphael Burke: I should like to thank Senator Magner and Senator Whitaker for their good wishes. The confusion that Senator Magner refers to is something of which we are all to well aware, and the fact that so many of these tenants are the type of people and in the age group he refered to is exactly our difficulty with this legislation and highlights the need to have substantive legislation rather than continuing on the temporary legislation from six month period to six month period. There are people who are not aware of their rights or of the existence of temporary Bills, despite reassurance from Governments, Deputies and councillors and so on, and who [602] are being subjected to undue pressures, even though that is not legal. They are not aware of the true position because of the confusion created by the number of court decisions that have been made and all the publicity about it. For that reason, I am very anxious for this substantive Bill to be passed rather than depending on the temporary Bill.

I take the point made by Senator Magner and I assure him that I will act on it, that is, the publication of a simple leaflet outlining the rights of landlords and tenants under the Bill. I will also consider as soon as the Bill is signed and brought into operation the placing of newspaper advertisements, not in official style language but as simple as it can be made, letting the tenants and the landlords know exactly what the situation is as and from the date of operation of the legislation.

Subsection (2) (b) is exactly the same as the 1960 Act and we are trying as far as possible to stick with the wording of the 1960 Act, because we do not want to give any grounds whatsoever for any further challenges which may arise from suggestions of extending the rights of tenants compared with any existing legislation.

Question put and agreed to.

Section 8 agreed to.

SECTION 9

Mrs. Robinson: I move amendment No. 3:

In subsection (7), page 7, line 21, to delete “twenty” and substitute “thirty”.

This is an amendment which seeks to extend the relevant period in section 9 from 20 years to 30 years. It is an amendment which requires some explanation because this was one of the issues that was certainly raised and indeed was central to the Blake-Madigan decision, the question of the right of the landlord to recover possession of the premises. Of course at the time of the Blake-Madigan challenge to the original legislation there was no possibility of adjusting the rent, [603] nor was there the realistic possibility of the landlord recovering possession. There was a combination of these two; but in this Bill, and I accept that this was also part of the previous measure, the period is 20 years and it is a very relevant period because it takes away from the security to the family of the tenant. It takes away significantly from what appears to be the security which is granted in section 7, where we have the list, which Senator Whitaker thought was too wide, of the members of the family. It looks as if all those members of the family are protected even grandchildren; but, in fact, apart from the spouse, if the tenant has a spouse, they are not protected for their lifetimes or anything like it. They are protected for 20 years from the passing of this Act, so it could be 20 years from this day week.

Take a situation, for example, of a widow with two or three small children who will live for 25 years after this Bill has been passed and her children have been away. The have grown up with her and left and are not residing with her and then come back a year before she has died, or one of them does, then they would not be covered by this Bill because the relevant period would have run.

I think that is a situation which has not been thought through sufficiently. We have a very severe shortage of houses. It is particularly severe for young people, newly weds trying to get houses, and therefore the provision period of 20 years, because it would run from next week and would cut off all rights of tenants other than the right of a spouse — it is only in the case of a tenant having a spouse that the spouse would have a right for a lifetime if the tenant died — is quite a harsh cut-off in the overall context, and I feel that a period of 30 years would appear to be reconcilable with the arguments made that the landlords must have opportunities for reasonable repossession, because we have tenancies for periods of years and we are now to have adjustments of rents — we will come to that section, section 13, on the question of fixing and adjusting the rent. So the landlord is not in the same position as [604] when the litigation was begun on the Act which did not allow the possibility to adjust the rent.

As Senator Magner said, you could have a grandfather living with a grandchild and the grandfather might live for the period specified, but leave somebody very young, or you could have a widow, or you could have a single mother with her child who could live through a 20-year period but might have a young person or a person who would have great difficulty otherwise to get housed, a person who would be unable to continue to live in the rented dwelling, even if the rent which would be fixed by the District Court — we are to have a rents tribunal I hope in the very near future — might seem reasonable to that person.

It is for that reason that it seems desirable, while addressing ourselves to the problem of security of the tenants involved, to give a security covering a number of years is more likely to cover the various categories of family whom we are seeking to protect in section 7. The amendment would mean a span of 30 years. It would cover adequately the reasonable expectations of the extended range of members of families set out in section 7. For that reason I think it desirable to extend the period so that it will give that kind of security, particularly when young members of families are concerned and where spouses are not involved.

Mr. S. O'Leary: I support Senator Robinson on this amendment. We must recognise that a totally different set of circumstances exist now from those which existed when the matter was considered by the Supreme Court in the first instance. It was recognised by all sides in the Second Stage debate, and in the discussion on the previous Bill which was referred to the Supreme Court, that the implementation of either of these measures would give rise to a substantial increase in rent and in the return landlords were getting for their property.

In those circumstances the question of landlords not having the authority to gain immediate possession is much less relevant. In letting property in the commercial [605] market it is quite common for landlords to let their property for periods of 30 and 35 years. Indeed in the commercial market it is quite common that after the period of three years the tenant would in any case have a business equity in the premises, and the landlord would be unable to regain possession.

In these circumstances I think it is therefore right first to think and to consider what is the proper period of time during which we should guarantee security of tenure to the tenant, in light of the fact that a just and proper rent under section 13 will be payable by the tenant to the landlord. For exactly the same reasons outlined by Senator Robinson, on the correct inclusion of nieces, grandsons and granddaughters under section 7 (2) I suggest that circumstances will or may come about which would mean that if the 20-year provision is implemented it would not be sufficient to give members of families who need protection the protection which they require.

My mind would be put at rest if the Minister could assure me or indicate whether his Department had considered what other rights other tenants might have as a result of continuous occupation. For instance, if tenants had been in occupation in the premises for more than 20 years would they be entitled to leases in the same way as any other tenant who had been in occupation of the premises for more than 20 years would be entitled to leases? If so, I would find myself considerably more able to support the 20-year provision, because it would mean that the 20 years would be sufficient, at a minimum, to qualify somebody under the Landlord and Tenant Act, 1980; which I think, gave rise to that right. In principle, I think a period of 30 years is necessary. If, however, a 20-year term is sufficient to give rise to a right to get a lease, that might change my views on the matter. So I will ask the Minister for his views.

Mr. Raphael Burke: As Senators have said, one of the reasons leading to the finding by the Supreme Court that the Rent Restrictions Acts were unconstitutional was that a landlord was being alienated [606] from his property indefinitely. I consider that section 9 of the Bill goes as far as one can reasonably go to protect tenants. The present tenant and, on his death, his spouse are being given a right to possession for their lifetime. Other members of the family who succeed to the tenancy are being given a right for 20 years from the commencement of the Act, that is into the next century.

The present Bill gives two important improvements to tenants compared with the 1981 Bill. Firstly, where a member of the family succeeds to the tenancy with less than five of the 20 years remaining, he can stay for a minimum of five years. Secondly the rights under the Landlord and Tenant Act to a new tenancy after 20 years occupation of a dwelling is not being withdrawn in this Bill as it was by the 1981 Bill. Consequently a tenant who either himself or jointly with his predecessors in title have 20 years continuous occupation would be entitled to a new tenancy under the landlord and tenant code. I consider that the provisions of section 9 of the Bill provide reasonable protection to tenants and in the circumstances I have outlined I do not propose to accept the amendment.

Mrs. Robinson: The Minister undertook, in response to a request from Senator Magner, to issue leaflets publicising the effects of this section. Could that aspect be heavily emphasised?

Mr. Raphael Burke: It could.

Mrs. Robinson: People should know that it requires 20 years of residence to assure the member of the family who is not a spouse that he will have a right to a renewal in the normal way of the tenancy, because I think that there is sometimes a risk of a break in residence, but somebody basically would like to come back, and I think if tenants were advised of their rights in that regard and were aware of them it would help a great deal in relation to this.

Mr. Raphael Burke: I can assure the Senator that that aspect has been looked after. I share the Senator's view that this [607] is regarded as being important — indeed I tabled an amendment in the Dáil to this effect.

Amendment, by leave, withdrawn.

Question proposed: “That section 9 stand part of the Bill”

Dr. Whitaker: The possession of what one owns is obviously an important property right. All of us would accept it as being equitable that an existing tenant and his or her spouse should not be dislodged during their lifetime from a dwelling at present controlled. It is, however, much less obvious that the privilege of denying a return of possession to the owner for as long as 20 years or more should be extended to members of a tenant's family in the very wide sense in which family is defined in section 7(2) of the Bill. I realise, of course, that there is a condition of residence with the tenant at the time of his or her death. Even so I do not know how such a wide extension of the family can be justified.

Senator Robinson conjured up some possibilities to support the case she made and I shall do the same. Let us imagine that I am a lonely old age pensioner living, or rather dying, in a controlled dwelling. I have, however, a grandson who has become a successful lawyer or banker. Is it fair to the owner if, as I lie on the point of death, my grandson moves in to establish a claim that he is bona fide residing in the dwelling at the time of my death and so becomes entitled to retain possession for quite a long period of years ahead? That is the other side of the coin. I doubt whether such wide provisions are justifiable particularly as they open up the possibility of that disregard of relative financial capacity and social need which was at the root of the Supreme Court's declaration that earlier legislation was unconstitutional.

I would suggest that, if it were possible to amend this section, a much narrower range of relatives should be given so important a privilege at the owner's [608] expense, for example, as I indicated earlier, the immediate family circle. The conditions should be stiffened so as to require, say, a year's bona fide residence with the tenant before the latter's death. We have just heard an explanation of why it is six years in certain cases. Thirdly, the relevant period, which is defined as 20 years from the commencement of the Act, should be reduced, rather than increased as was proposed by Senator Robinson. Changes of this kind would achieve a better balance between the rights of both parties and diminish the risk of unconstitutionality. But, even if there were no Constitution or Supreme Court, it is the responsibility of us all as legislators to make sure that what we enact is clearly necessary and fair and for the common good. It seems to me that some of the provisions of this section go further than that.

Mrs. Robinson: I would like to emphasise the distance between myself and Senator Whitaker on this issue. We have to remember, and it is central to our concern in relation to this legislation, that we are talking about tenants in previously controlled, indeed still controlled premises, most of whom have lived there for a very considerable time; it is their home. There are cases, as I and other Senators have emphasised, where it is the tenant who is exploiting the situation, where the tenant has a higher income than the landlord or landlady, who in that instance happens to be an individual with a low income and the revenue from a controlled premises is an important part of their income and may be their only income. There are such cases of hardship and of abuse by the tenant. But, by and large, we are talking about peoples' homes. Very often we are talking about companies or absentee landlords. Why should we in any way erode further than we absolutely have to the right of people to live in their homes and the right of their families to live in their homes? That is a very important social and legislative purpose that we should, in so far as is possible, use all our efforts and, if necessary, all our legal ingenuity to secure that position. It is not a question of treat- [609] ing somebody's home as an economic unit that must somehow come frequently onto the market place. That is not a desirable social objective. We must be firmly rooted in the purpose which is to give as much security as possible to people in their homes while not allowing exploitation either by landlord or tenant of rights that flow from that.

Mr. S. O'Leary: I would like to add my voice to the consideration of this matter. The views held by Senators Robinson and Whitaker are diametrically opposed. Both of them are understating the strength of their own cases and failing to take into account the changes which are being brought about by the introduction of this legislation. Senator Whitaker talks about the possibility of the arrival on the scene of a well-off son to take over the tenancy of the dying parent as if there were something wrong with that. All our property law is based on the fact that, once an owner of a property lets that property, he virtually loses control of the possession of that property and that his property right after that becomes an entitlement to rent and not an entitlement to possession. If one imagines the same old lady, also dying, who owns a business premises, not only will it be possible for her son to move in and take over her tenancy of the business premises but a complete stranger could do it. Indeed, a complete stranger could acquire that right after her death. So we have to recognise that the type of property right which we are setting up must fit into the overall framework of property rights as we see them in all our property law and in all our landlord and tenant situations.

We must also consider the fact that we are no longer talking about exploited tenants or exploited landlords. We are not now talking about the situation that has obtained up to this point; we are talking about the situation that will pertain from this on. From this on people will be getting a fair rent for their property. If they are not getting a fair rent, as some people indicate by the shake of their head, that would be a serious situation for the constitutionality of this legislation. But that is a different point. If we assume that [610] what is coming up here is a fair rent for their property, then there is no real necessity for getting too worried about whether or not the landlord regains possession of his or her property because is not necessary for the landlord to regain possession of his or her property to get a proper return and to exercise the most essential property right with regard to that property, that is, to get a proper income from the property.

In those circumstances we have to look at the new situation. We have to assume for the purposes of our discussion of this section that what the landlord is getting is a fair rent. The overconcern with the return of the property to its original owner and putting it on the market a second time is irrelevant if the system we have devised will give the landlord and the tenant fairness with regard to the rent to charge, and that rent will be fixed for a period of five years.

In those circumstances, whether it is 20 or 30 years will not substantially reduce the property rights which the property owner will have on the property in any case. Very many of these properties will never go back into the possession of the landlord, not because of this Bill but because of the operation of other Acts which apply to all properties in the State. We should not be very concerned about the 20 or 30 years. I agree that there is no necessity to change the 30 years. We should put on record we expect as a result of this legislation that property by and large will not revert to the possession of landlords but that that they will get a proper and fair return for their property. In that way their property rights will be retained and vindicated.

Mrs. McGuinness: I support what Senator O'Leary said. We are thinking too much in terms of the premises returning to the possession of the landlords. If one looks not only at this legislation but also at the regular practice of the courts in regard to landlord and tenant matters, there are very many situations where, for example, tenants may have broken various covenants contained in their lease and other circumstances may arise, but it is actually quite rare for possession to be [611] given back to the landlord. We are probably concentrating too much on how the landlord is to get back the premises. If one produces a premises for rent, I thought the common situation would be that it would continue to be rented out.

There are short term tenancies where somebody goes away for a short time and rents their house. That is not the situation which is covered by this Bill. These are controlled tenancies which have been in existence for a long time. Recovery of possession is not necessarily the most important thing. When we consider the landlord's right to get a fair rent, we must remember that in section 13 (2) the court has to take into account the means of the landlord and of the tenant in fixing the gross rent. In the situation outlined by Senator Whitaker, where a rich man may move in on his grandfather's tenancy, the rich man's means would have to be taken into account by the court when fixing the rent. He could not get away with staying on for 20 years or whatever in the house on the kind of rent that his poverty stricken grandfather had been paying. The situation is dealt with to some extent in the Bill.

Mr. Raphael Burke: Deciding on the proper balance between the rights of landlords and tenants is one of the key issues the Government had to consider in drafting this legislation. I found myself somewhere in the middle between the two extremes expressed by Senator Robinson and Senator Whitaker and the Bill is drafted accordingly. We are giving security of tenure. The landlord and tenant code comes into operation after 20 years. On the question of the grandson coming in on the death of the grandparent, he must be bona fide resident with the tenant at the time of the tenant's death. It is up to the court to decide, if the grandson was a very wealthy man and had a second house, whether he was bona fide resident or not.

What we have tried to do in this Bill is to meet the common good. I am convinced that we have achieved it in drafting the Bill.

[612] Question put and agreed to.

Section 10 agreed to.

SECTION 11.

Question proposed: “That section 11 stand part of the Bill”.

Mrs. Robinson: I should like to clarify the scope of section 11 (2) which provides:

Whenever, after the commencement of this Act, the rent of a dwelling is increased by agreement between the landlord and the tenant or by the Court, the amount of the increase shall not be payable until —

(a) the terms of the tenancy have been set out in a written form and signed by the landlord or his agent and a copy thereof has been furnished by the landlord to the tenant, and

(b) if regulations under section 24 are in force, the landlord has complied with the requirements of such regulations.

Mr. Raphael Burke: They will be in operation.

Mrs. Robinson: Could it not be that the landlord has complied with the requirements of regulations under section 24?

Mr. Raphael Burke: It was raised in the Supreme Court that the regulations, if they were not made, would be used as a reason to delay the Bill. It was for that reason that we put in “if”.

Mrs. Robinson: It would be a good enough reason to delay in the sense——

Mr. Raphael Burke: It is my intention to have the regulations in operation.

