Rent reform is long overdue

Over the years, successive governments have refrained from carrying out essential far-reaching changes to rent legislation.

The emergency which justified the original restrictive legislation was instead made more restrictive over the years. Court decisions from Valletta to Strasbourg denouncing the current state of play have been piling up. The rent reforms of 1995 and 2008 cannot be discarded, however they were not followed up. They were appropriate small first steps but too much time elapsed with no adequate follow-up action. Successive governments have been reluctant to disturb a hornet’s nest hoping that somehow time will solve the matter.

It is within this context that Government’s proposal to carry out a root and branch reform of the 9,700 remaining pre-1995 tenancies is thus a responsible and courageous political move. Through it government will be shouldering the accumulated shortcomings of all its predecessors, red and blue, which have generally ignored the matter over the years. The Greens in Malta have over the years actively campaigned on this specific issue: justice for the landlords must be carried out together with adequate protection of vulnerable tenants.

At the time of writing the statements made by Prime Minister Robert Abela and Social Accommodation Minister Roderick Galdes have not been followed up with the publication of the specific legal texts which will implement the policy declarations made.

The proposals as described so far, are, in my view acceptable in principle. It is however expected that when the detailed legislative proposals are published, these are accompanied by studies carried out, including costings. An essential healthy public debate needs to be adequately buttressed by well-researched background information.

The proposal as spelled out by Abela and Galdes is based on two fundamental points. It seeks to tread the difficult path of protecting both tenants and landlords.

Tenant protection will be achieved through ensuring that vulnerable tenants will at all times have access to a home, be it their current one or, in some cases, possible alternatives provided through access to social accommodation. This is essentially a transitory provision applicable to the identified 9,700 pre-1995 tenancies and is undoubtedly a restrictive condition on landlords. It is however of central importance. It is to be counterbalanced by a mechanism which determines a more reasonable determination of rental income which will be coughed up by the state in part or in whole depending on the vulnerability of the tenant. It is also a mechanism which over the past years has generally been accepted by the Courts as constituting a fair and reasonable rental income.

Of fundamental importance in the proposal as communicated so far is the manner of determination of the payable rent. This will not be left completely to the whims of market forces as it will be capped at 2 per cent of the property’s value. This signifies that, hopefully, some lessons have been learnt from the fallout resulting from the complete liberalisation of the post-1995 rental market.   

The proposal will be addressing an accumulated social problem with a substantial financial outlay consisting of millions of euros annually.

So far, the rent payable in respect of pre-1995 tenancies have been subsidised by the landlords who, in a number of cases are themselves in need of help! It is appropriate that this support is shouldered by the whole community, through the state, who now steps forward to shoulder the problem in the spirit of national solidarity.

So far most have acknowledged that pre-1995 tenancies are a tough challenge. What matters, now, is that we face this challenge head-on. It cannot be postponed any further.

published on The Malta Independent on Sunday: 7 March 2021

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