Ground Rents - The Unfinished Revolution
BY ROISIN DE ROSA
The abolition of ground rents would finally end an outmoded feudal concept and allow Irish democracy to replace a relic of the colonial past. It would end an ongoing injustice against hundreds and thousands of Irish people who have been battened upon by land speculators, both native and foreign, avaricious builders and many opportunists in the legal profession since the foundation of the state.
Tony O'Toole of ACRA, the national body for residents' associations.
Ground rent is an annual rent paid to a ground landlord, in return for no service whatsoever. The majority of ground rents are charged on foot of leases which are sometime in perpetuity. Other land leases go well into the next century.
Many such ground leases date back to the Plantation and occupation of Ireland by the British, but others are quite recent in origin, such as those created by builders like McInerneys, which bought tracts of land, built houses which they then sold, but set up a ground leasehold which they retained, upon which the householder may continue to pay an annual rent.
Or so it was until the 1970s, when ACRA began the fight against payment of ground rents.
Ground leases expiring
Many of the more recent ground leases, which were for 35 or 100 years, are starting to come to an end. When the ground lease is up, people who when they bought their houses thought they owned them face an appalling choice.
At present under the Landlord and Tenants (Ground Rents) Acts, 1967 to 1984, the landlord has a statutory entitlement to one eighth of the value of the house on expiry of the lease. For example, on the expiry of a ground lease, the owner of a house valued at, for example, £64,000, would have to pay the ground landlord £8,000 plus legal costs, to buy out the freehold of `their' property.
Alternatively, the householder is entitled to renew the ground rent lease for a further 99 years, but the ground rent chargeable would be in the region of at least £600 per annum and subject to review every five years, so that ground rents can `keep pace' with inflation and the astronomic rise in rental values and house prices.
Government refuses to act
Sinn Féin TD Caoimhghín Ó Caoláin, speaking at the recent Sinn Féin Ard Fheis, warned that there is no prospect of the abolition of ground rents by the current 26-County government.
All the political parties in Leinster House say they are utterly committed to abolition, but none has felt it important to act. The latest attempt has come from Eamonn Gilmore of the Labour Party, who in February of this year introduced the very same bill Michael Woods of Fianna Fáil introduced when in opposition in 1997.
innocent might think that the present coalition government would support their own bill and allow it government time to go to its second and third reading. But of course this will not happen, and even if the Labour Party were to pursue the bill in private members' time, the government majority would secure its rejection. All this despite that the present government made the abolition of ground rents a part of its government programme when the coalition came to power.
Scandal goes on
Ground rents on long-term leases may often be nominal, but nonetheless, as Tony O'Toole says, are ``an absolute and utter scandal. It's amazing to think that though we have got our independence, this issue has still not been resolved.''
As it is, ground rents represent a nice little earner for the ground landlord. Dublin property market sources estimate that ground rent income to, for instance, the Pembroke Estate alone, may be worth something in the region of £250,000 per annum.
In 1974, ACRA started a ground rent strike. Over 50,000 householders were brought to court by their landlords for refusing to pay, some 170 received jail terms, and five actually went to jail.
In 1978, reforms were introduced banning the creation of further ground rents and outlawing the right of the ground landlord to evict anyone from their house for arrears in ground rents. ACRA estimates that some £60 million at least is owed in ground rents, though some £42 million may not be enforceable debt, as it is over six years old and statute barred.
But no one really knows the true situation, because many householders who owe ground rents are old people who are afraid to go public and are afraid not to pay. Many fear the time the lease ends, that they can neither afford to buy the lease out, or pay the massive increase in ground rent which may be demanded.
ACRA advises people not to pay ground rents, to boycott the buy out scheme, and to ignore all intimidating letters from ground landlords or solicitors acting for them. No one can be evicted for the non payment of ground rents. But the position is not so clear when the ground lease expires.
Most of all, what ACRA condemns is the fact that local Irish builders have not only set up ground leases, but they have been amongst the most voracious in demanding the annual rents. Two of the people who finally went to jail did so for their refusal to pay McInerneys.
In 1992, McInerneys, under the name of Henry Hunt, (a wholly owned subsidiary company set up to handle McInerneys' ground leases) sold their ground rent portfolio of 3,290 household ground rents to an English property dealer, Ellard Lipson, for £32,000, around £10 per house. ``When you think'', says Tony O'Toole, ``of how much McInerneys had already made out of the Irish people through building and selling houses, the fortunes that they have made from householders, and then they sell the ground under these houses to an English landlord, or debt collector!''
Government sells its ground leaseholds
But even worse was the situation with Irish Life, a government-owned company which, in the early 1980s, sold 9,000 ground rents in Ireland to a Philip Frederick, a London property dealer, who now trades under the name of Dublin Land Securities.
The deal was for £3.36 million, which included `odds and ends' of vacant ground around houses and a site of over seven acres of land in Palmerston, then valued at £300,000. ``Imagine the government of the day selling these ground rents under the feet of the Irish householders who had bought their houses,'' says Tony O'Toole. ``Imagine the government selling them `the right' to take £180,000 off Irish householders per annum (average ground rents at £20 a year). The government was selling our birthright, our country, back to those who colonised us.
``They will tell you that there is difficulty abolishing ground rents, because it might conflict with the constitution, but we also have a constitution, which is there to defend our rights. The governments have ignored our constitutional rights. They've even sold them. The robber barons, the rack renting landlords, those whom Connolly warned us might still rule us as `we hoist the green flag', they have not yet gone away. In fact, the government has reinstated some of them, and protected all of them.''
Existing ground leases on which the government pays rent
According to ACRA, there are an astonishing 250,000 ground leases in the 26-County state. The state itself pays ground rents in many cases to English ground landlords, like The Earl of Pembroke, who owns property around Merrion Square, or the Duke of Leinster, who owns the land around Kildare Street. Many ground leases are held in the name of solicitors and other native Irish landlords and interests. Even the Catholic Church and the estates of religious orders, like for instance the estate of the Sisters of Mercy, have their fingers in the pie.
The length of these leases vary; those upon which the government pays ground rents go well into the next century. The largest proportion are `forever'. The annual rents, though very substantial in their day, are now only nominal, and few go above several hundred pounds.
Amazingly, the government still pays ground rent to landlords on such historic sites as St. Enda's in Rathfarnham, The Four Courts, Dunsink Observatory, Dundrum Mental Hospital, Iveagh House, and Kilmainham Jail.
These government ground leases of course only represent the tip of the iceberg. The lion's share of ground leases are of course on private households. People think they own their house, and so they do, but they don't own the land upon which the house is built.
The government itself pays ground rent on many government offices in Dublin and around the state. Private landlords also own the ground leases of Arbour Hill Barracks, Cathal Brugha Barracks, Clancy Barracks, Collins Barracks, McKee Barracks, Ship Street Barracks, Naas Barracks, Newbridge Barracks, Sarsfield Barracks and a long list of Garda stations.