Mrs. Robinson: Would it not in that case be more normal to leave out “if” and have the landlord complying with the regulations?

Mr. Raphael Burke: The regulations will be in force.

[613] Mrs. Robinson: The terms of the tenancy must be set out in a written form and be handed by the landlord to the tenant. It is desirable that tenants are given possession of the written agreement, which is by no means always the case. How is it intended to enforce that? A lot will depend on the extent to which the tenant is made aware of this, even if there is agreement between the landlord and tenant and the tenant agrees to pay some increase. Many tenants will pay the increase rather than go to the District Court. Such a tenant is most in need of help, because quite often that tenant may not have legal advice. For example, in the case of an old age pensioner who offers an increase which a landlord is prepared to accept, there is agreement and it is not necessary to go to court. The tenant in particular does not want to go to court, but it is necessary to have some way of ensuring that the provisions of this section have been fully complied with. It may be that the Minister could do this as part of the regulations relating to registration. Perhaps a further copy could be lodged as part of the system of registration. It is not enough just to write in a provision that the landlord must provide the tenant with the copy of the agreement. We need firstly, some way of ensuring that the tenant knows he is entitled to it and that he need not pay the additional rent until he gets the copy, and, secondly, that it actually happens.

Mr. Raphael Burke: With regard to the tenant's knowledge of what he is entitled to, this comes back to the need for publication of tenants' and landlords' rights. That will be done. Unless the tenant gets an agreement and unless the landlord registers it with the local authority, the tenant does not have to pay the increase demanded by the landlord. It is not a question of one or the other. The landlord must do both, otherwise the tenant does not have to pay any increase. Of course, the effect of it is that the landlord will not be able to increase the rent until such time as the dwelling is registered with the housing authority. The advantage of this is that it provides a self-supporting mechanism for the registration of [614] all controlled dwellings. The regulations will be in force from the commencement of the Act. Up to now nobody knows exactly the number of controlled tenancies we have. This mechanism of registration will provide that information within a very short period.

Mrs. Robinson: I accept that the publication of the provisions and of the rights concerned will be helpful to tenants but I am not sure that we have yet secured adequately the position of probably a considerable number of the tenants we are concerned about who will do anything not to have to go into court and will prefer to reach agreement with the landlord and be prepared to pay an increase in the rent. These tenants ought to have the full protection of knowing that the landlord has complied with the regulations under section 24 of this Bill and also to have a written copy of the agreement. There is cause for concern because the tenant may not have access to legal advice. He may either go to a law centre or have access to a solicitor, but we need to be particularly concerned to ensure more than just the letter of the law, that the actual enforcement of it is secured. I am not satisfied that that has been fully achieved.

Mr. Raphael Burke: If a landlord does not register he is subject to a fine of £500 and I do not think landlords are going to leave themselves open to that. However, if there is collusion between the landlord and the tenant there is very little that any Government or legislation can do about it.

Mrs. Robinson: We will come to the penalties under the section where it may be more appropriate, and there I may develop further the problem of whether we will have proper enforcement. We have had various by-laws and various standards which have not been enforced at local authority level because of the absence of inspectors and the absence of a way of enforcing them. It will be very important to enforce the provisions in relation to this.

[615] Mr. Raphael Burke: I agree with the Senator.

Question put and agreed to.

Section 12 agreed to.

SECTION 13.

Mrs. Robinson: I move amendment No. 4:

In subsection (2), page 8, line 35, after “dwelling” to insert “and the prospect of suitable alternative accommodation being available to such tenants by the local authority”.

This is a key section in this Bill because it relates to the fixing of rent by the District Court as an interim measure until, as the Minister has assured us, he will introduce legislation establishing tribunals to carry out this function. It is necessary to clarify precisely what is meant here. The amendment which I am proposing adds a tenth factor which the District Court should take into account in fixing a just and proper rent. We will come back to what we mean by a just and proper rent. It is necessary to be very clear on that. It is worth looking at the fact that already we have nine factors for the District Court to take into account. They are the nature of the dwelling, the character of the dwelling, the location of the dwelling, the means of the landlord, the means of the tenant, the date of purchase of the dwelling by the landlord, the amount paid by the landlord therefor, the length of the tenant's occupancy of the dwelling and the number and ages of the tenant's family residing in the dwelling. In that context an important additional relevant factor is the one that this amendment seeks to introduce. It will introduce the factor and the prospect of suitable alternative accommodation being available to such tenants by the local authority. This very important background consideration is just as important as the other factors set out here, such as the nature, character and location of the dwelling etc., and the means of the landlord and of the tenant.

[616] We have a housing crisis, certainly in Dublin and I speak as a member of the Dublin City Council. We have a very long housing list and people have to be almost in a special category to be able to get any sort of priority in relation to housing. This is very relevant because we are talking about previously totally protected tenants in controlled tenancies and we now expose them to a change in relation to their tenancies and to the question of a rent being fixed in circumstances in which we still have to clarify precisely how that is being done and in which we invite the District Court to consider a very significant number of factors. We will have to come to those separately so that we can understand precisely what the district justice will be doing in relation to fixing rents. It is very relevant to know, in relation to a particular tenant in a local authority area, whether that tenant has any prospect of being housed by the local authority if he is unable to remain on in the place where he has lived previously as a controlled tenant. This would be a realistic background for the district justice and just as relevant as some of the other nine factors which the district justice will have to take into account. I hope this is an amendment which the Minister will feel able to accept in that context.

Mrs. McGuinness: I support Senator Robinson on this amendment, largely because, as I pointed out in my contribution on the Second Stage of the Bill, over the years we have used controlled tenancies and the whole mechanism of controlled rents to substitute this type of cheaply rented dwelling for the provision of local authority dwellings for people who cannot afford ordinary commercial rents. It is extremely relevant to think in terms of whether the person whose rent is being fixed is likely to be able, if that person cannot pay that sort of rent, to get local authority housing. It is no strange matter for the courts to consider this sort of thing because in claims by landlords for repossession of premises, in the Circuit Court at any rate, it is quite common for the judge to be well aware that this is part of a search for local authority premises. The Circuit Court judge's orders are [617] very often made in consideration of the likelihood of the person getting local authority accommodation. It would not be altogether without precedent in the courts to consider this sort of thing. Bearing in mind the history of the whole matter it is a relevant aspect.

Mr. Raphael Burke: As has been outlined by the Senators, the amendment to the criteria set out in section 13 (2) of the Bill to which the court is to have regard in the fixing of the gross rent of the dwelling attempts to include as one of the considerations the prospect of suitable alternative accommodation being available to the tenant by the local authority. I cannot see that this type of criterion can reasonably be applied in a matter affecting the relationship between landlord and tenant. The other items include, the nine referred to by Senator Robinson, have a direct bearing on the position of the landlord or the tenant. To bring in a third party as the amendment envisages would be at variance with how the section should properly operate.

Concern has been expressed that section 13 (2) could raise constitutional problems. It is a view with which I do not agree. However, the inclusion of something on the lines of this amendment would exacerbate the position and would put the section at risk on constitutional grounds. I am reluctant to say, therefore, that I cannot accept it.

Mrs. Robinson: It is always the practice to come to the amendment before the section, so in a sense we are discussing one aspect of the section before we have really thrashed out the problems relating to the section itself and how it is to be understood and how it is to be applied by a district justice. I will have views to express on that, but if the Minister is seeking to deny the relevance of this amendment he really fails to establish this in contrast to some of the nine factors which the district justice must take into account. For example, one could argue that the precise ages of some of the people living with the tenant is a reasonably extenuating factor. It could be a very relevant factor in some circumstances.

[618] The date of purchase of the dwelling by the landlord might go right back into a very early period, the amount he paid at that time might have very little particular relevance to the present and so on.

What is of deep and crucial relevance to the tenant, and any family of whatever age living with the tenant, is whether that tenant has alternative accommodation if that tenant cannot afford the terms of the rent fixed under the section. As Senator McGuinness has said, this is a consideration which would probably be submitted to a district justice by counsel in relation to the case and to which a solicitor would probably refer or seek to refer. Since there are so many factors being taken into account, it would appear that this very relevant consideration relating to the possibility of alternative accommodation for a tenant should be written into the section itself.

I will deal with the question of the potential constitutionality of the whole section when we come to deal with the section. The Minister has already referred to views that have been expressed and there is cause for some concern in relation to the method of fixing the rent, if we can understand precisely what that method is.

Mr. Raphael Burke: I am not denying the relevance of what the Senator attempts to include here. However, the other factors that are included in section 13 (2) relate to both the landlord and the tenant, and the Senator is proposing to bring in a third party. She is proposing that the national situation be included and that consideration be given to the ability of the local authority to provide alternative accommodation. The whole economic state of the country is being talked about. I believe, to say the least of it, that it would be undesirable for the reasons which I have already outlined to accept the amendment.

Mr. S. O'Leary: I find myself with some sympathy for the viewpoint of the Minister with regard to the addition of factors which are outside the circumstances of the tenant or the landlord and the other items to be taken into account [619] under section 13 (2) relating to the landlord and the tenant. The problem might not necessarily be overcome by the inclusion of this amendment but the valid point raised by Senator Robinson might be overcome if regulations requiring the registration of property — the general registration of property rather than property only under this Bill — were to be drafted in such a way that when recovery of possession was to be sought in a court, or any change in the terms of the tenancy, there would be provision for the notification of the local housing authority of the fact that such an application was made. They could then be made a party to certain of those applications and certainly to applications for the granting of possession, which are probably even more important than applications for the adjustment of the rent.

There are ways that this could be done by the Minister without including this amendment specifically because the amendment further exacerbates the difficulty of the section. The points made by Senator Robinson are very valid. We live in the real world and in the real world Circuit Court judges take these matters into account. In the real world District Court justices must be encouraged also to take the reality of the local housing situation into account. If we cannot put it down in writing, some other system of ensuring that they are adequately informed in that matter must be made available: to give the right to the housing authority to be heard with regard to that matter would go some way towards easing problems which some of us might have in that regard.

Professor Murphy: Although the section enjoins the court to have regard to nine specific factors, is it not true that the opinion of the court is the over-riding concept there and that in any court any judge would take into account matters not specified which would be relevant? A judge in any case in any locality would surely in his discretion take into account the prevailing local factors, including local housing.

[620] Mrs. Robinson: I am sorry to disabuse Senator Murphy of that view but when a section such as this requires the court to form an opinion, it must be formed on the basis of the factors that the district justice is told to take into account. The district justice, if he is exercising his discretion correctly, cannot take into account extraneous factors even if he believes — as I think a number of Members of this House believe — that this factor, for example, is a very relevant and important factor. If we do not write it in, then it is not one that the district justice can properly take into account. Although I understand the reservation that Senator O'Leary would have to putting in — and indeed the Minister has mentioned this — a reference to what appears to be a third party, the point has been very well made both at Second Stage and today by Senator McGuinness that we created this situation.

We are dealing with tenancies that are to a considerable extent a development in housing that occurred partly because of neglect by the Legislature. We did not monitor sufficiently precisely what was going on. We left the situation as it was and we left it to such an extent that it was possible, because there had been no adaptation at all, to mount a successful constitutional challenge. That is what has us in this very serious and difficult dilemma in which we find ourselves in relation to this Bill. Having done this we created a kind of cheaper housing in the private sector situation for certain tenants and gave them very substantial protection in it. For that reason it is extremely relevant that we build in a factor of regard for the possibility in relation to these tenants of there being alternative accomodation from a local authority. This is not imprecise or impossible for a district justice to take into account, but he will not be able to take it into account unless we write it in. So it is an important additional element to add this tenth factor, which is of much greater practical relevance than some of the other factors which we ask the district justice to take into account in the section.

Mr. Raphael Burke: I am grateful to [621] Senator O'Leary for his contribution and in particular for his sharing of my views with regard to the inclusion of this amendment to section 13 (2). On his point of the regulations and the wider scope that he has in mind outside of the controlled tenancies affected by this legislation, that is a wider question and I would not be in a position to go into it today.

On the basis of alternative accommodation being available and that landlords would be compelled to notify local authorities in the event of a dispossession situation arising, of course it is open to anybody to go to his local authority and make application for housing. Whether he is put on the housing list or not is, of course, another matter but one is entitled to go and make contact with one's local authority, which would be the reasonable course of action a tenant would take in the event of any question of dispossession.

As far as Senator Robinson's contribution is concerned, I am afraid I must stick with the point I made earlier with regard to the whole question of the undersirability of bringing in a third party to the list of criteria laid down to be decided by the district justice. As far as the question of cheap housing is concerned, we are conscious of the problems for tenants. There is no point in denying that it had been a fairly comfortable option from a national point of view to allow this 1960 Act to continue until the Madigan case. We are aware of the problems facing tenants and with that in mind the Government included section 23 in this Bill to give tenants financial protection as well as giving them security of tenure. There is no point in giving them rights regarding security of tenure if, at the same time, we are not prepared to give them some financial assistance to meet the extra rents that may be imposed under section 13 (2). It is with that principle in mind that the Government included section 23 in the Bill.

Mrs. Robinson: I think when we come to discuss section 13 we may have to refer to section 23 as well in order to have a full appreciation of the way in which rents [622] will be fixed and how it will affect the landlord and tenants. However, it does not cover the point of the amendment. I will not delay the House much more on this but I think it is an additional factor that is especially relevant to these tenancies because of the way they developed and because of the problems that arose and which we are trying to meet. It is much more relevant than many of the factors that have been listed. It would enable the District Court to come to whatever perception we may have of a just and proper rent, which is the objective here. I am not going to delay the House on this matter but the amendment is not withdrawn.

Amendment put and declared lost.

Mr. S. O'Leary: I move amendment No. 5:

In page 8, after line 35, to insert the following new subsection:

“(3) Where the terms of the tenancy are fixed by the Court under section 12, the gross rent shall not in any case exceed 7 per cent. of the open market value for the dwelling at the date of the application to the Court. The open market value for the purpose of this subsection shall mean the amount for which a willing purchaser would purchase and a willing seller would sell the dwelling, freehold with vacant possession, for use as a dwelling without further improvement.”

The terms of this amendment are that the rate as laid down by the court should be limited in its amount to a sum not in excess of 7 per cent of the open market value of the dwelling at the date of the application to the court. The purpose of the amendment is to put an upper limit on what the court may fix as the rent. We are giving the job of fixing the rent to the court without giving any indication as to what we consider would be appropriate in any particular case. I think it is right that we put a maximum figure on that. The court which we are asking to do the job will be the District Court. When the rent tribunal comes into operation, as promised by the Minister, it is only right [623] that the opinion of the Oireachtas should be made known, that there should be a maximum rent beyond which the court would not be allowed to go and that this maximum would be fair to the landlord and to whatever tenants would fall within the category of people to whom in the court's opinion the appropriate maximum should apply.

The figure of 7 per cent has been picked after full consideration. It was done as a result of a survey I undertook of the property market in areas throughout the country and for properties not covered by this measure. It is reasonable to say that it is most unusual — indeed very rare — that the amount of the open market rent between a willing lessor and a willing lessee should exceed 7 per cent of the open market value of the property at the date of the agreement. There are good reasons for this that I shall deal with in a moment.

I am not seeking to apply to this category of dwellings anything that does not apply by the operation of market forces to the rest of the market. When people decide to let a property through an auctioneer, that auctioneer seeks to get the highest possible rent from people who wish to get the accommodation. The amount of the rent does not normally exceed 7 per cent of the open market value of the property. In these circumstances, however, there is an open market situation, where people can choose property A or property B. Therefore, the open market rent is arrived at by the play of ordinary market forces.

Ordinary market forces will have no part to play in the establishment of these rents. Therefore, the establishment of the rents without guidelines from the Oireachtas will be particularly difficult. It would not be possible for an auctioneer when giving evidence in the District Court to say what in his opinion should be the proper rent of the property. It is up to us to give him some guidelines in the expert advice he can give the court and to give the court some guidelines in the maximum rent that should be applied.

