Section 23.. Landlord and Tenant (ireland) Act, 1870.

Landlord and Tenant (Ireland) Act, 1870.

Under what are known as the “Bright Clauses” of this Act, the landlords and tenants of agricultural or pastoral holdings could arrange for a sale of their holdings with State aid to be carried out in the Landed Estates Court. Upwards of two-thirds of the price agreed upon could be advanced by the Board of Works, to be repaid in thirty-five years by an annuity, at the rate of five per cent. on the loan. Under this Act 877 tenants purchased their holdings, and the amount of loans issued was £514,536. The total purchase money paid by the tenant purchasers for their holdings was £859,000, being at the rate of twenty-three and one-third years’ purchase of the rents.

The Act of 1881 (the “Gladstone Act”).

Under this Act the Land Commission thereby established was empowered to make advances to tenants for the purchase of their holdings, and was enabled to purchase estates for re-sale to the tenants. The limit of advance was extended from two-thirds of the purchase-money (as in the Act of 1870) to three-quarters. The terms of repayment were the same—an annuity of five per cent. for thirty-five years.

Upwards of 731 tenants purchased under this Act, and the advances made amounted to £240,801. These included advances to 405 tenants on seven estates bought under the Act (Section 26) by the Land Commission in the Landed Estates Court.

The Purchase of Land (Ireland) Act, 1885 (the “Ashbourne Act”).

Under this Act—commonly known as the “Ashbourne Act”—a sum of £5,000,000 was authorised to be advanced to the Land Commission to enable sales to be carried out between landlords and tenants by agreement, and to enable the Land Commission to purchase estates in the Landed Estates Court for the purpose of re-selling them to the tenants. The Land Commission was empowered to advance the entire of the purchase-money subject to the retention of one-fifth by way of guarantee deposit for a period of about seventeen and a half years, by which time an equivalent amount of the capital advanced had been repaid by means of the sinking fund. This deposit could be utilised if the tenant purchaser made default in his repayment, and if the amount in default could not otherwise be recovered. Thus the landlord vendor was made a guarantor for the repayment of the annuity by the tenant purchaser. (Section 3.)

The advances made under this Act were to be repaid by annual instalments (which included interest and sinking fund), extending over a period of forty-nine years.

In 1888, the £5,000,000 given under the Act of 1883 being practically exhausted, an additional sum of £5,000,000 was advanced to the Land Commission for the purposes of land purchase (51 and 52 Vic., c. 49). Under the “Ashbourne” Acts 25,367 tenants (on 1,355 estates) became purchasers of their holdings, and the loans made amounted to £9,992,536. The rate of sale was seventeen years’ purchase of the rents. (Report of the Irish Land Commission, 1902, p. 89.) Under these Acts 101 estates were purchased in the Landed Estates Court for re-sale to tenants, and loans were issued to 2,029 tenants, amounting to £531,277.

Purchase of Land Acts, 1891 and 1896 (the “Balfour Acts”).

The funds advanced to the Irish Land Commission for the purposes of land purchase having again become exhausted, Mr. Balfour, in 1891, introduced a new system under which the landlord or vendor was paid in a specially created guaranteed Land Stock (exchangeable for Consols at the option of the vendor), equal in nominal amount to the purchase money. This stock bears interest at the rate of 2-¾ per cent. per annum, and cannot be redeemed until the expiration of thirty years from the date of the passing of the Act of 1891. The dividends and sinking fund payments required for this stock are paid out of a “Land Purchase Account,” established by the Land Commission (Section 4), to which all moneys received on account of any purchase annuity for the discharge of an advance are paid. If this Land Purchase Account is at any time insufficient to meet the dividends and sinking fund payments (owing, for instance, to default in the repayment of instalments), the deficiency is to be a charge on a “Guarantee Fund,” established for the purposes of the Act (Section 5). This fund consists of a cash portion and a contingent portion. The cash portion is mainly made up of the Irish Probate Duty (now Estate Duty) grant, and an Exchequer contribution, and the contingent portion consists of the Irish share of the local taxation (Customs and Excise) duties and certain local grants (Section 5). Any deficiency in the Land Purchase account is to be paid out of this Guarantee Fund. This financial expedient, of course, throws the securing of the repayment of the advances for land purchase on the ratepayers of the county, as any default will be recouped by deductions from the various payments and contributions in aid of rates that make up the Guarantee Fund. The amount of stock that could be issued for each county for purposes of Land Purchase was limited to twenty-five times the share of the county in the guarantee fund by the Act of 1891 (Section 9). This limit, having been reached in the case of Co. Wexford, by Mr. Wyndham’s Purchase of Land (Ireland) Act, 1901 (1 Edw. VII., c. 3) the limit was extended to fifty times the share of that county in the guarantee fund. By the Act of 1903 (Section 46) the limit for each county was raised to thirty times its share in the guarantee fund, which limit might be further raised to sixty times where the Treasury, on the certificate of the Lord-Lieutenant, were of opinion that such increase in advances could be made without any risk of loss to the Exchequer.

