Editorial

From time to time the subject of the unfair rent laws governing old property, a injustice which becomes worse with every passing day - and it has lasted for quite a few decades now - crops up in the media.

We have often commented editorially on this continuing daylight robbery at the expense of landowners, and have called for a radical reform of the rent laws, ideally through political consensus. But the feeling is - and this is echoed by correspondents writing in this issue - that Government, on whom the major responsibility falls, and Opposition, lack the political will to put an end to a disgraceful situation.

To its credit of the political forces in the country, only Alternattiva Demokratika has unequivocally called for urgent action in this regard.

In 1995 Parliament enacted amendments to the rent laws, by which new rent agreements were liberalised - i.e. tenant and landlord could arrive at any rent they agreed upon, without the interference or oversight of the Rent Regulation Board, and presumably for any period. They could even agree to raise the rent periodically every few years to take account of inflation.

Yet these amendments have not made much impact on the rental situation. Property owners are still extremely wary about renting to Maltese residents, so strongly biased are our laws in favour of tenants.

A few years later Government set up a commission to study rent law reform, but after three years its chairman was appointed judge, and practically nothing has been heard of the commission since.

And property owners, who are seeing the value of the income they receive from controlled rents constantly declining to a point where they are now truly ridiculous (palatial properties are rent at Lm15 or Lm20 a year, slightly more than an average day's wages), are now truly fed up at the situation and are asking, as our correspondents today are doing, what happened to the "justice" promised by the Nationalist Party in 1987.

At the very least, the government could take one measure which the Opposition cannot possibly argue with, since it is fair and logical - namely, to abolish the automatic "inheritance" of a low-rent tenancy on the death of the lessee. Although, in cases where the heir or heirs have no alternative accommodation, one would agree that they should not be thrown out onto the street, surely they cannot be expected to continue to pay the same rent as the deceased had paid when he first took out the lease 60 years ago!

And in some cases, the tenancy is "inherited" not by the tenant's son or daughter, but by some distant 'relative' or even a complete outsider who decides to move in with the tenant before he or she dies.

That is only a tiny part of the injustice suffered by old property owners, some of whom are suffering hardship while their tenants - especially those in commercial property - live in luxury, subsidised to boot by a massive "discount" on the annual rent they should realistically be paying.

What about, for example, the matter of "extraordinary" repairs? A tenant who has been paying Lm30 a year for a three-bedroom apartment in central Sliema, for example, and who has never spent a cent on ordinary maintenance, suddenly presents the owner with a bill for Lm1,000 for the repair of a wooden balcony or for Lm2,000 for a leaking roof because these are "extraordinary" repairs, thus ensuring that he would be living rent-free for the rest of his life!

There are other "horror stories". Such as when the tenant of commercial premises in a prime site, with the right to sub-let, goes on to sub-let the entire premises to third parties, making a profit of four to five times on what he gives to the property owner in annual rent - a case of the whole being a fifth of the sum of its parts!

Or when a tenant living in an old property abutting modern apartment blocks refuses to move out (to enable the owner to sell the property and finally realise its true worth) unless he is given an enormous sum, like Lm100,000, and an apartment, after spending a lifetime paying just Lm30 in rent a year!

The final straw for many came in the last Budget Speech, when owners who finally manage to sell their old property, which had been netting them consistently declining returns in real terms, now find they will be charged capital gains tax, which means the government takes up to 40 per cent of the sale price!

It is indeed shameful for Malta to be taking this kind of "baggage" with it into the European Union next May. Ours is a set of rent laws which should be declared immoral on human rights grounds from day one. Government should make an effort to rid us of this baggage as soon as possible. It can rest assured that allowing realistic rents to be charged would not only remove a gross injustice, but also a gross distortion of our property market, and thus give a boost to the economy.