The figure of 7 per cent has been picked [624] because it gives a real return to the investor in the property. That figure is considerably in excess of the amount of money people receive if they invest in commercial property. In a good commercial property the investor would not get 7 per cent at the present time, even with inflation at 20 per cent. The reason is that good commercial property does not fall in value and the investment of the individual is protected. Similarly, where a person owns a property, provided it is properly repaired its value does not drop. Therefore, the person is getting an inflation-proof return on his investment because at the end of the next five-year period he will be entitled to another renewal, which will be subject to the maximum of 7 per cent — not 7 per cent of the market value of the property at the date of the original application but as it exists at the date of the new application.

This seeks to introduce a further safeguard for both landlord and tenants and it also seeks to act as a guide to the District Court with regard to the maximum rent. The real return a person gets on his investment will depend on the rate of inflation. Should inflation unhappily continue at 20 per cent over the next five years, the real return to the owner of the property — I am speaking of the person who was fortunate enough because of his own circumstances and the circumstances of the tenant to achieve the maximum — would be 4.6 per cent. If one were to allow a reasonable margin of 1 per cent for replacement of the property — that is 1 per cent of the market value at the date of application — and if one were to allow 25 per cent of the rent to be used for the purpose of repairs, even in those circumstances a real return of 2 per cent would be available to the landlord, having made full allowance for repairs and the replacement of the dwelling at the end of a 100-year period, or a 75-year period if one takes the site value into account. Normally, the site is one-quarter of the value of a dwelling of that type.

To people not used to the question of a real return on income, a return of 2 per cent might appear small. The Minister is aware that the Housing Finance Agency [625] Act will guarantee to investors — pension funds, insurance companies and so on — a return over inflation which will depend on the amount they will be willing to tender. I am advised that the tender amount in those circumstances is likely to be approximately 2 per cent more than the rate of inflation. The experts say a good investment is any investment which yields to the investor a return of 2 per cent more than the rate of inflation. In those circumstances, the return of 4.6 per cent envisaged under my amendment as being applicable where the court thought the maximum rent should apply and that rate adjusted to a real return of 2 per cent if account is taken for repairs and replacement of the dwelling, represents a fair return to the landlord while putting an upper limit on the amount of rent a person will be called upon to pay. The advantage of doing this cannot be overstressed.

Most of the applications in the agreements under this legislation will be agreed outside the District Court and outside the rent tribunal; most of the agreements will be agreed by the tenants without the benefit of legal advice. It is in an attempt to strengthen their bargaining position and to reduce the number of occasions when it will be necessary to resort to the courts that I am suggesting this guideline should be included in the Bill.

I will give an example where this would be necessary. If an artisan dwelling in the inner city of Dublin was sold on the open market for letting without further improvement, it would be reasonable to assume it would sell for £15,000 to £20,000. If, however, the improvements were carried out and this property was let to a totally different category of person for multiple use, it could have a substantial additional value. My amendment for the purpose of valuation insists that it be valued as freehold with vacant possession for use as a dwelling without further improvement. In those circumstances if the property was valued by a competent valuer at £15,000 both the landlord and the tenant would know at the start of their negotiations that the maximum rent for that property would be £1,050 per annum. The landlord would know that [626] would give him a real return on the value of his property at the date of his application and the tenant would know that was the maximum the court could assess him as being liable for. Armed with that information it is likely that the landlord and tenant would reach an amicable agreement. Agreements reached amicably will be much more in the interests of the tenants than agreements arbitrated on by a court tribunal.

This amendment is similar to that which I mentioned on the previous Bill. In an attempt to include a percentage for replacement — which strictly is not necessary because a house which has been properly repaired will not need to be replaced in the foreseeable future — I have raised the suggested percentage from 6 per cent to 7 per cent. In these circumstances, I consider this to be a worthwhile amendment which the Minister would be well advised to accept.

Mrs. Robinson: I support Senator O'Leary. He set out very clearly and cogently his arguments and has done a great deal of homework. When we were discussing the Coalition's Bill, and the same holds true here, I considered it important that we fix a maximum ceiling in relation to what can be regarded as a gross rent. The method proposed in this amendment is very fair and adjustable — it will be a percentage relating to the value at the date of application to fix rent — and is particularly necessary in relation to the type of tenancy we are dealing with. We have had an artificial situation. The types of property we are talking about — a number of them quite small — are located in very valuable and attractive areas and their market value could be very high. I emphasised this point very strongly when we were discussing the previous Bill. If we were determining the rent on the basis of demand, the demand could be artificially high, but it would still be the market demand. Some types of property would be particularly attractive to single people, particularly if they joined together to share the premises and if individually they had relatively high incomes, such as people working in banks, insurance and so on.

[627] The Minister might say the factors the district justice will be taking into account will rule out the problem of high market rents being imposed. I do not think that will be the case. Senator O'Leary was correct when he said that a number of the rents will not be fixed by the District Court bearing in mind the nine factors involved. We will have to thrash out in some detail exactly what will be involved in that process. Even accepting that process, I think Senator O'Leary was right when he said that in a number of cases the tenants will not want to go to the District Court and the landlord and tenant will be seeking to agree on the rent. Unlike the District Court there is no duty on the landlord to take into account the nine factors I mentioned earlier. The landlord does not have to take any factors into account. He can say he has other tenants looking for the property who would pay him the rent he is asking, and he would consider that that is the rent he is entitled to.

This would be a realistic way of controlling the situation, in particular in relation to tenants who will do almost anything rather than have to go to court. There are a number of elderly tenants in particular in that category. The strain and tension induced at the prospect of court proceedings would be too much for them to contemplate and they would rather throw themselves on the resources of the corporation or local authority housing department than go to court. For social reasons, we must know the ceiling we are talking about in relation to tenancies which have been in an artificial and sheltered situation for a number of years, which in many cases are in prime centre city locations and which are very attractive, because some of these houses could have a high market value.

When we come to deal with section 13 it will be necessary for us to be aware of how the district justice will go about considering the nine factors mentioned. One way could be to fix the gross market rate and then start taking the factors into account. I will want to know if this is what the Minister has in mind when we come [628] to section 13 but, in any case, either consciously or subconsciously, because of the practical necessity for it the district justice will take into account what the free market rent for the particular property would be. That is certainly what the landlord would have in mind in seeking to come to an agreement on an increase in rent, because the landlord is not required in any way to take into account any of the factors in section 13. They are factors which only a court must take into account in fixing the rent. It seems to me that this is a very reasonable, very well thought through, very well structured amendment. The Minister should be prepared to accept that it would be an improvement in the overall protection and that it is also fair to landlords. It gives them a fair return for the property and does not interfere with the fixing and adjusting upwards of rent in the years to come.

Mr. E. Ryan: If this amendment were accepted the almost inevitable result would be that the Bill would be rejected again by the Supreme Court, and certainly that is not what the mover would wish to happen. Some of the other factors which the district justice has to consider are in fairly grey areas. It would not be obvious to what extent he was taking them into consideration. This is a clearly defined formula which the proposer is trying to impose on the court — that the rent shall not be more than 7 per cent. If the Supreme Court take the view that this would have the effect of making the rent lower than it would otherwise be, then I think they would do as they did in the past and reject the Bill. Therefore it would be self-defeating.

The reason why they may accept some of the other restrictions in section 13, some restrictions which it could be argued would affect the rent which the landlord would get in the absence of any restrictions, is that this is a grey area. In this case the Senator is imposing a formula which can be quite clearly estimated: whether 7 per cent is a return which is less than the landlord would otherwise get. Of course we have no ideas what may happen in the future in regard [629] to inflation, in regard to rates of interest, and so on. This figure would be in the Act and it might be affected by all kinds of things in the future. It seems to me that if this amendment was accepted by the Minister, a Bill including that amendment would be rejected, almost inevitably, if it went before the Supreme Court. I am sure that is not what the proposer had in mind and, for that reason, it would be self-defeating.

Mr. Raphael Burke: The problem is that the amendment goes against the spirit of the criteria in subsection (2) of this section for determination by the court of the just and proper rent of a dwelling. Subsection (2) gives a court considerable discretion in the setting of the gross rent and avoids setting any arbitrarily fixed limit which the rent should not exceed. In individual cases the landlord could be denied a just and proper rent for his dwelling, something which was specifically precluded by the Supreme Court's judgment of February last.

One could easily imagine a situation where an impoverished landlord with a wealthy tenant could be prevented by the amendment from receiving his just and proper rent. This would raise some constitutional questions, especially since the Supreme Court struck down the arbitrary phasing-in arrangement in the last Bill. I consider that any arbitrary setting of figures, as this amendment does, could run risks of being found unconstitutional.

The amendment could easily result in the 7 per cent of the market value being taken as the norm for the court in determining rents, and it could result in rents generally being set at a higher level than would result from the application of the criteria in subsection (2) of section 13. In the circumstances I have outlined I find myself unable to accept the amendment. I take this opportunity to congratulate Senator O'Leary on the amount of work he obviously put into the preparation of his case for his amendment which showed a tremendous depth of research. However, for the reasons I have outlined I find I am not in a position to accept the amendment.

[630] Mr. S. O'Leary: I should like to respond to a number of the points made. It is not sufficient for Senator Ryan to say that, as a result of this amendment, there would be a greater likelihood that the section would be found to be unconstitutional without indicating exactly why that is the case. As I understand the reasoning of the Supreme Court, outside the question of possession, which is not affected one way or the other by this amendment, and which is a different, difficult and thorny problem which we have already considered, the property right which the Supreme Court decided needed to be protected was the property right to receive a fair and just return for the investment which the person made in the property.

In present circumstances my amendment gives a fair return to the landlord. There is no point in saying my amendment might prove unjust in 20 years' time, because we are not legislating for 20 years hence. We are legislating in the present circumstances, and we are legislating with inflation running up to 20 per cent. I am saying that from zero inflation or from negative inflation to 20 per cent will give a fair rent to a landlord. I am sure that, if my approach to the matter was incorrect, the Minister would have pointed that out. It gives a real return to the landlord and there are very few investments in the State at the moment which are giving a real return. Anybody who has invested in a building society is not getting a real return on his or her money. People who have invested in any Government stock are not getting a real return on their money. People who have invested in almost any investment you could imagine, the Stock Exchange or anything else, are not getting a real return on their money when inflation is taken into account. Anybody who has money on deposit in the bank, even at the present outlandish rates of interest, is not getting a real return on his or her money.

The investment opportunities available to people with money, which gives them a real return on their money, are very few indeed. Because my amendment gives the landlord who happens to receive [631] the maximum a possibility of a real return on his money it is by far and away one of the finest investments he could make in the State. Between that and any reduction which the court might make, there is ample opportunity for that investment to be reduced from the pinnacle on which I have put it to being on a par with other investments in the State. Most investments in the State are showing a negative interest rate of 7 or 8 per cent; after making all allowances for repairs and all allowances for replacement, mine shows a real return of 2 per cent — surely a unique position.

I might be asked if I am in favour of the rights of the tenant why I am in favour of putting this in. For exactly the reason so eloquently put by Senator Robinson that we have here an artificial situation with regard to 50,000 tenants and we must give some guidelines, I do not accept that for the Oireachtas to tell the court it should not set a rent of more than a certain amount is an interference by us in the duty of the court.

Leaving aside the Supreme Court, the court under this Bill has only the duties that we give to it. We are the Legislature. The District Court has only the rights that we give it. If we say that they are not to fix a rent of greater than 7 per cent then we are not in any way interfering with a right of that court because that is not one of the rights which the court has either in natural law, under constitutional law or in any other way.

The other matter which constitutes a more substantial objection is that it might become the normal. That is a much more substantial objection and one to which I gave greater consideration. It is possible that more properties would be fixed at that rate than would otherwise be so fixed if this amendment was passed. One must balance that disadvantage against the fact that if this amendment or one like it is not passed, there certainly will be many hundreds and thousands of tenancies which will be fixed at figures far in excess of that because of the ignorance and/or reluctance of tenants to go to court, because of the pressure of the landlord will be able to bring to bear on them and, [632] above all because of the artificial nature of the market situation from which we are emerging. On balance I am quite happy that the court will be able to use its discretion in this matter and will be able to look at this 7 per cent as a maximum. But it will give people something about which to negotiate. It will mean that every tenant who knows to within a few thousand pounds the value of the property in which he or she is presently situated — with vacant possession — will now know the maximum rent that he or she could be called upon to pay. That certainly is something well worth including in the Bill. I see no reason whatsoever why we should not — and it does not run counter to either the decision of the Supreme Court — insert a fixed percentage. As long as that fixed percentage is fair to the landlord then it improves the possibility of the Bill being held to be constitutional rather than being regarded as no improvement. For that reason I think the amendment should be passed.

Dr. Whitaker: I intervene briefly just to be sure that I understand the argument made by Senator O'Leary, particularly the argument that this would be the best investment ever. That seems to me to be based on certain assumptions which he has not made explicit. One of these is that the open market value of a dwelling will improve, year by year, at least in line with inflation. If he does not make that assumption as a starter then he cannot go on to say that there is any real return coming out of the 7 per cent or less which is being given on the basis of that value. When he was quoting the 7 per cent and saying that it yielded approximately 4 per cent even at 20 per cent inflation he was in danger, as he realises, of positing that this 7 per cent would not be a limit but a norm. In any case, what I am trying to establish is that he is assuming that the open market value of property goes up inevitably, year by year, in line with inflation. It has not and that is the nub of the thing. I am sure he is aware that one important Irish insurance company which runs a property modules scheme showed a rate of return for 1981 which was only a fraction of the rate of inflation. That [633] relates to the highest quality commercial property. I am just putting in a query as to whether he should not perhaps be more cautious about the assumption that property values rise automatically in line with inflation.

Mr. S. O'Leary: Could I answer that?

Acting Chairman (Mr. J. Harte): Senator Murphy has the floor——

Professor Murphy: I have some difficulty in coming to terms with these rarefied regions, being a man of little property myself. Am I not right in thinking that if Senator O'Leary's amendment is passed, just for the sake of argument, then what we would have in section 13 (2) is a provision which defines the limits for rent and deals with the guidelines factors which should determine a just and proper rent. Then in subsection (3) we would have the 7 per cent, the gross rent being defined as not in any case to exceed the 7 per cent. The total effect, it would seem to me, of that section would be very much to favour the investor, the landlord. There is an inconsistency in Senator O'Leary's argument — and I think Senator Whitaker suggested as much — in that sometimes we understand from Senator O'Leary that we are talking about a just and generous return for investment as if 7 per cent was the norm. But at other times, and in the amendment as phrased, it would seem that 7 per cent is very much the maximum. Taken together with subsection (2) it would suggest that only very occasionally will a landlord get the 7 per cent.

Mr. Raphael Burke: I share Senator Murphy's views on this. There is considerable inconsistency. Leaving that aside I foresee a number of problems. First of all, the original Supreme Court judgment — the Madigan-Blake judgment — by implication was quite opposed to the setting of any arbitrary limits. Again, further by implication, the judgment on the referral case was against phasing in and again was opposed to any arbitrary limits being set; that is on the constitutional [634] problems of this amendment which are quite serious.

But on the practical problem there will be subsection (1) then subsection (2) which sets out the nine factors to be taken into account by the court in the first place and then by the rent tribunals when they are set up, such things as regards the nature, character and location of the dwelling, the other terms of the tenancy, the means of the landlord and the tenant, the date of the purchase of the dwelling by the landlord and the amount paid by him therefor, the length of the tenant's occupancy of the dwelling and the number and ages of the tenant's family residing in the dwelling.

Then we are to have a further subsection — as proposed here by Senator O'Leary — which sets this 7 per cent of the open market value of the dwelling at the date of the application to the court. In practice what will happen is that 7 per cent will become the norm rather than the limit. I think it would result in rents generally being set at a far higher level than would result from the application of subsection (2) as included in the Bill at this stage.

Mr. S. O'Leary: Might I deal with a number of points raised on my amendment? I am indebted to Senator Whitaker for pointing out to me that I should have made clear that of course, there are a number of assumptions that one must make in dealing with any matter. One of the assumptions which I made with regard to the question of this amendment is that property does tend to run parallel with inflation. Of course we live in the real world and in the real world there has been the fact that for the last 50 years property has appreciated at the same rate as inflation. In the real world, it has been a fact for the past 50 years that property does appreciate at the same rate as inflation but allowing for the fact that there may be a time lag, sometimes inflation may run slightly ahead of property and at other times property may run ahead of inflation. But in the only property indices published in this country over the last 40 years, the long-term trend has been almost magical in that the rate of [635] inflation and the value of the property have gone hand in hand. My amendment does make that assumption. None of us would be happy to legislate on the basis that property was about to deflate. That is not going to happen.