Taken on the basis of the financial year 1909-10 the Guarantee Fund for all counties of Ireland amounted to £2,797,126. On the above figures the capitalized value of the Guarantee Fund on the thirty times basis is at present £83,913,780, but owing to increases beyond this thirty times limit which have been sanctioned by the Treasury, in certain counties the present capitalized value of the fund stands at £89,323,685.

The total charge on the fund up to March 31st, 1910, was about 48-¾ million pounds in respect of advances made on the security of the fund, and, taking pending applications for advances into account, the approximate charges amounted at that date to about 105 millions.

The Act of 1891 was amended in various respects by Mr. Gerald Balfour’s Act of 1896, which introduced, among other changes, a method of reducing every decade (up to thirty years after the advance was made), the annuity to be paid by the tenant purchaser. As under the “Ashbourne Act” of 1885, this annuity was calculated at £4 per cent. on the purchase money, 2-¾ per cent. being for interest, and 1-¼ per cent. being for sinking fund. Under Mr. Gerald Balfour’s system, during the first decade after the purchase the annuity is calculated on the original advance, and during the second and third decades on the portion of the advance which is ascertained to be unpaid at the end of the previous decade. At the end of the third decade the annuity is calculated on the amount of the advance then outstanding and runs until the entire debt is paid off. The Act of 1896 also permitted the Land Commission to dispense with the whole or any part of the guarantee deposit required under the Act of 1885 if the security for the repayment of the advance was considered to be sufficient without it (Section 29).

The number of loans issued under these Acts of 1891 and 1896 to tenant purchasers up to March 31st, 1910, was 46,828, amounting in all to £13,145,762, and being at the rate of 17.7 years’ purchase of the rents (Land Commission Report, 1910, p. 110).

Irish Land Act, 1903 (the “Wyndham Act”).

I have traced the history of the Irish Land Acts down to 1896. Some short Acts were added to the code during the following years to clear away certain difficulties, and in 1903 Mr. Wyndham brought in and passed his Irish Land Act, which may be said to have opened a new era in Irish agrarian legislation. Under it a new body known as Estates Commissioners was formed, and included in the Land Commission to administer land purchase in Ireland.

Sales under previous Purchase Acts were carried out by holdings. A landlord could agree with one or more of his tenants to sell them their farms, and if the Land Commission, after examination, found that the particular holding was security for the advance asked for by the tenant, such advance was made irrespective of any other sales on the estate. The Act of 1903 introduced the system of sales by “Estates.” A landlord, to obtain the benefit of the Act, is obliged to sell his entire estate, or such portion of it as the Land Commission considers fit to be regarded as a separate estate for the purposes of the Act. The Commissioners, before defining any lands to be an estate, have to consider all the circumstances of the district and of the property. Once the estate is “declared,” the holdings comprised in it are dealt with in accordance with the provisions of the Act. Those of them that are subject to judicial rents and are within certain “zones” laid down in the Act are freed from the liability to inspection as to security or equity of price. The Act presumes that a holding subject to a judicial rent which is sold at a price the annuity on which is from 10 to 30 per cent. less than the judicial rent, where that rent was fixed since the passing of the Act of 1896, or from 20 to 40 per cent. less where the rent was fixed before that date, is good security for the payment of the annuity, and that the agreed price is equitable. Holdings not subject to the “zone” provisions are liable in inspection as to security and as to equity of price.

