Rent reform amendments aim to be fair to all

Parliamentary Secretary Mario de Marco said yesterday that through the proposed amendments to the rent reform legislation, the government had tried its best to present a solution which minimised any negative effects that it might have on both owners and the tenants.

Speaking in Parliament, he said that the government could have simply liberalised the market or removed inheritance of leases. The amendments were clear, so much so that no criticism had been levelled at its details or principles. And the opposition should now specify precisely that which it said left room for interpretation.

Current rent legislation had been implemented over time with the aim of protecting the tenant.

In the private sector, the owner could not demand rent at will, as the tenant could turn to the Rent Regulation Board if he felt this was too high. The second amendment stipulated that the rent was automatically renewable at the end of the contract. Thirdly, the spouse or family members of the deceased tenant could take up the rent as their own.

This created a situation where people, even today, were still paying the same rent rates that had been paid before the war.

Dr de Marco said it was important that in thinking about the tenants, the owners were not ignored. Some owners had been denied their property without any form of fair compensation. In the long run, these laws had harmed the rent market and created problems requiring government intervention.

The 1995 amendments stipulated that rents agreed on after June of that year were not liberalised, but were subject to the Civil Code. Prior leases were still subject to the same problems. Commercial tenements presented a more difficult situation, leading to owners being reluctant to rent.

Turning to the Bill, Dr de Marco said the amendments established that a contract must be in writing so that no room was left for interpretation. There were also five basic principles for a contract to be valid.

The government also wanted to protect the present tenants by establishing a minimum rent of €185, which it felt was fair. The rent would increase every three years, according to inflation.

As to commercial tenements, for the first three years as from January 1, 2009, the rent would increase by 15 per cent every year. Also, when the three years come to an end, in January 2013, the rent would be liberalised, and the parties would have to come to an agreement over the new rate.

If no agreement was reached, they would then refer to the Rent Regulation Board. If there had been a previous written agreement on how prices should increase, this would no longer apply. If a tenant was not ready to pay the new rate, he had the right to withdraw from the agreement.

Dr de Marco said that without unnecessarily burdening the owners, the government was trying not to conversely burden tenants. If the tenant passed away, the protection would extend to those close to the tenant, such as the spouse or children. When the house was used as a residence, the spouse was also counted and protected. This protection did not cover cohabiting couples. There was discussion on how long this protection should be extended.

The amendments also protected the children who would have been living with the parents for four out of the last five years, although this did not extend to the children's spouses.

Brothers and sisters of the tenant, who were over 60 years old, were protected too. The reality was that a line had to be drawn, and 60 was considered to be fair. Another extension was to children who were younger than five years, and the tenant's parents, if they would have lived there for four out of the past five years and were more than 60 years old. Both merited legal protection, subject to means test satisfaction.

Dr de Marco said that when it came to commercial tenements, the law was different. The tenant was the person who signed the agreement, and the spouse and the children were the heirs. In this case, however, the commercial lease would come to an end at the end of 20 years. He said this was fair as it granted the tenant protection and time to find an alternative.

Band clubs, which were not considered commercial, could be exempted when this was considered in the public interest. There was consensus that it was not in the public interest to suddenly close down a club that the people made use of. On the other hand it was understandable that owners asked whether they would be offered any compensation for being unable to benefit from these amendments.

The owner had the right to inspect the tenement at any time.

If a tenant chose to sublet or reallocate the premises, the owner would have the right to take possession of the tenement. To circumvent the law, tenants used to come up with management agreements, which were now being prohibited.

If a company rented a place, the solution to the prohibition on subletting used to be selling company shares. This was also prohibited by these amendments.

Dr de Marco said the amendments showed new levels of maturity, and even tenants had understood the necessity of these amendments. The situation would be solved not through the private sector, but by the government.