There are two other points I would like to deal with. One is the question of the difficulty in which Senator Murphy finds himself as a result of the fact that I have done some calculations. I would like to put on record that one of my maths teachers one time was the same Senator Murphy——

Professor Murphy: A scandalous revelation——

Mr. S. O'Leary: —— who likes to be remembered now as a historian. But I know that his real forte is mathematics and that he is really only a mathematician hiding behind a screen as a historian. I realise the difficulty that Senator Murphy and others would find when faced with a figure of 7 per cent which appears in this inflationary situation to be unreal. For better or worse, as a part of my position I have had dealings with the property world. In a property which is going to maintain its value a yield of 7 per cent is excellent; the rate of 6 per cent would be considered quite good. That is because the basis on which the percentage is calculated is a sliding basis; in other words at the end of the five years the 7 per cent is not 7 per cent of the old price but is 7 per cent of the new price and consequently the person receiving the 7 per cent is proofed against inflation and that is very valuable indeed. Senator Murphy asked how I can square that excellent return for the owners of the property with my assertion that by putting down this amendment I am doing a favour to the tenants. It is precisely for the reason that the people who own this property and the people who are tenants in these properties do not realise what the proper rate of return on the property is, that they need protection. I maintain that in the absence of some guidelines from the Oireachtas, in a property which I have mentioned previously — a kind of [636] artisan's dwelling in the Dublin area worth, without further improvement, £15,000 to £20,000, the kind of rent which could easily be set for it would be a rent which would not reflect a proper return but a return which would reflect scarcity.

We are within our rights to legislate away the scarcity value of property because we do it in other areas, as mentioned in particular by Senator Robinson and other speakers on the Second Stage of the discussion on this Bill. We legislate in the areas of the control of drink prices and in a lot of other areas; we interfere with property rights, but we do it always subject to a proper return to the people who are making the investment. If we do not put some upper limit on the amount that the court could fix it may well be that the court will be forced by looking at section 13 (1) and (2) unamended to take into account the scarcity value of the property and such will be forced to set a rent which is above a reasonable return for the investor. What we are asked to do by the Supreme Court is to ensure that there would not be an arbitrary or unfair interference with the property rights of the landlord.

The Minister made the point that he is afraid that this will be considered as an arbitrary or unfair imposition on the landlord. Because it is a reasonable return it cannot be regarded as such. If a court is an interference with the property rights of the individual, the judgment makes quite clear that an interference with the property rights of the individual is not of itself unconstitutional; it must be an unjust interference with the property rights of the individual. The mere fact that we are interfering with the property rights of the individual is not enough to make it unconstitutional; it must be an unjust interference with the property rights of the individual. Nobody could say that the implementation of a maximum like this for the benefit of both landlords and tenants is an unjust intereference with the rights of landlords and tenants. While it will give a fair return to the landlord it will protect the tenant from the worst abuses of the unnatural situation which will be created when all these tenancies are decontrolled at the [637] same time. For that reason I wish the amendment to proceed.

Mrs. Robinson: I find, in regard to the arguments raising doubts about this amendment, that the case for it strengthens, because when we come to section 13 when we have dealt with this amendment and hopefully adopted it, we shall have to consider that there is no control at all over the upper rent that the district justice may fix. He takes into account a number of factors and how much store he will lay by them we will have to consider. Senator Eoin Ryan made a very revealing comment when he criticised this amendment as being very clear and precise and therefore in his opinion might raise a constitutional problem. He pointed to the fact that the factors to be taken into account by the district justice are in grey areas — somewhat similar language to what I used when I said that in my view this section fudges but does not really fudge enough to get over the difficulty that is envisaged. When we come to section 13 we shall have to consider this question of how the district justice addresses himself to fixing the rent that he is going to be required to fix.

Sitting suspended at 2.30 p.m. and resumed at 3.30 p.m.

Mrs. Robinson: In the discussion we had before the break on amendment No. 5 the Minister was concerned that if it was put into the Bill then the 7 per cent return which would be the maximum fee a landlord could get for the rent would become a norm. He expressed worry about that. Indeed, Senator O'Leary conceded to some extent that there was some possibility that it would not become a norm but a factor in the calculation of the rent. Obviously if it is a court calculation then the exercise that the District Court would engage in in considering the other factors would have an influence and a bearing on that figure. What we have to bear in mind is that at the moment there is no norm, there is no ceiling on the rent that can be fixed. That is the cause of worry because the district justice is going to be required by section 13 to [638] do certain things and we are coming to the obligations he will have to consider. He will have to consider the nine factors contained in this section in fixing the rent.

The first thing a landlord presumably will do is to say the rent he should get for this is the rent he would be entitled to on the basis of the demand that exists for this property either in relation to comparable properties in the same area or circumstances or even in relation to the fact that there are a number of tenants who are prepared to offer a certain rent to him. That can be any rent at any level. That would fix the free market level of the rent. Then the district justice would engage in his calculations. There is no control over that. As we have mentioned repeatedly on Second Stage and earlier today, it is proper and appropriate in relation to any legislation which is concerned about the future of a particular sector of property, rent-controlled premises which have been dealt with in a certain way and which have been in a sheltered capacity where they have been immune from market forces, that the Legislature would seek to put upper and lower limits. Certainly, it is appropriate they put upper limits on those market forces because they are now artificial market forces. They are artificial market forces because of the location and the kind of tenancies which hitherto have been under such control. Therefore, it is realistic to expect that high rents might be offered by others who would wish to become tenants of those properties. The district justice could not ignore this, and he must be able to take into account the rent that would be offered for these premises if other tenants were to be put into them.

Senator O'Leary is seeking in this amendment which I support, to control in a very fair way, giving a fair return to landlords, but not an unlimited return. We are not giving either landlords, individual landlords or companies who have been clever enough to buy up former rent-controlled properties, the prospect of the kind of unlimited profits they may have thought they could make. We are seeking to control the possibility of unlimited profits while giving individual [639] landlords and companies who happen to be landlords of properties a fair return for their money. Senator O'Leary has shown in the statistics and actuarial material he has compiled that it would be a very fair return in comparative terms. Therefore, I do not think the Minister has given adequate reasons for rejecting the amendment as a matter of policy. I do not think it is an adequate or, indeed, a substantiated argument to say that the measure would be a danger in that it might be unconstitutional. That is not the case. I do not read into either the Madigan and Blake judgment or the subsequent reference judgment the rather broad statement of the Minister, that it prevents an arbitrary ceiling on rents. First of all, this is not arbitrary. It is well calculated and it is done in line with other rents. It is based on an assumption that property will increase in value. If that assumption were to change then the Legislature ought to bring in amending legislation in a decade or so if things have changed so much that property is no longer going up in value. None of us sees the likely prospect of this.

We can comfortably assume that for at least a decade the current land values will continue to increase in relation to the inflation rate at more or less the same rate as they do at the moment, and have done for a long time. That is a safe assumption on which to put forward a policy such as this which would introduce control. I wanted to say that on the grounds of policy and on the argument that it might be potentially unconstitutional it does not appear to be in any way a factor which is different from the other factors that the District Court will have to take into account. If the Minister thinks it is unconstitutional, then so are the other factors and we have the same problem. I do not think it is an answer for Senator Eoin Ryan to say that the other factors may withstand a challenge because they are in a grey area. In other words, because they fudge things nobody knows what they mean. The amendment put forward by Senator O'Leary is clear. It has the merit of being clear but that does not make it unconstitutional. It is [640] either as valid as the other factors or they are all invalid and they will all be struck down as being unconstitutional in due course. That is something that would be very serious as a consideration for all of us. This is not depriving of property, is not unjust, is not an unfair depreciation but is a balanced judicious control in the public interest in the exigencies of the common good and the principles of social justice of the property rights involved.

Mr. Raphael Burke: I have already given in some detail the view of the Government and the advice available to us with regard to the possible constitutional difficulties that would arise from the arbitrary setting of figures suggested or at any figure because of the implications of the judgments of Madigan-Blake and the referral cases. I am not a lawyer and all I can go on is the best legal advice available to me. I have given that to the Seanad. Senator Robinson, Senator O'Leary, myself and the Seanad generally are at one in trying to ensure that whatever rent is fixed is not going to be above what would be just and proper rent.

As a Government in drafting the Bill we had to look at a balance between the rights of the landlord and the tenant taking into account the two Supreme Court judgments and the legal position we find ourselves in. Senator Robinson made the point that the district justice, in the first place, and the tribunal at a later stage, will have to look at the market rent, what the property would get if there was a willing landlord and tenant starting from scratch. For that reason and to avoid the market rent we went for what the Supreme Court said, a just and proper rent. I do not think that the district justice can take into account what other rents are paid in the area. Senator Robinson said this morning that the district justice will be tied in his consideration to the criteria laid down in section 13 (2). When we discussed Senator Robinson's earlier amendment No. 4, where she suggested inserting “the prospect of suitable accommodation being available to such tenants by the local authority”, Senator Murphy said that the district justice would be able [641] to take that into account together with the other nine points set out in 13 (2). Senator Robinson said he could not, that he would be tied to the nine points. You cannot have it both ways. The district justice will be tied to what is set out in 13 (2) and the rent tribunal, when set up, will also be tied to 13 (2). If you go along the road proposed by Senator O'Leary, leaving aside the constitutional arguments altogether, this level of 7 per cent will become the norm, rather than a figure to be decided on. I honestly believe that that 7 per cent will be far higher in the long run than what is included in section 13 (2). It must be remembered that we are not talking about a market rent as such. We are talking about a just and proper rent.

Mrs. Robinson: Whatever that is.

Mr. Raphael Burke: I remind the House that a just and proper rent has regard to such things as the nature, character, location, and other terms of the tenancy, the means of the landlord and of the tenant and the date of the purchase of the dwelling by the landlord. For example, Senator Robinson made the point about some speculative company buying in anticipation of a court decision. The district justice will have to take into account when calculating the rent the date of purchase of the dwelling by the landlord — the amount paid by him therefore, the length of the tenant's occupancy of the dwelling and the number and ages of the tenant's family residing in the dwelling. That is a very strict set of rules. I feel that that will be in most cases far lower than what I fear would arise from Senator O'Leary's amendment setting a level of 7 per cent, which he intends to be the just and proper figure. We would be making a serious mistake if we decided to tie ourselves to that 7 per cent because it will very rapidly become the norm.

Senator Robinson said earlier that the district justices might start off with a market rent. So be it. If they start off with a market rent, they have to take all of the nine criteria into account, which would be far beneath the market rent. If you [642] start with the 7 per cent figure, that figure will be the end result of the deliberations. I remind the House that this is an amendment adding a subsection. Section 13 would then read:

(1) Where the terms of a tenancy are fixed by the Court under section 12, the rent of the dwelling shall be the gross rent reduced by an allowance for any improvements, and any such allowance shall be such proportion of the gross rent as is, in the opinion of the Court, attributable to the improvements.

(2) For the purposes of subsection (1), the gross rent shall be the rent which, in the opinion of the Court, would be a just and proper rent having regard to the nature, character and location of the dwelling, the other terms of the tenancy, the means of the landlord and the tenant, the date of purchase of the dwelling by the landlord and the amount paid by him therefor, the length of the tenant's occupancy of the dwelling and the number and ages of the tenant's family residing in the dwelling.

with the addition of the following subsection:

(3) Where the terms of the tenancy are fixed by the Court under section 12, the gross rent shall not in any case exceed 7 per cent of the open market value for the dwelling at the date of the application to the Court. The open market value for the purpose of this subsection shall mean the amount for which a willing purchaser would purchase and a willing seller would sell the dwelling, freehold with vacant possession, for use as a dwelling without further improvement.

Quite honestly, I accept the good faith of Senator O'Leary, Senator Robinson and others who have debated this point. I accept that they are trying to be fair and just. However, what they are doing is imposing a 7 per cent norm which would be far higher, in my interpretation of subsection (2), than what is intended by the Government and by myself.

Amendment put.

The Committee divided: Tá, 22; Níl, 16.

[643] [644]

Blennerhassett, John.

Bolger, Deirdre.

Bulbulia, Katherine.

Burke, Ulick.

Butler, Pierce.

Byrne, Toddie.

Dooge, James.

Fausset, Robert.

Ferris, Michael.

Harte, John.

Higgins, James.

Kearney, Miriam.

Lawlor, Patsy.

McAuliffe, Timothy.

McGuinness, Catherine.

Magner, Patrick.

Mannion, John.

O'Connell, Maurice.

O'Leary, Seán A.

O'Mahony, Flor.

Robinson, Mary.

Ross, Shane P.N.

Níl

Cogan, Barry.

Cranitch, Mícheál.

Fallon, Seán.

Fitzgerald, Tom.

Hanafin, Des.

Hillery, Brian.

Hussey, Thomas.

Kiely, Dan.

Kiely, Rory.

Lanigan, Mick.

Mullooly, Brian.

Murphy, John A.

O'Rourke, Mary.

O'Toole, Martin J.

Ryan, Eoin.

Ryan, William.

Tellers: Tá, Senators Butler and J. Harte; Níl, Senators W. Ryan and Cranitch.

Amendment declared carried.

Question proposed: “That section 13, as amended, stand part of the Bill.”

Mrs. Robinson: We have already had a certain amount of discussion on the subsection relating to the fixing of rent, but it is important to be clear as to how this subsection will operate. The District Court, and subsequently the tribunals when established, will fix rent in accordance with nine factors which must be taken into account. When that rent is fixed it is being called the “just and proper rent”. It seems that the Minister is placing very considerable reliance on that wording, but in the reference to the Supreme Court, on which judgment was given on 19 February 1982, that wording is used by the Supreme Court in relation to the gross rent, the market rent, which was being fixed under the Coalition measure. Calling it a just and proper rent does not necessarily imbue it with any special characteristics or value. We must concern ourselves with what it means, how the district justice will operate it and whether this is the appropriate way to go about it. Speaking for Senators on this side of this House, I am happier that at least there is a fair feeling on what this just and proper rent will be and that will be of great assistance to district justices. They will at least have some parameters within which to operate.

The passage in the reference judgment where the Chief Justice on behalf of the court referred to the words “just and proper rent” was after the judgment had considered section 6 of the Coalition measure which required the District Court to fix the gross rent, allowing for reductions for allowances, and section 9 which allowed a phased-in payment over five years if the circumstances of the tenant warranted this for payment of the gross rent. At page 17 of the judgment the Chief Justice continued;

Having carefully considered the submissions of Counsel on both sides of the case, the Court is of the opinion that the intent of the Bill is that the gross rent to be determined by the District Court under section 6 in [645] accordance with the criteria therein set out is to be regarded as the just and proper rent.

The Chief Justice continued:

The effect of the rebates permitted by section 9 is that for a period of five years after the passing of the Bill landlords are to receive an amount which will be substantially less than the just and proper rent payable in respect of their property. In the absence of any constitutionally permitted justification this clearly constitutes an unjust attack upon their property rights.

We have the words “just and proper rent” applied to a system of calculation which the district justice will be asked to do. I think it is important for us to understand precisely what that system of calculation will be.

If Senators look at subsection (2) they will find it very difficult to calculate precisely how this will work. The only way in which I can see it work is when the district justice will be enabled to start at a reference point involving the free market rent. If he starts at that reference point, at least he will have a figure of what the rent would be if the property were put on the market. That is a problem with which District Courts are faced normally because of their dealings with that sort of thing. In the Supreme Court case it was the growth rent which was identified as the just and proper rent.

The difficult problem is whether it is open to us as a Legislature to do what I believe we all would want do do: to bring in a just and proper rent that will be below the free market trend without being unconstitutional. If we cannot do that we will be faced with the other way of trying to resolve the social problem, that is, that the just and proper rent will be the market rent and that the difference between what the tenant will be able to pay and the market rent will have to be borne by the taxpayer, because that will be the amount that will have to be paid in supplementary welfare allowances to tenants if such tenants find themselves unable to pay the rents.