The Act also introduced the system of sales of estates to the Commissioners under Section 6 (the direct sales to tenants by landlords being under Section 1). When a landlord is willing to sell in this manner, the Commissioners, after due enquiry as to the price that should be paid by each tenant for his holding, may offer to purchase the estate for the purpose of re-selling to the occupiers, provided that at least three-fourths of the tenants agree to purchase their holdings from the Commissioners at the estimated price.

To encourage sales of estates, and to enable owners to get such a sum as would give them their net income out of the purchase money, when reinvested in suitable securities, the Act provided that a bonus of 12 per cent. on the purchase money should be paid to the owner on the completion of the sale. At the same time the tenant was enabled to borrow the purchase money of his holding on easier terms. As we have seen, under the former Purchase Acts, the annuity rate was fixed at 4 per cent., of which 2-¾ per cent. was for interest and 1-¼ per cent. for a sinking fund, the accumulation of which, with compound interest, would repay the sum advanced in about forty-three years. Under the Act of 1903 the annuity rate which the tenant had to repay was reduced to 3-¼ per cent., of which 2-¾ per cent. is for interest and a ½ per cent. for sinking fund. This reduction in the sinking fund lengthens the period over which the repayment will extend to sixty-eight and a half years, and, of course, renders it practically impossible to continue the system of giving decadal reductions in the annuities. The decadal reductions, which were abolished by the Act of 1903, worked out at about 15 per cent. reduction in the annuity every ten years.

The Act of 1903 also enabled owners to sell their demesnes and untenanted lands to the Commissioners, and to repurchase them, or so much of them as the Commissioners approved, with the aid of advances made to them in the same manner and under the same conditions as to tenant purchasers.

The Act also gave considerable powers to the Commissioners of dealing with poor and uneconomic holdings. It enabled (Section 2) parcels of untenanted lands on the sale of an estate to be sold to the following persons:

(a) A person being the tenant of a holding on the estate;

(b) A person being the son of a tenant of a holding on the estate;

(c) A person being the tenant or proprietor of a holding not exceeding five pounds in rateable value, situate in the neighbourhood of the estate; and,

(d) A person who within twenty-five years before the passing of this Act was the tenant of a holding to which the Land Law Acts apply, and who is not at the date of the purchase the tenant or proprietor of that holding: Provided that in the case of the death of a person to whom an advance under this paragraph might otherwise have been made, the advance may be made to a person nominated by the Land Commission as the personal representative of the deceased person.

This last class (d) was intended to provide for the reinstatement of tenants evicted from their holdings within the prescribed time.

It also gives power to the Commissioners to purchase untenanted lands for the purpose of enlarging holdings and of creating new holdings, and to enable this work to be carried out satisfactorily, the Land Commission is given all the powers conferred on the Congested Districts Board by their Act of 1901 for facilitating re-sales of land.

The Evicted Tenants Act, 1907.

A large number of evicted tenants had been reinstated in their holdings under the Act of 1903 or had been provided with new holdings where their former holdings were not available. Large sums of money (drawn from the Reserve Fund established under the Act of 1891, which was made available by Section 43 of the Act of 1903) were expended in equipping these holdings and in financing reinstated tenants where in the opinion of the Estates Commissioners this was necessary. The provisions of the Act of 1903 were, however, found to be insufficient to carry out the intentions of the legislature, and in 1907 Mr. Birrell passed an Evicted Tenants Act which enabled the Estates Commissioners to acquire untenanted land compulsorily for the purpose of providing holdings for tenants who, or whose predecessors, had been evicted from their holdings since the year 1878, and who had applied to the Commissioners before May 1st, 1907. Up to March 31st, 1911, as many as 12,398 persons had applied for holdings as Evicted Tenants. Of these 6,276 were rejected by the Commissioners after enquiry; 2,631 did not apply within the prescribed time; 2,830 were actually reinstated in holdings; and 661 were still under consideration by the Commissioners.

