published on Sunday July 13, 2008
by Carmel Cacopardo
Rent reform brings to the fore two very important issues: social policy and sustainability. On the one hand is the delicate balance between property rights and social justice, on the other is the need to use land resources sustainably in the interests of present and future generations.
AD has been campaigning for rent reform for years. In 2006, as part of its Rent Reform Campaign, AD published a document entitled Rent Reform: A Declaration of Principles in which it emphasised that rent reform should be all-embracing and not limited to legislative proposals. Rent reform requires buttressing by adequate housing policies in order to ensure that government creates the required environment that is so necessary for the development of a healthy rental market. A healthy rental market that matches the supply of residential property with demand will reduce the urge to take up more virgin land for so-called development, as existing demand can be successfully met from the stock of vacant property.
Through the removal of unnecessary shackles, rent reform aims to use the market to provide a decent home for everyone in the full knowledge and respect of mutual rights and obligations. It should be clear to one and all by now that while everyone has the right to a decent dwelling, this does not equate to home ownership. Unfortunately, this is what has happened in the past quarter century.
As the recently published White Paper rightfully emphasises, whether one purchases or rents a property is an economic choice determined by what is currently available on the market. In the past 60 years the rental market has been distorted and not permitted to develop. Instead, the state, through its organs, assumed the functions of a property developer. While the state built housing estates, gobbling up virgin land, it established a pattern of behaviour to be followed by so-called developers. The end result is 53,000 vacant properties as in November 2005. Some would say it is closer to 70,000 now. It is difficult to obtain a worse certificate than this to attest to the mis-management of our built up property!
The White Paper, entitled The Need for Reform. Sustainability, Justice and Protection, is not the end of the story. It is just the end of the beginning, hopefully marking the political decision to act! It seeks to redefine the legal framework within which the rental market will be permitted to develop in the immediate future. Through a set of transition periods it will slowly dismantle the barriers set up over the years that limit the access of owners to their properties. The pace of the transition is undoubtedly not acceptable to all. Some wish to see it move faster; others consider it as already being too fast.
The manner whereby leases are only inherited in specific and predetermined circumstances is the central proposal of the White Paper in relation to residential leases. The White Paper limits the inheritance of leases to three instances. The first instance is the case of the surviving spouse, the second is that of the tenant’s offspring and the third instance is that of parents aged over 60. In the first instance, no changes are being proposed to current legislation. In the latter two instances, the White Paper limits this right as a one off occurrence in respect of those who, on 1 June 2008, had been residing with the tenant for five years or more. All other cases not falling within these parameters will, in terms of the White Paper, be entitled to a transitional five-year lease on the basis of paying the market rent. Subsidies by the state to assist those who cannot afford this will be available through reinforcing existing rental aid schemes administered by the Housing Authority.
The White Paper rightly introduces into the equation the economic worth of those who would inherit the lease. Those who are entitled to inherit a lease but earn in excess of €25,000 per annum, or have an economic worth in excess of €125,000, will have to shoulder the expenses of their own accommodation. Subject to a temporary and transitional lease of three years’ duration at a rental value determined at three per cent of the value of the property, the White Paper reasonably recommends that in such cases the right to inherit a lease will not be operative.
The point of contention with all this is that government is limiting itself to the civil rights of the traditional family, ignoring the fact that society in Malta is not static and has developed alternative families. At the time of writing, a news item is emphasising that one out of every five births in Malta in 2007 took place outside wedlock. That is 20 per cent. It implies alternative families, in particular single-parent families as well as unmarried couples who are cohabiting.
The White Paper thus limits itself to traditional definitions of the family, ignoring in the process alternative family units made up of unmarried couples, single parents or same sex couples. Pointing this out and taking a definite stand in favour of the civil rights of alternative families does not mean taking a contradictory stance on the proposed rent reform: insisting on the removal of restrictions on the one hand and promoting further restrictions on the other. It means that rent reform also has to take note of the social realities of this country and should ensure that, in its determination of the civil rights of tenants, no section of the Maltese population should be discriminated against. In this particular aspect, the White Paper proposes an ostrich-like social policy. It seems that, just like the ostrich, the authors of the White Paper believe that if they ignore the emerging social realities they will disappear. In fact they are continually on the increase. These are not new rights but existing rights that are as yet unrecognised by the Maltese state. In this respect, the White Paper needs to tune in to the realities of Maltese society in the 21st century.
In dealing with commercial leases, the White Paper is very generous with the current pre-1995 tenants. It proposes a maximum 20-year transition period, which I think is excessively long. Such a long transition period gives elbow room to those who would undoubtedly be urged at some point in time to turn the clock back 60 years. The shorter the period, the better: 10 years as a maximum transition period would, in my opinion, be more than enough.
Those who own properties let to band clubs will undoubtedly not consider the White Paper acceptable, as it does not address their problem. In fact, the White Paper places the issue of property let to political parties, band clubs, sports clubs and other organisations considered of a social nature outside its parameters. Minister John Dalli has publicly clarified that government intends to address these issues, hopefully through the same initiative as the rest of the rent reform process. This is another headache yet to come. But it is no use discussing these issues in a vacuum. It would be best to postpone comments until such time as specific proposals dealing with them are presented for public consultation.
On the whole, the proposals put forward by the White Paper on Rent Reform should result in the interweaving of social and environmental policy. Through ensuring that the market works without undue interference, with government functioning as a regulator instead of assuming the role of a market basher, a developed rental market can in time mop up vacant properties, thereby reducing the need for the large scale “development” that has turned the Maltese Islands into one large building site.
When considering the above, AD is of the opinion that, overall, the White Paper is a positive exercise that aims to reach a reasonable balance between different interests in civil society. If government takes serious note of all the alternative proposals that will be announced in the public debate, its proposals may be substantially improved. AD is willing to act as a social and political partner in order to ensure a reform that is sustainable in social, economic and ecological respects.
Carmel Cacopardo is an architect and civil engineer and spokesman for Alternattiva Demokratika on sustainable development and local government.
You may also view the following posts in this blog. They discuss the Rent Reform White Paper :