It is very important for us, therefore, [646] to try to clarify precisely what is meant in this subsection. We are now talking about three different names for rents, and it is important that we should clarify what we mean by them. There is the market rent. That is fairly easy to understand because it is the rent that would be offered on the open market. There is then the concept of a fair rent, a concept which applies in the UK, which had been examined by a fair rents tribunal. We referred to this on the last occasion when we said that whatever else we might call such tribunals we could not call them “fair rents tribunal” because we could not have such a system here without being unconstitutional — we could not introduce a system of rents which would be significantly below market rents by their nature and process — possibly 20 per cent below market rents.

There are two types of rent which would have to be considered by “a fair rents tribunal”, a term which the Minister apparently has ruled out. In the Supreme Court a fair rent was equated with a just and proper rent — I have quoted the reference. Therefore, it is important that we be told what the Minister means by “a just and proper rent”. We should be told how a district justice will be enabled to arrive at a just and proper rent. I must ask the Minister to explain, at greater length than might be normal on Committee Stage in answer to a query, how he envisages a district justice responding to the responsibilities being placed on him by section 13. A district justice cannot pull a figure out of the blue: that is not the way these things operate because there must be a reference basis.

Therefore, the Minister should clarify for us whether the reference figure is the market rent, or is it the rent existing at the time of the passage of this Bill? We all know that would be a very low rent, being a controlled rent, the type of rent which was declared to be unconstitutional because it had not been increased in any way, because it was not a rent that could be adapted to any normal conditions. I do not think that could be the reference. I suggest a district justice will need some reference base. Having got that, I suggest it should be the market rent.

[647] Having got that, the district justice will then apply various factors, and it would be helpful if the Minister would give us some indication of what loading is to be given to each factor, how important are they? I will take two aspects of this situation.

There is the income of the landlord and the income fo the tenant. Let us first take the income of the tenant. To what extent will that be a factor in fixing the just and proper rent? If we take into account the provisions of section 23 — I have tabled an amendment on an alternative way to do it — we will be subsidising the rent. To what extent will the income of the tenant be a determining factor? If the tenant is well able to pay the fixed rent there will not be any need to subsidise the rent, but if the tenant is not able to pay the fixed rent, the rent will be subsidised. Therefore, there will be circumstances in which the income of the tenant will be relevant. But what about the income of the landlord? How will the income of the landlord be relevant when the court or tribunal will be fixing a fair and proper rent? A very wealthy landlord will not be allowed to charge the same rent as a less wealthy landlord. How will the district justice apply himself to that problem?

Therefore, it will be necessary to give some guidelines to district justices and, we hope, ultimately to a rents tribunal, when they come to engage themselves in this exercise because calling a rent “a just and proper rent” does not make it a just and proper rent. We cannot just say we will rely on the experience of district justices, because in this case a district justice will need proper guidance and proper reference. Senator E. Ryan earlier described these factors as “a grey area”. I agree with him. They are so grey that it is very hard to know what they mean.

Therefore, we cannot fudge the thing entirely because we ourselves do not know what it means: with a hope and a prayer expect the Bill will withstand a constitutional challenge. Unless we are fairly clear about what it means, the likelihood is that a landlord who has a tenant willing to offer the free market value for [648] a tenancy simply will produce that agreement in the District Court, and if the “just and proper rent” is, say, 15 per cent or 20 per cent below that, he will challenge the constitutionality of the legislation.

This is a very serious problem. Supposing the just and proper rent is about the market rent, say, £50 or £55 a week, and the tenant has been paying £10 a week, will the tenant go on paying £10 a week or will the rent go up to £12 a week or £15 a week, and will the taxpayer, through social welfare subsidy, pay the difference? Is that what is intended? As far as I am concerned that would meet the problem of the tenant, but if that is to be the situation the £6 million which the Minister indicated will be allocated will not be likely to be sufficient to bridge the gap between what a tenant will be able to pay and the rent which will be fixed by the district justice in the exercise of his power. They are all questions that will need to be clarified on this section. I await the Minister's explanations to these various queries.

Dr. Whitaker: In continuing to make some unpopular arguments I am sustained by the belief that in a matter like this all sides of the case must be aired. Perhaps I will be denied a social conscience, so I should make it clear that I am not a landlord and that I am not talking on behalf of landlords. I am trying to be a good legislator.

I have read the two Supreme Court judgments and I would hesitate to rely on the advice given to the Minister that section 13 is in conformity with Article 40 of the Constitution. I agree with the Minister's Second Reading statement that the Supreme Court judgment does not necessarily mean that a market rent must apply. Senator Robinson has drawn a distinction between a just and proper rent, a market rent and a fair rent and I will explain in a moment why I do not think a market rent should or need apply. At the same time, I am unable to agree with the Minister that these section 13 provisions provide a satisfactory alternative, particularly as they completely rule out, as I read them anyway, the [649] notion of a market or an economic rent. I notice that in the previous legislation — the 1967 Act, which amended the 1960 Act — there was provision for a determination of rent by the court as being “rent of such amount as the court considers reasonable having regard as far as possible to the rents of dwellings which are comparable in regard to location, accommodation, amenities, date of repair and rateable valuation.” No such wording appears in the present Bill. I read it as being excluded. The old provision of 1967 goes by the board under the repeal provision of section 6 of this Bill.

To explain my position I have to go back to the gist of what I said here in July and December 1981 when previous purportedly remedial legislation was before us. I argued then not about the constitutionality of the legislation, on which I had merely a layman's doubts as I have about this Bill, but about whether rent control was a form of regulation of private rights consistent with the principles of social justice or of good economic sense. I gave reasons for a negative view on both counts which I do not intend to repeat now. At the same time, and this is relevant to the present section, I argued that the present rent control system should be replaced by a combination of two things: (a) supervision of rents for a period of years, preferably by a specialised professional body rather than by the District Courts; and (b) the supplementing out of public funds of the incomes of those tenants who are unable to pay an economic rent. In present conditions, and in the conditions likely to prevail for a considerable time to come, I regard some control as being necessary to ensure that rents do not exceed what is basically economic simply because of conditions of scarcity of rented accommodation or of tenant vulnerability. By “basically economic” I mean the kind of rent that gives a return on the value of the property in line with what can be derived from a comparable investment in, say, a range of trustee securities, allowing both for likely appreciation and for the actual income earned. If we do not want to have this problem tied around our necks for a long [650] time ahead, we should face up to the fact that, so long as rents are held below a basically economic return, then the trend must be towards a dwindling and deteriorating stock of houses for letting. Only when we restore at least the concept of a basically economic rent will the investment in new accommodation occur which will relieve the present scarcity and improve the situation generally.

The reason that I am sticking to “basically economic” rather than market rent is that market rent would be the appropriate standard if it could be defined to mean the rent that would apply if the supply of rented accommodation were adequate to meet the demand. That is what was done in the 1967 Act, in the direction to the court. They were asked what the situation would be if a willing tenant not already in occupation and a willing landlord were confronting one another, on the basis of vacant possession being given, and in such circumstances that the supply of similar dwellings is sufficient to meet the demand and the competition therefore is normal having regard to the other terms of the tenancy and the letting values of dwellings of a similar character in the vicinity. Market rent would be all right if those conditions applied but since they do not apply, and it is difficult to invent them, market rent would simply represent the rent which could be exacted in conditions of scarcity and would not therefore be, in any sense of the word, a fair or just and proper rent.

I favour the concept of a basically economic rent. That would be consistent with social equity and good economic sense as well as being in no danger from the Constitution. Taken in conjunction with the provision for rent allowances in section 23 it would be much more straightforward and defensible than the whole ragbag of criteria, including the means of the landlord and tenant and so on, set out in section 13.

The means of the parties do not enter into other transactions which are of significant importance in life. If my neighbour has a lower income than I have he is not given the right to buy a motor car for less than I can, nor can he buy his [651] house at a cheaper price. A system relating prices to means would indeed be considered ridiculous and unworkable, so why try to apply it to a limited category of rents?

Mr. S. O'Leary: The section, as amended, has a number of deficiencies and the main one relates to subsection (2). It centres around the Government's decision to draft the Bill in such a way that “just and proper” was put in as being the rent which would be applicable. This “just and proper” rent was defined in a particular fashion. Just as you could have a gross rent which could mean more than one thing, it could mean an economic rent or the market rent. You could have a gross rent meaning a number of different things. You could have a just and proper rent, or a rent which you called just and proper for the purpose of definition, which would mean more than one thing. What the legislation seeks to do is to take a thing which recurs in both judgments of the Supreme Court and use an expression used by the Supreme Court to describe the type of rent which is to be calculated, apparently under the impression that the Supreme Court will be so flattered by the use of its own term that it will not really look at the meaning that is given to it by the remainder of the section. That is a considerable underestimation of the determination of the Supreme Court to vindicate the rights of the citizen.

I refer to page 26 of the Blake-Madigan judgment in which it is made quite clear that any interference with the rights of a landlord does not necessarily render the legislation which interferes with that right unconstitutional. It states:

To the extent, therefore, that these statutory provisions interfere and render ineffective the exercise by the owners of houses and dwellings affected of their property rights in relation thereto they constitute, in the opinion of the Court, an attack on such rights. The question which must be decided, however, is whether such attack is unjust and therefore in contravention with the [652] provisions of article 40.3.2º of the Constitution.

So obviously some interference with the rights of landlords is acceptable under the Constitution as long as it is not unjust. I am sure the Minister and his advisers found the series of expressions and qualifications which are contained in subsection (2) on page 28 of the judgment. The judgment goes on to consider whether or not interference by the legislation was unjust and it states:

Neither the means of the tenant nor the lack of means or possible hardship to the landlord may be considered in determining the permitted rent.

However, because the Supreme Court says that neither the means of the tenant nor the means of the landlord may be considered in the legislation then in force, that by no means says that if that had been permitted the legislation would have been all right. It merely makes an observation. It further states:

It is, therefore, apparent that in this legislation rent control is applied only to some houses and dwellings and not to others. The basis for selection is not related to the means of the tenants, to the financial or economic resources of the landlord or to any established social necessity. Since the legislation is not now limited in duration, nor associated with any particular temporary or emergency situation, such legislation to escape the description ....

In other words, the preceding paragraph contains the element why the Supreme Court held that the 1960 Act was unconstitutional and it says:

It is, therefore, apparent that in this legislation rent control is applied only to some houses and dwellings and not to others and the basis for selection is not related to the needs of the tenant.

So when the Supreme Court on this occasion used the expression “the needs of the tenant, the financial and economic resources of the landlord and the other social necessity” they were referring to the selection of particular dwellings for [653] the purpose of rent control rather than the fixing of rent control within the subsection of dwellings so defined. What they were saying was that out of all the dwellings which we have in the country the basis for selecting a certain number of them for particular attention is not related to the means of the tenant or the landlord and so on. That criticism is still true of this subsection because the basis for selection or consideration as to whether or not they fall within this whole legislation as amended, has nothing whatsoever to do with the means of the landlord or the tenant. The basis for selection is whether or not they were previously controlled dwellings.

Somebody seems to have taken the decision of the Supreme Court, which referred to the means of the landlord and the means of the tenant, as meaning that legislation framed along those lines would be acceptable to the Supreme Court, when all the Supreme Court was talking about was the decision whether it was a proper dwelling for consideration and if there should or should not be a special rent on it.

My interpretation of what the Supreme Court said is that if houses were selected on a basis other than the means of the landlord and the tenant, that was not a reasonable way of selection. These houses are still so selected because they are selected on the basis of whether they were previously rent-controlled. That is why I say that unless we use either market rent or economic rent the application of any formula to this restricted number of dwellings is liable to the same attack as the previous rent restriction legislation in the Supreme Court.

On page 31 the court in the same judgment finally arrived at the conclusion, and stated:

In the opinion of the court, the provisions of part II of the Act of 1960 as amended restrict the property rights of one group of citizens for the benefit of another group.

Surely this section does exactly the same thing. This is done without compensation and without regard to the financial capacity or financial needs of either group in [654] legislation which provides no limitation on the period of restriction, gives no opportunity for review and allows no modification of the operation of the restriction. We have come a long way since then but what we are still doing is restricting the property rights of one group of citizens for the benefit of another group of citizens without compensation. That was identified as one of the key elements. Compensation is, in the opinion of the Supreme Court, a necessary element. There were other things such as financial capacity, the financial needs of either group, the limitation of the period of restriction of the legislation and so on, which have now been sorted out by this Bill. They were sorted out in the previous Bill which was declared unconstitutional but the whole question of interfering with the property rights of a group of citizens, without compensation, has still not been tackled. This subsection cannot survive a reference to the Supreme Court. It is not that I object to the things which the District Court had to take into account. They are all excellent things. I do not think we are living with the reality of the situation.

What we need is something which conforms to our Constitution as long as our Constitution is as it is. We need something which conforms with the Constitution and which gives State assistance in that area where State assistance is needed. There is also the very real problem whether, in taking into account the means of the landlord and the means of the tenant, the possible State assistance can be taken into account by the court. Can the court take into account the possible State assistance which the tenant will get if his means are below a certain amount? That does not appear to be made clear. Does that fall within the definition of the means of a tenant for the purpose of the subsection? That has not been dealt with adequately.

Regarding the means of the landlord, we may be talking about the little old lady who owns a house or a wealthy capitalist who owns a house. All sorts of other people own houses. Incorporated bodies, chambers of commerce and all sorts of organisations have owned houses [655] from time to time which were bequeathed to them for some reason or other and the dwellings they owned fall into this category. How will you assess the means of a tenant in such circumstances? We are failing to face the real problem in that we do not know what will happen in the situation where you have a poor landlord and a poor tenant. What will happen there and how will that rent differ from that received by a poor landlord from a rich tenant or from a poor tenant by a rich landlord? The whole thing is impracticable. If it survives a constitutional challenge the only reason it will work is that district justices generally are and the rents tribunal when they are instituted will be people with common sense and there will be no further opportunity for review. It will be very much a question of which district justice you appear before. When the adjudicator can lean to the side of capital or to the side of the tenants, that way of assessing the market rent is not good enough. Here we have a very wide area of interpretation.

The criticisms of Senator Whitaker and other Senators on Second Stage and Senator Robinson's criticism today support my view on the matter. I assure the Minister that there is nothing personal in this. It is just so vague. The only possibility of survival is that because it is so vague it could be applied very unevenly throughout the country and in a very unjust fashion. It may be unjust to the landlord or unjust to the tenant because of the way in which the criteria have been set down. The nine criteria that have been identified are such that no relationship exists between them. There is no indication about whether you should put the means of the tenant or the means of the landlord for priority where both demand attention. There is no indication which will get priority; therefore district justice A will arrive at a decision different from that of district justice B. The application of the rule of law so unequally throughout the country is not good for legislation and I am against it. In particular I am against section 13 (2).

Mr. Raphael Burke: Many and varying [656] points have been made. We have heard about economic rents, market rents, fair rents, “just and proper” rents, which side of the case gets priority — I assure Senator O'Leary that I accept that there is nothing personal in the arguments made here and that it is a question of arguing and Senators expressing their views democratically on the Bill. However, I would be less than honest if I did not say I regret deeply that the Seanad by its vote decided to amend this section by including subsection (3), which I feel leaves us now in a position of relying on the very doubtful blanket cover of the temporary legislation. However, that is for another day and another place — as a matter of fact, it is for today and it will have to be tackled today.

