Many landlords now get as little as €185 a year for a house that could get them 20 times as much on the open market!
Legal expert Kurt Xerri (January 12) asks why landlords of 10,000 houses have failed to overturn this in spite of their obvious clout. And despite landlords who asked for more always winning in court for the last 15 years, at times getting hundreds of thousands in compensation. Does it not mean that we in Malta have scant respect for human rights?
The rent laws, that long freeze of rents at 1939 levels, first came about to respond to the post-World War II emergency.
Nobody would deny that the commandeering of food during the war saved us both from death and from surrendering. Malta’s population was also the second-most decimated in that war, mostly due to bombed houses. Controlled rents kept rents affordable in a time of scarcity, safeguarding decent life. Do we still need controls, 80 years on?
It is easy to condemn the present scenario as the result of short-sighted policy and cheap vote-seeking, which ended up crowding out the respect due to human rights and august courts.
It is true that our dominant political parties were long hesitant to open a can of worms that could endanger the decent housing of many. Only Alternattiva could afford to rock the boat, campaigning for a referendum, getting a law change instead.
But the laws of 1995 only liberalised new leases, keeping pre-1995 ones still controlled. It took a further decade for this settlement to come under severe attack in the form of court sentences, from Strasbourg, followed by Valletta, awarding massive government compensation to landlords.
What kept legislators from scrapping these laws?
Xerri considers two possible scenarios leading out of this. Landlords could use their clout to have it their way. Or, in the second scenario, landlords and tenants join forces for a win-win. The latter solution would be for social housing to be financed by the government, instead of being at the expense of landlords, as it is now.
It would be wrong to think that Strasbourg courts supported the first scenario, for the landlords’ right to enjoy property to reign pure and simple. Sentences awarding compensation to landlords spoke in arguably prudent terms. They acknowledge that governments have wide powers to limit the free-for-all of the market, if for the good of the economy or for equity, the good of people.
Sentences also did not evict the tenants but supported their right to stay on irrespective of the landlords’ wishes. They did not award free-market levels of compensation but lower ones, out of respect for equity. That is, they did allow the government to defend the right for decent living, at times seen as the poor relation of the European Convention of Human Rights in our anti-solidarity age.
Sentences (including Strasbourg ones?) often even said clearly that they apply to the case in question and not as such to all cases to which the rent laws apply.
But in the latter lies a big crux of the problem. Can the legal arguments and frameworks that apply to resolve a case here and there be applied unchanged when the whole system is challenged? Does the economy of scale not kick in?
If a few hundred thousands are affordable by the government to compensate for rent lost on a palazzo, does that mean the same government should be made to compensate for rent lost by 14,000 landlords on rented properties over many decades, even if this would destabilise the economy or cause disproportionate hardship on the taxpayer?
Where would that leave the government’s right to ensure equity?
Expert Xerri is, in fact, a proponent of the 2021 law that strikes an interesting compromise. It allows owners of old, pre-1995 leases to proceed to claim a much-increased rent. But it would still be capped at one or two per cent of the property’s market value.
The short-sighted laws of 2019 have no provisions for curbing exaggerated rents- Charles Pace
The 2021 law also heavily subsidises tenants who cannot afford the resulting rent.
Experts firmly hope that Strasbourg won’t strike this down. If it does, would it be the end of affordable rents for the many? Will huge numbers be thrown into the street? Will there be a massive exodus of families to inferior housing ghettos?
What will happen to the village cores they now vacate? Will they go the Vittoriosa and Valletta way, houses being gentrified and taken over by richer occupants, often foreign or even absent? Will houses as investment push out houses as homes?
But even if the one to two per cent capping is accepted, its benefit won’t last long. As Galbraith famously said, “in the long run we are all dead”.
This includes the current tenants of controlled houses. By 2040, so many tenants of them will have died that their houses will have drifted anyway to the free-market sector.
While this capping thus marches grandly, at every step, into its own self cut-off dates, the exodus avoided now will only happen later, gradually and imperceptibly, if we remain blind to it.
Many would agree that foot-dragging and delaying tactics have saved the solidarity of the old rent laws (though at a price). But we should wake up to the fact that blindness and inaction have now become the greatest threats to solidarity.
While the new capping law marches daily towards its death, all is not quiet either on the rest of the housing and solidarity front.
For one, the short-sighted laws of 2019, which govern the free-market renting sector, set to dominate the future, have no provisions for curbing exaggerated rents if they happen. And leases for families in this sector are rarely for more than three years – a big threat to the stability for families that was promised.
Meanwhile, governments provoke raised rents by marketing Maltese houses abroad through embassies and international fairs, with the president roped in and taxpayers subsidising the developers’ travel, while farmers are being threatened with eviction and long-term affordable emphyteusis is being struck down.
I do not agree with those who hold that any resisting of the free marketisation of rents by Maltese lawmakers and courts was essentially wrong.
I also do not agree with those who hold that the first article of Malta’s constitution, reflecting that we are a republic based on work, is just an amusing ornament and dead letter that never had any implications.
As we stand, the right to enjoy the fruits of our work is eroding under our feet. When, in the long run, we’re all dead, will our children curse us for our blindness and inaction?