The perfect social service

There has been a sudden spate of letters and articles on the "rent laws", written perhaps in the belief and hope that joining Europe will automatically correct one of this country's longest surviving injustices. If only things were that simple. I will attempt to clarify some points as the matter is quite complex but not as insoluble as some have claimed.

Marisa Micallef Leyson, chairman of the Housing Authority, has claimed (The Sunday Times, May 9) that changing the rent laws will not "solve" our housing problem. I do not feel this is the right way to address the issue. Laws regulate - not solve.

And in this particular case we are dealing with emergency legislation enacted during and immediately after the war period granting tenants of urban premises, including commercial outlets, perpetual and virtually absolute protection from increase in rent and from eviction.

This protection is also given to the government as a tenant but, in typical irony, does not apply when the government is the landlord. In 1959 this protection was also extended to rural tenements, basically fields, gardens and farmhouses. There is no protection for tenants of land leased for hunting, trapping or for quarrying but I believe everything else is covered.

A few years back, a feeble attempt to liberalise was made. This protection was no longer made applicable to leases created after 1995 so that the period agreed in a lease agreement can not be extended unilaterally and in perpetuity by the tenant in virtue of what are popularly referred to as the "rent laws", but in effect is one law: Chapter 69 of the Laws of Malta enacted in 1939. In this way all pre-1995 leases have retained their full protection and tenants have kept their vested rights.

The 1995 law has not prejudiced any tenants and has barely helped any owners as it only applies to property that was vacant at that moment in time or has been vacated since then. So much for reform. That, in brief, is the present position: a social service at the expense of the private citizen who, despite owning suitable immovable property, invariably finds himself in the ridiculous position of having to purchase his home and commercial outlet on the open market or lease at post-1995 conditions from a third party.

Ms Micallef Leyson claims that the 1995 amendment has simply placed unaffordable apartments on the letting market. The truth is that the 1995 amendment was too limited to impinge on the market: those properties were already on the market but were usually decontrolled - i.e. exempted to a certain extent from the application of the "rent laws" and only let to non-resident foreigners.

Very few further properties were actually put on the market and the only change has been the initially very hesitant acceptance of Maltese nationals as tenants.

As supply cannot possibly cope with demand, the market cannot find its own level. The problem is further compounded by an understandable but unfounded reluctance, after years of inflation-proof rents, set in stone since 1939, to accept paying up to one-third of one's income in rent, as is normal in other European countries.

Ms Micallef Leyson makes several assertions about owners not paying tax on rental income and bullying their tenants. The first point, if so widespread, is purely a weakness on the part of the Inland Revenue Department and should not be allowed to confuse the issue.

As to the second point, in my 24 years' experience in the field, I have generally found the tenants, and not the owners, to be the bullies. Decades of uninterrupted possession, at rents often below that charged for water and electricity meters installed in those premises, has encouraged them to blatantly effect structural alterations, to change the use, to transfer the lease or to sublet without the owners' consent.

They are eagerly assisted by the police and health authorities in demanding the execution of extra-ordinary repairs, usually caused by lack of ordinary maintenance, for which they are legally responsible, that cost the equivalent of 20 years' rental income. They expect and often receive astronomical sums for vacating premises to save the owners the ordeal and the risk of eviction proceedings that could be made to drag on for several years. I could go on for ever, but will resist.

Ms Micallef Leyson's article is limited to dwelling-houses and makes no mention of shops, offices, warehouses and garages, which are all still protected if leased before 1995. This is understandable, given her role but is only a part of the picture. Her concern is the availability of affordable housing for rent.

However noble her motives, it is not up to the unlucky private citizens who happen to own dwelling-houses subject to pre-1995 leases to provide such affordable housing. It is up to the government. If this entails, as threatened, more taxation, so be it. At least the burden will be shared equally by us all and not just by the unlucky few as at present.

Removing the protection granted by the 1939 law to commercial leases is the first step that should be taken following European Union accession. The protection given to pre-1995 tenants of commercial premises is equivalent to the subsidies granted to our shipyards: it distorts the market and is anti-competitive, giving established Maltese traders an unfair advantage over traders from other member states. Its removal should not prove to be too painful. The tenants are often, thanks perhaps to their low rent, better off than their landlords.

Initially, the protection against an increase in rent - which for commercial premises is capped at not more than 40 per cent of the theoretical 1914 (sic) rental value - should be removed and the rent for all existing tenants established by a panel of architects on a per square metre rate as in the rest of the civilised world. Its introduction could even be staggered over five years to mellow the effect.

The next step would be the gradual but definite removal of protection from eviction. Arguably, given a fair market-related rent, there should be no motive for eviction and the effects will be minimal.

The dwelling house protection will also have to go. The first step is the general removal of what Ms Micallef Leyson calls inheritance rights. It is actually a legal fiction whereby the expression "tenant" includes the widow/er, children and other relatives but in effect allows succession to the lease - but not to the dwelling house which in theory is still owned by the landlord. By the next generation, there will be no tenant to protect and consequently no reason to retain the law. Their children, grandchildren, nephews and nieces can shop around and take house loans as other people's children do.