I tell Senator O'Leary that this subsection does not provide for priority one way or another. Purposely no priority is given one way or the other because we are into a balance. This legislation must be a balance. Senator Whitaker talked of controlled and economic rents and so on and referred to the ragbag group of criteria laid down in subsection (2). I do not accept that they are a ragbag group of criteria. We as a Government have decided that in the options available to us, rather than a straight market rent as was included in the 1981 Act, which laid down straight criteria to be introduced then over a phased period and which with the phasing of the period was found to be unconstitutional, we would go for rent which would be decided on quite specific points. It will be a just and proper rent which will have regard to the nature and character of the building, the location of the dwelling, the other terms of the tenancy — I do not see anything ragbag in that — the means of the landlord and the tenant, the date of the purchase of the dwelling by the landlord and the amount paid by him therefor, and the length of the tenant's occupancy of the dwelling and the number and ages of the tenant's family residing in the dwelling. They are all interrelated with — not unrelated to — the problem which we as a Legislature have to tackle. Quite consciously we did not go for a straight, simple formula of market rent. Rather we went for what is [657] before us here today. As to the implemantation of it — the base-line Senator Robinson spoke about in most legislation as passed by this House — we leave it to the good sense of the district justices. I have no doubt that on this occasion we are very fortunate to have such talent available to us in the district justices who will handle the matter with their usual fairness, taking into account the quite specific criteria laid down for them. Very soon this will be decided by rents tribunals and I have no doubt that the rents tribunals will operate in a balanced way also, taking into account the points laid down in section 13 (2). I do not think it necessary to go into a base of market and go on from there. Each individual point will be taken into account by the district justice and by the rents tribunals and a just and proper rent will then be decided upon.

Mrs. Robinson: It might be helpful in trying to get some understanding of the factors here to focus on one which gives rise to particular difficulty, that is, the means of the landlord and the tenant. In a number of situations the means of the tenant may be easy to ascertain. The tenant, in a number of circumstances which we are all aware of, would be in receipt of a social welfare income and there would be no particular problem. But there is no provision, either in this section or in the Bill itself, to ascertain the means of the landlord. As a number of us have emphasised, the landlord may have an income lower than the tenant, may be a limited company, or some association or body that happens to have the particular property. One of the factors that a district justice has to to take into account is the income or means of the landlord. It would be important for us to try to ascertain how the district justice is to get that information. Is the landlord required, in making an application to court, to make his means known to the district justice? If so, how far does that go? Does the landlord have to show his sources of income and his other means and does that include any assets that the landlord may have? If the landlord for [658] one reason or another does not want to do that, does that mean that the district justice will not fix the rent?

I would be the first to rely on the commonsense of district justices. But they have to rely on the commonsense of the legislators. There is a lot of this section which does not really conform to commonsense. Again I would agree with Senator O'Leary. We have picked out the term “just and proper rent” and hoped to hell that that is what will come out at the other end. But we are not really addressing ourselves as legislators to how that rent is to be fixed, to how one district justice will do it and how another district justice will do it. Are rents in Cork to mean one thing and rents in Dublin another? District justices will do their best and ultimately the members of the rents tribunal will build up very considerable expertise. But they are entitled to know what is the position if the district justice is to take into account the means of the landlord. How does he ascertain the means of the landlord and what are the consequences for the landlord if the landlord does not want to reveal his means in the process of applying to the court to have the rent increased?

Mr. Raphael Burke: If he is the person applying to the court he will realise what is ahead of him in the court, that he will have to give evidence of his income, of the purchase price of the dwelling when he bought it — all the issues laid down in section 13 (2). On the basis of that I am confident that not only will it be constitutionally sound on the advice I have available to me from the Attorney General, but also that it is operable, that it is just and proper and balanced from the point of view of both the landlord and the tenant.

Mrs. Robinson: That is beginning to clarify this particular aspect of it. Without delaying, I wish to pursue it a little further. The Minister has said that a landlord would have to give evidence as to his means. At random let us take a landlord who is a doctor in private practice. He has property and he wishes to have the rent increased. Will he have to come into court and give evidence of his income as [659] a professional person? That is one possible example. Would a businessman have to give evidence of his income in order to raise the rent of his property? It appears from what the Minister said that he will. Perhaps that is something which will have to be clarified. That did not come out in the debates in the other House in so far as I have read the debates. Of course, there was a shortened Committee Stage in the other House. Another type of landlord is the limited company or other body. To what extent will the means of that body have to be produced to the district justice as part of the matters which he is required to take account of in fixing the rent?

Mr. Raphael Burke: I do not intend at this stage to go into any more of the details of the operation than what I have already said. It would not be right to discuss the doctor, the dentist, the shopkeeper or the candlestick maker. The criteria for deciding on a just and proper rent are very clearly laid down in section 13 (2). I have at this stage gone as far as I possibly can. We have already discussed section 13 (2) in the context of the tribunals. The Government have decided that this is as broad a basis as we can find for the decision on a just and proper rent. I would ask the Senator to bear with me on this.

Mrs. Robinson: I have sympathy for the Minister's apparent weariness and reluctance——

Mr. Raphael Burke: I am not the least bit weary.

Mrs. Robinson: I am glad to hear that. I thought from his demeanour that he was weary. I must ask the Minister to bear with me in my conscientious attempt, which is important because it has not been done in the other House. We have to understand what this section means. My questions are not either frivolous or vexatious or intended to prolong the debate. I want this Committee Stage ended as soon as possible. But these are questions we must ask ourselves, because [660] this is a section which will be absolutely crucial. A district justice will have to ask himself: “What do they mean by this?” We have to ask ourselves what we meant. I am not entirely happy with the Minister's answer. But he is not going to elaborate on it. We have dealt with the situation where the landlord is the party applying to the court. What about a situation where the tenant is the party basically applying or is the party before the court wanting to know the means of the landlord and the landlord does not wish to divulge his means? The real problem is that there is no provision in the Bill whereby the district justice can require to be furnished with the information on which he has got to base his calculations. In maintenance legislation, for example, where a spouse has to maintain another spouse, there are ways in which the district justice can require that the means of a spouse be ascertained before him. He has considerable powers in relation to that and may make an order of attachment of earnings or whatever.

But under this Bill the means of both the landlord and the tenant are relevant criteria that the district justice will be required to take into account in fixing the rent. I wonder how the district justice is to operate in circumstances where either the landlord or the tenant, for one reason or another, is shy of being forthcoming about his means. Can the district justice disregard the means in those circumstances and, if so, what is the consequence of that in fixing the rent? It is not clear to me what the relevance of the means of the landlord or tenant is in relation to fixing the rent, but we are requiring the district justice to take them into account so we ought to know how he is going to do that.

Mrs. McGuinness: I was going to speak on a different point in connection with section 13 (2).

Mr. Raphael Burke: Could I answer this one first? The strongest weapon in the hands of the district justice is that, if it is the landlord applying for an increase and if he does not give the information with regard to his income, then he does [661] not get his increase and the rent stays as it is. I have said many times that, because of the Supreme Court decision and of our duty to bring in legislation that is balanced for all citizens, this legislation is a balance between the interests of the landlord and the interests of the tenant. Let us take the case mentioned by Senator Whitaker of the old lady with no other income but who owns a house where the tenant has an income of £10,000 or £20,000 per year. If the lady has to declare her income, surely the tenant will have to do so also? It is one of the nine points to get a proper balance. It is linked with section 23 which deals with social welfare assistance to be given to tenants in need who are not in a position to meet any extra increases.

Mrs. McGuinness: I am sure the Minister will be glad to know I do not propose to go into the question of whether it will be constitutional. This matter has been argued fully on both sides of the House and I have nothing material to add. However, there is one matter that was raised also in the Lower House in regard to the matters the district justice should consider where the phrase used is “the nature, character and location of the dwelling”. The suggestion was made — I think it was a good one — that the word “condition” should be included also. As far as I know the condition of the dwelling is included in the standards to be set down by the Minister in section 26. However, I think this is a different situation. In section 26 we are talking about the standards that are to be applied to all rented dwellings under regulations laid down by the Minister but here we are talking about the district justice deciding on a proper rent as between one premises and another. One could envisage a situation where two houses fulfil the standard conditions set down by the Minister but one might fulfil them minimally and the other could be in excellent condition and, all other things being equal, would be deserving of a better rent. It may be argued that the word “character” could include the condition of the premises but I am not sure of this. It might be clearer if we used the word “condition” because [662] character could be used to indicate if the premises was a flat or a house on its own grounds. I am inclined to think that is the ordinary meaning of character whereas condition would mean the way the premises were maintained. It is a more specific word. If the Minister cannot see fit to insert the word “condition”, perhaps he might make it quite clear that the word “character” includes the condition of the premises.

Mr. Raphael Burke: We discussed this point at length in the Dáil. There is much sense in what the Senator has said regarding the word “condition”. However, in drafting the Bill we used the word “character” to include condition also. The condition of the premises is incorporated in the character of the premises. I take this opportunity to clarify once again that the condition of the building is intended to be taken into account.

Mrs. Robinson: In relation to the relevance of incomes of the landlord and tenant, I find it difficult to see how the district justice is to address himself or herself to the problem. Does it make a difference in fixing the rent when you have — to use the example given earlier by Senator O'Leary — a rich landlord and a poor tenant, a poor landlord and a poor tenant or a poor landlord and a rich tenant? Is it going to make a material difference to what is a just and proper rent in those circumstances, given that if it is a poor tenant there is provision for a rent allowance? In other words, are we introducing a new principle, which I do not think applies in any other area, that depending on your income you get a certain return for a particular asset, so that if you are a rich landlord you will get a smaller amount as the just and proper rent than if you were a less rich landlord? It is important for a district justice to have some understanding of where this is a relevant factor. If we are introducing this new principle, we should know about it.

Mr. Raphael Burke: We are talking about legislation to deal with a particular problem we have, namely, controlled [663] tenancies. District justices will have to take that into account as one of the nine items in calculating a just and proper rent.

Mrs. Robinson: All the other factors are constant. Let us take the situation where you have property A and property B and where all the other factors are the same. However, in one case the landlord has a high income and in the other case the landlord has a lesser income. Will the landlord with the lower income get more as a just and proper rent?

Mr. Raphael Burke: That is conceivable.

Mrs. Robinson: That is interesting.

Mr. Raphael Burke: It is highly unlikely that the circumstances in each case will be exactly the same. There are other criteria. There is the question of the date of purchase of the dwelling by the landlord, the amount paid and the length of occupancy by the tenant. It is inconceivable to think that the same circumstances would apply.

Mr. S. O'Leary: I do not wish to press the Minister on this because I think he has made his position quite clear. However, let us take the situation of a landlord who owns a row of 12 small houses. This is quite common in Cork city, although I do not know if it applies in Dublin. The first applicant who has a wife and child may say that his weekly income is £25 and the decision may be made to give him £20 per week. The next case to be heard by that court will be in respect of house number two where the income is given as £45 per week. The decision may be to give him £15 per week. There could be the situation where there would be different rents for such houses.

Mr. Raphael Burke: Perhaps I could help the Senator on this point——

An Leas-Chathaoirleach: It is now five o'clock, the customary time for the [664] Seanad to adjourn when sitting on Friday. The Chair would like to know what the situation is.

Mr. W. Ryan: The Minister wants all Stages of the Bill and I think the House should sit until we have finished this business.

An Leas-Chathaoirleach: There is another item of business on the agenda. What is the situation with regard to that?

Mr. W. Ryan: There is the motion but I do not think we will take it.

Mrs. Robinson: Perhaps we should wait until this matter has concluded.

An Leas-Chathaoirleach: Is it the position that the House will come back to the motion later?

Mr. S. O'Leary: If Senator Ryan will agree, perhaps we should postpone any decision on the motion until later. This business may finish in 15 minutes.

Mr. Raphael Burke: I was about to help Senator O'Leary. There are other criteria to be taken into account. Not every tenant will have the same number of children and their ages will be different. There are many matters that will be taken into account.

Mr. S. O'Leary: There is one point, I do not think it is a serious contention, but as the Minister knows, lawyers do funny things with legislation when the matter is brought to court. One of the things to be taken into account will be the means of the landlord. This gives no indication that the lower the means, the higher the rent. In fact, it could be interpreted as the higher the means the higher the rent because he obviously must continue to be kept in the style to which he has grown accustomed over a period of years. This is the trouble with the imprecise nature of it. It could mean anything.

Mr. Raphael Burke: The Senator said he would not be serious about this, so I will not treat it as a serious matter.

[665] Mr. S. O'Leary: It would be helpful if the Minister put on the record of the House some indication that higher means could have a negative effect on the rent, rather than the other way around.

Mr. Raphael Burke: That should be the obvious indication, but that is a matter for the justices and the tribunal to decide. It would be improper for me to make a comment on it.

An Leas-Chathaoirleach: Is section 13, as amended, agreed to?

Mrs. Robinson: We are not happy with it.

Mr. Raphael Burke: Neither am I.

Question put and agreed to.

Section 14 agreed to.

SECTION 15.

Question proposed: That section 15 stand part of the Bill.

Mr. S. O'Leary: In the previous Bill there was a formula in which the maximum was 15 times the value of the improvement — this is almost the same as is suggested in my amendment which was accepted by the House. Why is that being taken out of the Bill? That gave the court an indication how to decide on a figure.

Mr. Raphael Burke: The Senator is correct; it was in the previous Bill. It goes back as far as the 1931 legislation. It has historic implications but I decided not to specify any number of times in this legislation.

Mr. S. O'Leary: I do not think the legislators in 1931 appreciated it would be relevant but I think it was relevant. In my opinion 15 times was the right figure — the valuation was not to exceed a sum of 15 times the increase in rent which was attributable to the improvements. In other words, if the rent without improvement [666] was £1 a week and with the improvement £2 a week, that meant the increase of £1 a week or £52 a year, multiplied by 15, was the maximum figure.

Mr. Raphael Burke: That is the point. It was a ceiling but there was no guarantee that the landlord would get 15 times the increase.

Question put and agreed to.

SECTION 16.

Mr. S. O'Leary: I move amendment No. 6:

In page 10, to substitute a full stop for the comma at the end of line 9 and to delete lines 10 to 26.

We have already discussed possession and I do not intend going into it in greater detail now. The Supreme Court decided that the denial of possession does not in itself render the legislation unconstitutional. This obviously is a restriction on the use of the property, but it was an unjust restriction outside the terms of the Constitution as interpreted by the Supreme Court. In this situation, we have a landlord who is getting a reasonable rent — I am using the word “reasonable” but he wants to keep getting a just and proper rent — we have a tenant who is paying a just and proper rent. In those circumstances, I do not see why it should be open to the landlord to re-acquire possession of his property before the expiry of the period of the agreement.

As is normal practice in the business and commercial world, one cannot acquire possession of one's property until the end of one's agreement. If one has a 35-year agreement one cannot re-acquire one's property after a five-year period, or a ten-year period, but after 35 years one can re-acquire one's own property only in the interests of good estate management. These 35-year agreements can come about even as a result of an accident. The property cannot be restored to the landlord until the expiry of the 35-year period — it used to be 21 years — and then only on the basis of good estate [667] management. In those circumstances, and by reason of the fact that what we are now creating is the certainty of tenure for the tenant, with a just and proper return for the landlord, I do not see why the landlord should, in addition to getting a just and proper return, have the benefit of an additional clause over and above what he would not have got if there had not been a controlled dwelling.

If I have five houses let on a yearly basis I cannot interrupt any of those agreements half-way through the year because I need a house. Maybe I could at the end of a period, but certainly not half-way through the year. If the landlord is getting a just and proper rent and if the agreement is fair to the tenant, with an option for renewal every five years, I do not see why it should be possible for the landlord to re-acquire possession of the property, nor do I see why he should re-acquire possession of the property in the interests of good estate management. “Good estate management” might mean the transfer of the property into offices if planning permission had been obtained. I do not think “good estate management” relates to an existing planning permission to change the use of the property and which it is intended the landlord should carry out. In those circumstances, I do not see why we should retain this subsection. If a landlord was paid a very low rent, this type of an “out” was very important. If a landlord is paid a just and proper rent I do not see why he should be given this additional protection.

Dr. Whitaker: Listening to Senator O'Leary I got the impression he was hung up on the term “just and proper rent”. Earlier he said we should be on our guard against believing that because we call something a just and proper rent it is so.

Mr. S. O'Leary: I accept that.

Dr. Whitaker: The just and proper rent that comes out of this Bill is certainly not the market rent, and it is not even what I was calling the basically economic rent——

[668] Mr. S. O'Leary: It could be higher.

Dr. Whitaker: ——it is something which has regard to the means of the tenant, and many other considerations and, ex hypothesi must be well below the market rent. The premise on which the Senator bases his conclusion that this existing concession or privilege should be withdrawn is not valid.