Irish Land Act, 1909 (Mr. Birrell’s Act).

After six years’ experience of the Act of 1903 it became evident that further legislation was required if Land Purchase was to go on. In two important matters Mr. Wyndham’s Act needed amendment. Under the financial provisions of the Act the money required for advances to enable tenants to purchase their holdings was provided by the issue of a Stock bearing interest at 2-¾ per cent. But it turned out that at no time after the passing of the Act could the money be raised on these terms, except at a large discount averaging over 12 per cent. The Act provided that a fund known as the Irish Development Grant should bear any loss due to the issue of Stock at a discount. This Fund made available a sum of £160,000 a year. The first issue of Stock under the Wyndham Act was made at 87, or a discount of 13 per cent. Thus, to provide £100 in cash over £113 of Stock had to be issued. The interest on this “excess Stock” was not paid by the tenant purchasers, and was to be provided for out of the Development Grant so long as that Fund was available, and afterwards would fall on the Guarantee Fund, which meant the Irish Ratepayers. In the year 1909 it, however, appeared that the charge for “excess Stock” necessitated by the continual flotation of Stock at a large discount had so eaten into the Development Grant that that Fund had become exhausted, and consequently all subsequent issues of Stock for Land Purchase purposes would have to be made at the expense of the Ratepayer. Agreements amounting to 56 millions of Purchase Money were pending. To finance these Agreements a sum of about £250,000 a year for the period of sixty-eight and a half years would have to be provided by Irish Ratepayers, and were all the agricultural land in Ireland to be sold the charge on the ratepayers would amount to an annual sum of £877,000.

It became evident that the Irish Ratepayers would not tolerate Land Purchase on these terms. Mr. Birrell, accordingly, by his Land Act passed in December, 1909, provided that the charge for excess Stock to finance all pending Purchase Agreements should be provided by the Treasury instead of the Ratepayers, thus relieving the latter of a capital sum that might exceed over £7,000,000. As regarded future Purchase Agreements, the Act provided that the Vendors should be paid in 3 per cent. Stock, and that Purchasers should pay an Annuity of 3-½ per cent. instead of 3-¼ per cent.

The other matter in which the Act of 1903 required amendment was as regards the provision of the Bonus. A sum of 12 millions was provided by Mr. Wyndham for the purpose of encouraging landlords to sell. On the assumption that £100,000,000 would be sufficient to complete Land Purchase, this Bonus Fund was distributed at the rate of 12 per cent. on the Purchase Money advanced. This rate was to be continued for a period of five years. On the expiration of that period (November 1st, 1908) it was found that proceedings for sale of Estates had been instituted to an amount of between 70 and 80 millions, and that the amount remaining to be sold would probably approximate to another 80 millions. The Treasury accordingly, in accordance with powers given them in the 1903 Act, reduced the percentage from 12 to 3 per cent. at which rate it would remain for at least five years were a new Act not passed. Mr. Birrell’s Act, however, removed the 12 million limit, and provided for the payment of a graduated Bonus at rates ranging from 3 to 18 per cent., according to the number of years’ purchase of the rent at which the landlords sell. The old rate of Bonus tempted landlords to stand out for a high price: the new graduated rate offers an inducement to them to sell at a low price. It was calculated that under the new provisions the capital sum for Bonus would amount to at least 15 millions, which is likely to cost over 17 millions, owing to the necessity for excess Stock.

As before stated, Agreements representing 56 millions of purchase money were awaiting completion through the Land Commission in 1909. In 1903 it had been calculated that the annual output of the Land Commission would be five millions, and at that rate it would take more than eleven years to complete these agreements. The block was due partly to the difficulty of raising more than a limited amount of money in each year; partly to the impossibility of any department dealing with more than a limited number of sales in a year; and partly to the great rush of applications in 1908 when the bonus revision was impending. The Act of 1909, in order to relieve the block, gave Vendors under pending agreements an option to take 2-¾ per cent. Stock at 92 (3 per cent. investment) in whole or part liquidation of their Purchase Money. By virtue of certain statutory regulations, all Vendors who exercise this option will be paid in a special priority sometimes years sooner than if they elected to be paid entirely in Cash. Cash Sales, Stock Sales, and Future Agreements are dealt with pari passu, each class claiming on a separate fund.

