This will be anything but a restful summer for Parliamentary Secretary for Housing Roderick Galdes. His, and his government’s, socialist credentials are all so evidently being pushed to the limit by lobbying individuals, professions and entities involved with owning and renting of property, and all ahead of the upcoming debate in Parliament when the new rent reform act will come up for debate after the summer break.
The position that the Opposition speakers will be taking in Parliament will also give an indication of where it stands on such social policy topics, especially after its recent internal mishaps.
From lawyers to developers, from property-owning rentiers to academics with a big social conscience, from workers and families to pure speculators and estate agents, all have been lining up to submit to the government, not least through the media, their ideas and worries about whether the new law, which is the progeny of its former White Paper, will bring stability in the patterns of relationship between owners and occupiers of rental property.
The two extremes of the debate are easily discernible: at one end the position of those who clamour for their ‘right to enjoy their properties’ in an absolute, free-market manner; at the other end the masses of working families who want to pay stable, and affordable, rents in relation to their incomes, and not to be forced into lifelong penury or rental slavery.
To which side a socialist government should tilt is of course obvious: the ultimate legislation which emerges after the coming debate in Parliament should eliminate all forms of family suffering.
In simple terms there is of course only one sure way of ensuring this. This is to eventually have on the statute book a law that ensures that no property owner will ever have the power to fleece any renting party by charging rent that is higher than a certain percentage (certainly never over 30 per cent) of a worker’s wage.
If the envisaged obligation to register all rental agreements will help government to uncover unconscientious property owners who act abusively in such a context then ben che venga – roll on this part of the new law being proposed.
But the clouds of worry are still there for those seeking new, affordable property to rent. The way the new law is being proposed there is practically no check or control on owners demanding the sky from a would-be renting party at the start of the relationship. It is only the periodic subsequent increases that have some form of checks on them.
This still doctors the dice heavily in favour of the owner, as the latter will seek to maximise his income at the front end of the relationship and in fact create an extremely high rental income initially that will later still increase substantially.
Writing in The Malta Business Observer of July 25, Malcolm Mifsud answered the question “Can there be an increase in rent?” by saying that “The proposed law says yes” but only “once a year” and at a rate of “no more than a Property Price Index issued every year”.
One really hopes that these types of freedoms for rentiers will be seriously debated in Parliament because they are, in fact, anything but reassuring to those who need to rent at affordable rates.
The ultimate legislation which emerges should eliminate all forms of family suffering
I have no doubt that terms like ‘the market’, ‘market prices’, ‘supply and demand’, ‘the human rights of property owners’ and similar terms will be flying around all over the place when the law is debated. Many will probably be speaking as if the ownership of property is no different to the ownership of racehorses, art collections or antiques.
The litmus questions cry out. Where are the renting property owners who: have a profound social conscience, who are not only intent of finding ever more old houses to bring down and change into mini apartments; who, even with a law such as is being proposed, will be ready to enter into fair and equitable long-term (10-, 15-, 20-year) agreements.
To its credit, the government is seeking to turn what has, during these last five years, been a disastrous situation in this sector (instigated mainly by get-rich owners and developers riding the wave of ever more foreigners coming into Malta) into one with a certain modicum of stability.
I do not feel that we will see any signs of such stability within any short time after passage of the new law. Once the law is passed through Parliament the property lobby will be taking its time to see how it can get round its provisions (the process of regulatory capture) – and no doubt advising lawyers and notaries will be having a field day. The lobby may also indulge in getting even more properties added to the large numbers of vacant properties on the island.
The government should not be afraid of that at all, or feel threatened by it. It could, if it wanted to, legislate against that too at any time.
The records of new rental agreements that the Housing Authority will start to gather should be a good base for a badly needed cadastre (property register) of all immovable property in this country, also useful in a fiscal context.
The records could also be used as a possible tool to minimise situations where capitalistically inclined owners withdraw property from the market.
In line with speeded-up government projects to build up ever more reasonably priced rental property, that’s a yardstick it needs to adopt if we really want fairness and stability in Malta’s rental market.
John Consiglio teaches in the Faculty of Economics, Management and Accountancy at the University of Malta.