Mr. Raphael Burke: I have two basic objections to the amendment. The first is that it would significantly curtail the land-lord's right to recover possession and leave him in a worse position than under the rent restrictions code. It is difficult to see how this could be constitutional, given the court decision of June last. The second problem is that it would preclude legitimate and desirable development and prevent the landlord who genuinely needs the house from recovering possession. It should be remembered that notwithstanding the requirements being fulfilled, an order for possession of a dwelling under the section can be obtained only if the court considers it reasonable to grant the order. If an order is granted, the court may order that compensation be paid to the tenant for his expenses of quitting and up to three years' rent or alternative accommodation. I increased the compensation to a maximum of three years compared to two years in the 1981 Bill. I am sorry to have to say once again to Senator O'Leary that I cannot accept this amendment.

Mrs. Robinson: I am concerned in particular about two subsections which are grounds on which the landlord could go in and seek to get repossession of the dwelling. Senator O'Leary mentioned the interests of good estate management. Senator Whitaker expressed a view — and it is a reasonable view — on whether a just and proper rent is substantially below the market rent. Whether or not that is constitutional is another matter. If that is the reality — and I would agree with him that that looks to be the reality intended by section 13 — then it could be good estate management for the landlord to say: “If I cannot get a good market [669] rent for this property, then I want possession of it and I will decide what else to do with it in relation to a number of other assets.” Therefore he could get possession and he would have to compensate the tenant as the Minister has pointed out. Compensation in a situation of a great scarcity of housing is not at all in the interests of the tenant.

Although I have a certain reluctance to accept a total bar on a landlord being able to recover possession — particularly under (a) (i) “for occupation as a residence for himself” — even though we are dealing with properties that we know have been rent-controlled for a considerable number of years, have been lived in by the same families for a considerable number of years, and have become home to those families, my over-riding concern, like that of Senator O'Leary, would be not to allow a landlord to exercise the right to dispossess where the landlord is getting a fair return for the property.

This brings us back to the dilemma of not being sure of what the just and proper rent will turn out to be. It is one of our difficulties. I am not happy that a landlord could seek possession in the interests of good estate management for the reason given, and I am not at all clear on what would be meant by saying the landlord could get possession because he required “vacant possession to carry out a scheme of development of property which includes the dwelling and has planning permission for the scheme.” That seems to be putting the development plans of a landlord at a higher level than the home of a tenant which would be secure for the lifetime of that tenant and, if that tenant had a spouse, for the lifetime of that spouse, or the relevant period of 20 years for other members of the family, from whenever this Act comes into force.

These very liberal rights of repossession by the landlord run counter to the apparent continuing security of tenure we are giving to tenants. If landlords do not want to go through the process of just and proper rents because they will have to declare their incomes and be forthcoming about their means, and because they may have doubts about what the rents [670] may be fixed at, they may seek fairly substantially to look for repossession instead, and to argue that they will get repossession on either the grounds of good estate management or that they want to develop property and that they will look for planning permission. As we know, it may be possible to obtain planning permission in some circumstances for that kind of development.

These are loopholes which landlords might look to more than we would wish them to, and this could give rise to a worsening of the position as far as tenants are concerned and to more insecurity.

Mr. Raphael Burke: The same principle was incorporated in the 1960 Act and also in the previous Bill which was referred to the Supreme Court and lost. The only difference is that I have increased it from two years to three years. However, under all of the legislation landlords have found it practically impossible to regain possession. They have gone before the courts and have not succeeded in getting possession. While I accept the Senator's concern about this matter, it will have to be left to the good sense of the court.

Amendment, by leave, withdrawn.

Section 16 agreed to.

Sections 17 and 18 agreed to.

SECTION 19.

Question proposed: “That section 19 stand part of the Bill.”

Mrs. Robinson: Where the order for possession has been obtained by misrepresentation, could I ask the Minister why it was not thought fit to put the tenant back into possession of the property again? There is provision for the landlord to pay the former tenant a sum which the courts would consider reasonable by way of compensation. Compensation is not adequate redress where a tenant has been turfed out by the misrepresentation of a landlord. If you were a sharp landlord, you could engage in misrepresentation, [671] get the tenant out and pay a reasonable compensation if you had to, but the tenant would be out and would have lost his home. It seems to me that it is not really the kind of protection that the tenant ought to get. The tenant ought to get the right to go back in and resume possession.

Mr. Raphael Burke: It is exactly the same as the provision in Part IV of the 1960 Act. That does not make it right or wrong, but it is exactly the same. We are into the area as to whether it is practical to go further than compensation. In many cases there could be a different tenant in the dwelling or, if it were a case where there was a planning permission, the building could be pulled down, and so on. We have used the form already there to compensate for damage or loss sustained by the tenant arising from the order.

Mr. S. O'Leary: While that is satisfactory and obviously intended to overcome the problem, if the authority is left with the court to reinstate a tenant as an additional optional extra, then obviously it will not use it where the property has been demolished, but on other occasions it may choose to use it. I certainly accept the Minister's point that it is the same as in the 1960 Act, but in legal circles there is some concern about obtaining possession by misrepresentation and the type of redress available in respect of actions of that kind. The Minister should give further consideration to that.

Mr. Raphael Burke: The section reads:

Where it appears to the Court that an order for the recovery of possession of a dwelling to which section 8 (1) relates was obtained by the landlord by misrepresentation or concealment of material facts, the Court may order the landlord to pay to the former tenant such sum as the Court considers reasonable by way of compensation for damage or loss sustained by the tenant as a result of the order for possession.

It could be a considerable time later that [672] it became apparent to the court that there was misrepresentation or concealment. Senators will note that the section imposes no limit on the amount of the compensation the court may order. I have no doubt that in a case of misrepresenatation or concealment — relying on the good sense of the judges — there could be quite significant compensation.

Mrs. Robinson: It is only a district court.

Question put and agreed to.

Sections 20 to 22, inclusive, agreed to.

SECTION 23.

Mrs. Robinson: There is a bonus here for the Minister. With the permission of the House I do not propose to move amendment No. 7. It would provide an alternative mechanism and has a lot of merit. But, since we are dealing with the Bill at this stage — and there is a provision for rent allowance — I would prefer to spend the time addressing ourselves to section 23.

Amendment No. 7 not moved.

Question proposed: “That section 23 stand part of the Bill”.

Mrs. Robinson: This is the provision which gives an important role to the Minister for Social Welfare in relation to this Bill because he, with the consent of the Minister for Finance, can make regulations for the payment out of moneys which are to be provided by the Oireachtas. The Minister, in his introductory remarks on this Bill in this House, said that the fund being set aside for this is approximately £6 million.

The section is extremely unclear so I have waived the amendment in the hope that we can clarify what the regulations will provide and indeed how this rent allowance to tenants is to be applied for, to be obtained by tenants, and what bearing it has on the fixing of the just and proper rent. If the Minister would explain more fully how the system is proposed to [673] be worked and what the regulations will provide, that might speed up our consideration of the section.

Mr. Raphael Burke: Unfortunately I must admit to the Senator quite candidly that I am unable to tell her about its full operation. The details of the operation of the scheme will be announced by the Minister for Social Welfare. As I understand the position, preparations are at present well advanced. The Minister is working very hard on it because it has to come into operation immediately. The full details and implementation of the scheme will be announced shortly by the Minister for Social Welfare. I am sorry I cannot be any more precise. I know it is not what the Senator wants but I am being quite candid with her.

Mrs. Robinson: The Minister has candidly said he cannot give us full details but could we have at least a few details. Let us take it perhaps step-by-step. Subsection (1) provides that the Minister will make regulations for the payment out of moneys to be provided by the Oireachtas of allowances to the tenants of dwellings to which section 8(1) relates who would otherwise suffer hardship by reason of increases in the rents of their dwellings.

When we were considering section 13 and the fixing of rents we went through various permutations and tried to clarify what was the situation. Let us say that a tenant on a social welfare income at present is paying a rent of £4 a week and the just and proper rent is fixed at £40 a week. What happens in relation to that tenant? How much will that tenant get from the Department of Social Welfare? Surely the Minister must have clarified that position because it is central to our understanding of the whole structure of the Bill.

Mr. Raphael Burke: Obviously the amount of assistance to be given will be calculated taking into account the income of the tenant. But the full details of the scheme — as I have said already to the Senator — I am not in a position to give the House because the scheme is even today being worked on. I want to say also [674] that I am very pleased that this section is in the Bill. There was a doubt in the previous Bill as to whether compensation should be paid, exactly how it would work, which Department would be responsible or effect payment, whether it should be the Department of the Environment, Social Welfare, whether it would be implemented at local council level and so on. It is now the specific responsibility of the Department of Social Welfare who are geared to deal with difficulties of this nature. They are working out the precise details of the scheme and, as soon as that information is available, I will ensure that it is sent to the Senator. I shall also arrange with the Minister involved for the Senator to have any discussions she may wish about the operation of the scheme or in order to receive any suggestions she might have. If the Senator has any suggestions now on how she feels the scheme should operate I will take them back to the Minister for Social Welfare and ask him to consider them in the task he has in hand.

Mrs. Robinson: We are in a particular difficulty because the entitlement of the tenant — and the word “entitlement” is used so effectively we are talking about social welfare rights — does not depend on this Bill; it depends on the Ministerial regulations. Therefore, already we have got what the Minister himself did not approve of at an earlier stage in the debate on this Bill — very substantial power to the Minister for Social Welfare to determine the conditions of entitlement as well as the manner of application and the amount a tenant will get. What is not at all clear to me at this stage, even after a fairly considered Committee Stage, is what is the relevance of the income of the tenant when fixing the rent to the income of the tenant when the tenant wishes to apply for a rent allowance. How do these two things marry? The income of the tenant appears to be a relevant consideration for the district justice in fixing what will be the just and proper rent. But there is a different assessment in relation to an application for a rent allowance. Should the district justice be aware of what is the potential [675] amount of rent allowance when he is considering the just and proper rent? Will that be before the district justice when he is fixing the rent? I will use my figures again as a sample: where the tenant is at present paying £4 a week and the just and proper rent is fixed at £40, a week, the tenant is in fear and dread, does not know and goes along to the community care officer who says: this is a new scheme to me, you will have to wait until I ascertain what is the situation.

As the Minister I think knows, under the social welfare scheme, to get any increase in relation to rent of over £5 requires a great deal of hassle, work up the pipeline and is rather rare. Therefore, there is no doubt that community care officers will not be liberal in relation to the allowances unless they are told to be. A great deal will depend precisely on what the regulations provide in specifying what is the entitlement of the tenants. I would have to say that it is only because I am concerned that when this compensatory rent allowance scheme comes into operation it is not the subject of a much greater scrutiny, perhaps even more attempts to amend or change it at this stage. That is why I did not move the amendment in my name on this section, because I wanted us to address ourselves to the reality that this is going to be the scheme and that we need to know more about it. In particular, it is necessary for us to know, so that we can reassure tenants on how they should apply for the rent allowance and at what stage they will know approximately what they are entitled to. It seems to me that if a tenant knows he or she is being taken to court and the rent is going to be increased, it is at that stage the tenant should go to the community welfare officer and say: my rent is going to be increased, I cannot pay any more than, say, another £2 a week, or there may be some grounds on which the tenant can pay no more than the old rent. It is an invidious position to be in to be completely unsure at that stage, when the rent is being fixed, of whether there will be a rent allowance and, if so, how much. I think the district justice would require to know that as well.

[676] Mr. Raphael Burke: The allowance that will be payable will depend on the rent that is fixed. The court will not take into account what will be the allowance. The court will take into account the income of the tenant and all of the other criteria. And it does not necessarily have to be the community care officer — whether it is or not I am not in a position to say but it does not have to be the community care officer. The situation is that it is being done by regulation. I do not like doing things like this by regulation but I might just plead this one point — we have been only five weeks in Government. It has been a very complicated Bill which has already gone through the Dáil. We were only three weeks in Government when it appeared in the Dáil. In an endeavour to give a sense of security and remove some of the fears of tenants involved, it was written into the Bill that there would be rent allowances for tenants. Unfortunately, this is something which was omitted from the previous Bill which was thrown out by the Supreme Court. It was important to write that in. It will be important also, when the regulations are implemented, that they, like the various sections of this Bill, be well and truly publicised for the benefit of tenants so they will know what are their rights.

I spoke earlier this morning about leaflets being made available for tenants and landlords with regard to their rights under this legislation. I see considerable merit in highlighting the terms of the regulations laid down by the Minister for Social Welfare. They will have to be very widely publicised also to try to meet the worries which Senator Robinson speaks about, the person going to court who does not know how to handle the situation. All they know is that they have the right to avail of social welfare.

Mr. S. O'Leary: Might I pursue the Minister on this matter? I understand that he will not be responsible for the regulation and obviously cannot inform us on it. It is not crystal clear in this Bill that the District Court cannot take into account the means, including the means [677] under whatever allowance the tenant may become entitled to in the regulations being discussed. If the Minister has to amend the Bill he might give some consideration to inserting a simple subsection stating that the court cannot take anything like that into account. I can imagine members of my own profession getting up in the District Court and saying that £25 may be all right but if you make it £30 this person will be entitled to a £5 allowance anyway. These are the practicalities and these things happen. I would like the Minister to give some consideration to that.

The other point which I would like to raise is this. Knowing the way that the mind of the administration works, it seems it might be framed in such a way that the subsidy would be conditional on a court appearance. That would be a most unfortunate situation. I would like to ask the Minister if it is the intention that allowances would be paid in respect of agreements privately arrived at or would they only be paid in respect of agreements which had been the subject of a court order?

Mr. Raphael Burke: That is a matter to be decided in the regulations and I am not in a position to expand on that.

Mr. S. O'Leary: I would warn the Minister in those circumstances that, if it is conditional on a court appearance, there will be extraordinary pressures on people. I can see the other side of the coin. It is a very strong argument in favour of the Minister's rent tribunal because it would not have the same connotations. The Minister should take a balanced view. Forcing people of meagre means into court could be a very painful exercise as far as they are concerned. The Minister might consider, in thinking about any other matters which he will bring to the attention of the other House and this House at a later stage, making it clear in the body of the legislation that means are to be defined as excluding any help from the State. Otherwise the State will carry an inordinate proportion of it.

Mrs. Robinson: The most important [678] reassurance and clarification the tenants would want is an assurance that there would be no shortfall between a just and proper rent and what they are able to pay, either based on what they are already paying or what they can demonstrate would be the only increase they could bear, that there would be no shortfall between the rent which they are already paying or can pay out of their income and the rent fixed by the court. A halfway house — some contribution towards the rent, a rent allowance — is no answer because the tenant would not be able to bridge that gap. Apart from the detailed regulation, there must have been a Government commitment not to have a shortfall there but to allow the rent allowance to bridge the gap between what the tenant can afford to pay and the amount of a just and proper rent. Is that correct?

Mr. Raphael Burke: Not all tenants will be automatically entitled to it.

Mrs. Robinson: I accept that, but I am talking about the cases where there would be hardship.

Mr. Raphael Burke: Where there is hardship the regulations will be dealing with the hardship and I cannot go into those details today.

Mrs. Robinson: I am not talking about the details. I am talking about a vital point of principle. Will the Government bridge the gap between what the tenants have an ability to pay and the amount fixed in rent? If the Government are not prepared to do that then the whole system——

Mr. Raphael Burke: It depends on the assessment of the ability to pay.

Mrs. Robinson: I accept that but the situation is one where very often the assessment of means of the tenant would not be very difficult. The tenant will be in receipt of some social welfare allowance and will be able to pay either what he is already paying or marginally more than that. If the rent is substantially [679] more than that, it should be very clear that the Government will bridge the gap and not just make, say, a £10 contribution towards the rent.

Mr. Raphael Burke: That is the whole principle behind the rent allowance, to remove this fear from tenants. There is no point in giving security of tenure to somebody if he cannot meet the the rent decided by the court. It is for that reason that the rent allowance was introduced. There will be cases where tenants will be well able to pay. The taxpayers should not be asked to pick up the tabs in these cases. It is in cases of hardship and cases of distress that this rent allowance is being brought in and each individual case will be looked into. What the Senator has in mind is exactly what I had in mind and the Government had in mind when they introduced this.

Mrs. Robinson: I think the Minister has given me the assurance I was looking for that the Government will bridge the gap, in cases of hardship where the tenant is unable to pay the increase in rent. It is important to emphasise this because we can be talking about fairly substantial sums each week to certain tenants so that they can continue to live where they are.