Land Purchase under the voluntary system operated least of all in places where its operation would have been most beneficial, and the congested districts derived comparatively little benefit from the Act of 1903.

Table of Number of Purchasers and Amount of Advances under the various Land Purchase Acts

The following table gives a summary of the number of tenant purchasers and the amount of advances issued under the various Acts from 1869 to March 31st, 1912:

TABLE I

Act. No. of Amount of Purchasers. Advances. I—Irish Church Act, 1869 6,057 1,674,841 II—Landlord and Tenant Act, 1870 877 514,536 III—Land Law (Ireland) Act, 1881 731 240,801 IV—Land Purchase Acts, 1885, 1887, 25,367 9,992,536 1888, and 1889 V—Land Purchase Acts, 1891, 1896 46,810 13,633,665 VI—Irish Land Act, 1903 144,630 48,824,884 VII—Evicted Tenants Act, 1907 641 356,487 VIII—Irish Land Act, 1909 5,062 1,435,175 Total 230,175 76,672,925

The following represent the Number of Purchasers and Advances—comprised in cases at present pending under the 1903 and 1909 Acts, (i.e., on March 31st, 1912).

TABLE II

Purchasers. Advances applied for. Act of 1903 118,360 35,794,157 Act of 1909 40,733 7,094,725

(Includes lands of an estimated value of £4-½ millions for the purchase of which the Congested Districts Board are in negotiation.)

TABLE III

Table giving (1) the Number of Holdings; (2) Area; (3) Poor Law Valuation; and (4) the Purchase Money of (a) Lands Sold and Vested; (b) agreed to be Sold but not yet Vested; and (c) in respect of which proceedings for sale had not been instituted up to March 2nd, 1912:

(a) b) Lands (c) Lands agreed to Lands in sold and be sold respect of vested but not which in yet proceedings purchasing vested in for sale tenants, purchasing have not or in the tenants been Estates (including instituted Commissioners lands under the or comprised Land Congested in Estates Purchase Districts for the Acts (the Board, for sale of estimated resale to which to Purchase Tenants. the Money of Estates same being Commissioners calculated and on basis Congested of Districts Purchase-Price Board of Poor proceedings Law have been Valuation instituted. of lands sold to March 31st, 1910, under the Act of 1903). Acts 1870-1896. Number of 73,812 73,812 Holdings Area 2,508,938 2,508,938 Poor Law £1,399,188 £1,399,188 Valuation Purchase £24,779,176 £24,779,176 Money

Acts 1903-1909. Number of 143,618 167,319 Holdings Area 4,637,183 4,291,725 7,301,798 16,230,706 Poor Law £2,418,136 £2,250,372 £3,993,971 £8,662,479 Valuation Purchase £49,202,298 £45,536,851 £82,263,747 £177,002,896 Money

Gross Totals. Number of 217,430 167,319 Holdings Area 7,146,121 4,291,725 7,301,798 18,739,644 Poor Law £3,817,324 £2,250,372 £3,993,971 £10,061,667 Valuation Purchase £73,981,474 £45,536,851 £82,263,747 £201,782,072 Money

NOTE.—This Table is based on the assumption that all the land in Ireland valued as agricultural land will come under the operations of the Land Purchase Acts.

TABLE IV

Table giving Rates of Annuity (distinguishing amounts for Interest and Sinking Fund) and number of years payable under the various Land Purchase Acts:

Purchase Rate of Rate of Rate of Number of Act. Annuity. Interest Sinking years comprised Fund payable. in comprised Annuity. in Annuity. 1881 5 3-½ 1-½ 35 1885 4 3-1/8 7/8 49 1891 4 2-¾ 1-¼ 49 1896 As in Act 73 of 1891, subject to decadal reduction. 1903 3-¼ 2-¾ ½ 68-½ 1909 3-½ 3 ½ 65-½