The low-down on ground rents in Ireland

 

The public may see it as a relic of colonisation, but ground rents are far more complicated than that and should not be ignored, writes ROSE DOYLE

ENSHRINED IN the history of Irish social and political agitation as a burning, or at the very least jailing issue, ground rents have a complicated, not to say nefarious, hold on the average householder’s sense of justice.

Is the land not ours to own, freely and without paying rent to foreign and/or absentee landlords in perpetuity? Didn’t Michael Davitt, in the 19th century, proclaim the land of Ireland for the people of Ireland? Didn’t we fight and starve for it, suffer and work for it? And all of the above for centuries too, man, woman and child?

All true, but overwrought and not really the point about ground rents anymore, according to Brigid McCaffrey, a woman who has spent most of her working life dealing with rents reserved on long term leases on ground, but not reflecting any buildings on that ground. Ground rents, to the rest of us.

As chief examiner of titles, ground rent arbitrator with the Land Registry, she has a terrifying amount of information about ground rents at her finger tips. She imparts this with a suitably dry humour, all the while anxious to dispel myths and assure householders that it is in their interests to pay off whatever (usually small) outstanding amounts they may owe in ground rents.

“Anyone who has bought a new house since 1978 should not worry,” she says, “but people who own houses bought before that may not even know their lease is running out. This can have repercussions. Lending institutions, for instance, won’t give loans on a leasehold property that has less than 70 years left to run. House owners eliminate this as a problem by buying out the freehold (paying off the ground rent). People really should check the term of the lease on their house, just in case time is running out.”

There are other consequences. When a lease expires the entire property reverts to the landlord. In a case like this there will, of course, be rights to a new lease, or rights to acquire the fee simple, but pursuing these can be expensive. Above all, Brigid says, “people should not worry”.

There is nothing, she assures, which cannot be sorted and “all sorts of ways the situation can be ameliorated”. Together with her colleagues in the ground rents section she will advise, help, reassure and prove any situation “resolvable”.

The ground rents section within the Land Registry has been in existence for 32 years now, since 1978 when The Landlord and Tenant (Ground Rents) Act abolished the right of landlords to create new ground rents in respect of dwellings. Later that same year the Act upped the ante by bringing in a scheme for the purchase of ground rents. Under this the Property Registration Authority (for a prescribed fee) does the legal work involved with the purchase of the fee simple.

Proving its need, and value, the service has been availed of by some 82,000 people since 1978, all of them acquiring the freehold title to their property.

What is surprising, even allowing for the fact that title to most houses built since 1978 is freehold, is the reality that a great many ground rents continue to exist in Ireland. People don’t realise the scheme exists, don’t realise their lease is finite, don’t think about it at all or, when they do, incline to think ground rents a thing of the past and/or an odious hangover from colonisation for which they shouldn’t have to pay.

“It’s not as simple as an anti-English/ruling class landlord taking payment reaction,” Brigid is firm. “Landlords have been Irish as well as English. What people need to realise is that lots of Irish developers and builders are landlords too.”

The hard facts, researched and made clear by the ground rents section, show the perception that ground rents are paid to absentee English landlords is “wide of the mark”. Though the “landed gentry” created some leases centuries ago, and mean small head rents are still payable to their successors, most ground rents exist because of housing developments by Irish builders during the first half of the last century.

True, they were a form of income but leaseholds on land, as opposed to freeholds, existed, the section has found, “to facilitate orderly development of the land prior to planning legislation”.

Leases, put more simply by Brigid, “were created for planning development reasons, so as the person beside you couldn’t build a 10-storey house or build up against your window”.

A leasehold on a property gives the right to use the land for a term of years, often 99 years, and is finite. During that time no one but the householder and bank has a right to the property. Freehold, on the other hand, gives free title – outright ownership that lasts forever.

“People in Ireland still have the perception that freehold is better when selling,” Brigid says, “but a long lease is a perfectly good title. People should know, too, that they can simply go to their landlord/builder at any time and buy out the ground rent by agreement.”

The ground rents section deals daily with history’s ongoing reality. “People still hold titles going back to the 1700s, especially in Dublin,” Brigid says. “Mostly it’s a pyramid of titles, with lots of smaller leases building up. You see it especially with small houses on the northside of the city. The very old ones were set at the market rate for land at the time, so cost very little now.”

She makes the point, too, that the fact of the section continuing to get applications to buy out ground rents “means some house sales at least are happening”.

Brigid McCaffrey cares about the work she does, and is concerned that householders, elderly ones in particular, should be aware of their rights and the help available with buying out their ground rent through the ground rents section.

She voices concern about the Vesting Certificate or title document given to those who complete the procedure. “It should be registered with the Land Registry or Registry of Deeds. Many people who’ve bought ground rents directly from landlords in the past 30 years haven’t completed things by lodging the forms with the Land Registry so as to get a Vesting Certificate. We’d very much like those people to come in to us and complete the procedure.

“There are quite a few leases in existence which have less than 70 years to run,” she says, “ so people should check. If a person’s lease is running out it’s important to start the acquisition procedure as soon as possible. These procedures are straightforward. Buying out the ground rent means that people can more easily sell, mortgage or develop their property.

“Legislation applies, too, to local authority houses. Dublin City Council and others are often the landlords and will, on request, give people transfer orders which vests the freehold in the tenant.”

Technology has, and continues, to add to the treasure trove of information available to the ground rents section. Records go back to when the Land Registry was set up in 1891, though not everything has been registered since then. A few taps on the keyboard highlights the fact that this writer’s ground rent is 5p per year and that the lease has 110 years left to run.

You can get further information on prai.ie or visit the ground rents section at the Property Registration Authority, Chancery St, D7