Mr. Raphael Burke: That is one of the effects of the Supreme Court decision of June 1981 and it is one of the things which this Government were tackling in anticipation of the Supreme Court's decision of June 1981 when we passed the temporary legislation which was introduced by the Coalition administration. It was one of the things which they were aware of in December when they brought in their Bill and made allowance for £6 million in their budget and it is one of the things of which we are very conscious. It is one of the side effects of the Supreme Court's decision.

Mrs. Robinson: The only other matter I would like to raise in relation to the regulations is the timing factor, when the rent is fixed. It will be necessary, for the reassurance of the tenants and to minimise [680] the worry and concern for the tenant who would suffer hardship to have the timing correct. We have had experience in the past of certain delays, particularly in implementing new schemes. Apart from wide publicity for the scheme it will also be necessary to ensure that it comes into effect to coincide with applications to the court to fix rents so that tenants will be sure that the allowance will bridge the gap between what they can pay and the new rent they will have to meet.

Mr. Raphael Burke: The Senator can be assured that it is the Government's intention that as few administrative hiccups as possible will get in the way of this system and that as far as possible it will run smoothly. As the Senator has already said, there will be hiccups with new schemes but we are striving to have as few hiccups as possible.

Mrs. Robinson: There is one other matter. Is the allowance to be paid to the tenant or to the landlord? If the rent allowance is a considerable amount of money and is paid to the tenant — presumably this will be done with a view to the tenant passing on that money to the landlord — there may be occasions when the temptation might be somewhat worrying for the tenant having this money flowing through his or her hands. It could be double their entire income or as large as their income from other sources from the State. I do not know if that has been worked out yet.

Mr. Raphael Burke: I am sure they are the things the Department of Social Welfare will have in mind when drafting regulations.

Question put and agreed to.

SECTION 24.

Question proposed: “That section 24 stand part of the Bill.”

Mrs. Robinson: This is a section which I welcomed on Second Stage because it is now back into the broader framework [681] of the Bill. It is an important section to set standards in relation to all rented dwellings. It is something that has been long required and desired, particularly by tenants in private rented accommodation. It is a most welcome provision. The Minister in a previous day's discussion on this Bill referred to the fact that the regulations in relation to it were at a fairly advanced stage. Will he indicate to us exactly how this system will operate under those regulations? The Minister is given fairly wide powers and a wide discretion in relation to those regulations. In this case he is the relevant Minister and, perhaps, he could describe them to us.

Mr. Raphael Burke: The regulations will operate when the Bill is brought into force. They are limited initially to the controlled dwellings that are under this Bill. The landlord will have to register with the local authority.

Mrs. Robinson: Why are they limited to controlled dwellings?

Mr. Raphael Burke: The enabling power covers all rented dwellings but the initial regulation will be on the dwellings dealt with in the Bill.

Mrs. Robinson: Will the Minister explain why that is?

Mr. Raphael Burke: I have not got the power to go to the remainder of the uncontrolled sector but I will, hopefully, at a later stage. However, a landlord cannot get an increase until he registers the rent with the local authority. The situation is that at this stage it is tied to the dwellings we are talking about under the Bill.

Mrs. Robinson: I find that very difficult to understand because this is now a new part of the Bill. Indeed, I recall the Minister saying he was pleased that these provisions extended to all private rented accommodation. That is, indeed, how it has been put out. It is headed: rented dwellings registration rent books and standards. The section applies to any [682] class of dwelling and is not confined to controlled tenancies. It has come as something of a shock at this late stage that that is not going to be the case and that it will only be the controlled dwellings that will come under these standards.

Mr. Raphael Burke: We have a time constraint, first of all, and we want to get this one off the ground and get it done properly. Because of the time constraint the regulations will initially operate only for the dwellings involved here. We have to get it working properly. There are 87 different local authorities and we have to get it going properly from day one. As soon as I have that in operation and working properly then it will be extended to the other category.

Mr. S. O'Leary: The Minister, obviously, has the power under this to make regulations covering all dwellings.

Mr. Raphael Burke: That is right.

Mr. S. O'Leary: Is it his intention initially to restrict that to previously controlled dwellings?

Mr. Raphael Burke: That is right.

Mr. S. O'Leary: I can see an administrative advantage in that from the point of view of first of all identifying what these dwellings were, where they are, who they are and so on. It will identify them and that is good. The Minister should set himself a very strict timetable with regard to the introduction of the regulation in general. One way in which the Minister could bring the other rented dwellings into operation quickly is to make two classes of registration with identical responsibilities. One could go on register “A” and the other on register “B” with identical standards applying to each but merely for the purpose of identifying which are the previously controlled and which are not the previously controlled. It is obviously valuable that the Minister would do that because there is a system of subsidies applicable to one. The Minister should pursue the matter of introducing the regulations in a general [683] fashion as soon as possible. Of all the matters in the Minister's Bill it is the one with the greatest long-term potential for the proper regulation of the housing market and the preservation of the fabric of our housing stock which is very important.

Mr. Raphael Burke: That is why the power is in the Bill. It is my intention to implement it as soon as possible. It is an administrative difficulty I have. There are at least twice as many uncontrolled as controlled dwellings and the Senator, I am sure, will appreciate the scale of the administrative problem. It is in everybody's interest to get one going properly rather than two going less than efficiently. I want to get this off the ground and I give the Seanad my firm guarantee that as soon as I have one going the uncontrolled side will be handled immediately after.

Mrs. Robinson: It is useful to have the Minister's assurance of that. I want to be precise about it. I can understand the time constraint in relation to the necessity to have these regulations for rent-controlled properties because there cannot be a fixing of rents until the landlord has registered and there would have to be the possibility of doing that. However, when the Minister says, get the system going, I assume that this will be just the regulations which must be at an advanced stage of being drafted if this Bill comes in on the 25 April.

Mr. Raphael Burke: It cannot now.

Mrs. Robinson: Or shortly afterwards. In the interests of a better Bill we can tolerate a week or so of delay. What I am anxious to clarify is that the Minister is going to embark immediately on the further regulations. It is badly required that there be these kind of standards and control in relation to private rented accommodation. This has been a running sore for a long time in relation to tenancies in the private sector and it ought to be set in motion without waiting for the other to be completed and to have all the controlled [684] tenancies on one of the registers. I agree with Senator O'Leary that it gives an opportunity to have either two different registers or two different parts of a register in each local authority to distinguish the former rent controlled and the other private accommodation which could be an important social statistic and information for us. However, it is vital that the regulations be brought forward at the earliest possible date and in order to encourage the Minister in that programme he can take it that if they have not appeared within a reasonable time the matter will be raised in this House and he may be encouraged to come in and explain how far he has got in the drafting of them.

Mr. Raphael Burke: It is always a pleasure to visit this House.

Mr. S. O'Leary: The proper registration of rented dwellings of both kinds would in my opinion give rise to substantial additional income to the Exchequer.

Mr. Raphael Burke: We are well aware of that. The Revenue Commissioners have been very anxious for this for a long, long time.

Professor Murphy: Since this section gives the Minister unlimited scope to make regulations to have all tenancies registered is it not peculiar that the section does not state why this is so. What is the purpose of this section of the Bill?

Mr. Raphael Burke: It is never stated why a section is being put into any legislation. In any legislation you do not say “This section is included because we want to do X, Y or Z”. The need for registration has been recognised for years. It is in everybody's interest that we have this register as soon as possible. At the moment, because of lack of a register, we talk around a figure of 30,000 tenancies involved in the legislation, but nobody knows the number involved. The Private Tenants' Action Group used that figure two or three years ago and nobody has ever questioned it. We all work on the basis of its being fairly accurate. It is [685] wrong that we should not know the exact number.

Question put and agreed to.

SECTION 25.

Question proposed: “That section 25 stand part of the Bill.”

Mrs. Robinson: I wanted to clarify whether the same situation applies in relation to section 25. Is the Minister bringing in general regulations in relation to rent books for all private rented accommodation, or only in relation to controlled premises at the moment, or not at all?

Mr. Raphael Burke: No, we will not do it for all premises immediately. It will be for the controlled premises only, at the moment.

Mrs. Robinson: At the moment. Will the Minister give the same assurance there, that at the first opportunity they will be brought in in relation to the other accommodation?

Mr. Raphael Burke: It might not happen as fast as the registration but it would be my desire. I have the enabling power, but it probably will not happen as fast.

Mrs. Robinson: Is there any particular reason why there are difficulties in extending this requirement to all of the private rents accommodation? It is a very desirable requirement which does not seem on the face of it to cause administrative problems and which would be a considerable protection to tenants. It obviously operates in some cases on a voluntary basis. It is desirable that it be legislated for as soon as possible.

Mr. Raphael Burke: The Senator will accept that the Lower House, in three different sessions, have been trying to grapple with this problem of the controlled tenancy. If we get that sector sorted out properly, once and for all, dealing with registration, rent books and so on, then we can move on to the wider [686] area. I would ask the Senator to take the assurances given to her with regard to regulation of rent books and so on, that they will be coming in on the uncontrolled side. I do not want to give her the assurance that they are going to come overnight.

Mr. S. O'Leary: May I mention one small thing on section 25? It also occurs on sections 24 and 26, but 25 is what we are discussing at the moment. The Minister should notice that the Bill says that the Minister “shall”, which seems to be imposing a statutory obligation on him, although I am not taking that view. If a Minister fails to make these regulations, he could be in breach of the legislation. It is something to be careful about.

Mr. Raphael Burke: I will be careful.

Mr. S. O'Leary: The Minister might prefer to put down that the Minister “may”. It seems a contradiction that the Minister “shall”, which is imposing a duty on the Minister, make regulations on any class of dwelling. It does not say all classes. The Minister might consider it some time, from his own point of view.

Mr. Raphael Burke: I had “will” and accepted “shall”, as I may, in the Dáil, on the basis of some arguments that were made in that House.

Question put and agreed to.

SECTION 26.

Question proposed: “That section 26 stand part of the Bill.”

Mrs. Robinson: Again, in relation to this section, it would be helpful if the Minister would clarify whether he is bringing in regulations to prescribe standards for just the controlled dwellings at the moment or all dwellings or, worst of all, no dwellings at the moment and what the time scale would be.

Mr. Raphael Burke: I will not be able to have these regulations with regard to standards in time for the Bill because [687] there has to be notification to the various parties. There are technical difficulties, as the Senator can imagine, in drafting them. All I can assure her is that they will be there as soon as possible and I am tied by my own amendment that I shall make these regulations for setting down standards. That is what I intend to do.

Mrs. McGuinness: Would the Minister have any idea roughly within what time scale he envisaged making them? I well appreciate the difficulty and they will be quite complex regulations. I can well see that the Minister cannot do them in a couple of days. Would he, however, have any notion of what time scale there would be?

Mr. Raphael Burke: I can appreciate the Senator's concern. I am as anxious as the Senator to have the regulations setting down these standards as soon as possible. There are technical problems in drafting. This will be done as soon as possible. I would not like to give the Senator a specific date and then find that I could not meet it.

Professor Murphy: I meekly accept the Minister's rebuke that I should know that the Minister does not specify the reason for a section.

Mr. Raphael Burke: It was not intended as a rebuke.

Professor Murphy: The explanatory memorandum should point out this, for the information of the Members. On section 26, I take it that the reason for this is to help to improve the quality of the housing stock and to stop the deterioration that has been a feature of controlled dwellings particularly. While this is a laudable objective, could it not, at the same time, create further difficulties for the poorer class of tenant? Higher standards imposed by regulation mean that it is the better-off tenant who will benefit from a better type of tenancy. By the same token, would not the supply available for poorer persons be reduced and [688] will not rents be raised correspondingly beyond the reach of the poor tenants?

Mr. Raphael Burke: There is an element of substance in what the Senator says. I cannot deny that the more you increase the standard, and the more the nature and character, for example, of section 13(2) is taken into account, the more the call will be for higher rents. It will increase the burden on the State later on, as the standards are improved. Be that as it may, it is in everybody's interest that the standard of our rented accommodation be improved for tenants. The standard of our housing stock generally should be contained and improved.

Question put and agreed to.

NEW SECTION.

Mrs. Robinson: I move amendment No. 8:

In page 14, before section 27, to insert a new section as follows:

“27.—For the purposes of making regulations under sections 24, 25 and 26, the Minister shall, before making such regulations, consult with, and receive the consent of, the housing authority in whose functional area the dwellings to which the regulations relate are situated.”

This amendment is addressed to giving back to the local authorities some of the power which we have taken away from them, particularly in section 26. Section 26 deprives local authorities of the power to make by-laws under section 70 of the Housing Act, 1966, in relation to standards and has centralised the system. That section and the previous two sections, sections 24 and 25, give the Minister very wide power to make regulations. He would admit this himself. At the moment he is going to deal only with controlled premises in relation to regulations under sections 24 and 25.

Under this amendment the Minister would be required before making such regulations to consult with and receive [689] the consent of the housing authority in whose functional area the dwellings to which the regulations relate are situated. There should be a role for local authorities in this area. We are, effectively, depriving them still further of a power to make by-laws. For the sake of overall standards and enforcement of standards I am not objecting to that, but the Minister should be required to consult. This amendment says that he shall obtain the consent of, but if that is too much for the Minister, I will amend it on Report Stage. The Minister should be required to consult with the local authorities in the functional areas in relation to regulations for the controlled tenancies and, subsequently, for other private rented accommodation. This is important because it is the councillors and local authorities who are very familiar with housing conditions, with local problems and with the kind of problems Senator Murphy raised. It is bad that the matter would be too centralised and done at departmental level which might not be as much in touch with the local housing situation. In principle, I do not like the idea of a further denuding of the powers of local authorities without at least giving them compensation or a right to be consulted and have their views sought and, I hope, influencing the shape of the regulations made.

Mr. Raphael Burke: The purpose of sections 24, 25 and 26 is to enable the Minister for the Environment to make regulations concerning registration of standards and rent books. It is generally agreed that these regulations should be applied in a uniform manner throughout the country. If it was necessary for the Minister to secure the agreement of each of the 87 local authorities to every regulation made under these sections, very little progress would be made. Experience with regard to the operation of by-laws for rented dwellings under section 70 of the 1966 Housing Act tends to confirm this view.

I assure the Senator that consultation will take place with local authorities generally on the operation of the regulation. However, I would not be prepared to [690] accept the amendment as set out. I consider it would be unworkable and would frustrate the whole purpose of the sections involved. As well as that, rather than in any way reducing their powers, the local authorities will have quite extensive new powers with regard to registration that they did not have before. If I were to get individual agreement from each of the 87 local authorities I would be facing a major problem. Also I have to introduce the regulations for the rent books and the registration immediately.

Mrs. Robinson: I accept there is a time constraint and that the Minister is fairly far advanced in the regulations in relation to the controlled premises. I welcome the assurance that there will be consultation. Could the Minister be a little more explicit? Would it be possible, for example, for local authorities to receive the draft regulations in relation to the private rented accommodation and to have an opportunity to give their views? It is the housing committees of the local authorities, or the local authorities themselves, which have very considerable expertise in this area and they are aware of the potential pitfalls — what looks good on paper might not in reality be the kind of reform that would be helpful. I welcome the commitment to consult. Would it be possible to have that consultation at the stage of draft regulations where we are dealing with general rented accommodation, where there is not the same time constraint?

Mr. Raphael Burke: The time constraint applies to registration in the rent book, so I will not have time to——

Mrs. Robinson: Only in relation to controlled premises.

Mr. Raphael Burke: Yes I will give the Senator an assurance that I can have a system of consultation on standards with the local authorities. However, they will have to be uniform. It would be strictly a system of consultation.

Amendment, by leave, withdrawn.

[691] Section 27 agreed to.

Title agreed to.

Bill reported with amendment and received for final consideration.

Question proposed: “That the Bill do now pass.”

Mr. S. O'Leary: We appreciate the Minister's careful attention to our representations in the various matters which were put before us on this long and difficult Bill. I wish him every success.

Mrs. Robinson: I echo that sentiment on behalf of the Labour Party.

Question put and agreed to.