Parliament’s enactment of the Controlled Residential Leases Act marks a historic step towards closure in the tumultuous relationship between Maltese society and rents.
The original controls introduced in 1929 were intended as temporary measures necessary to soften the pressures of a housing crisis amid the interwar misery. As much as they were welcomed as a fated welfare initiative in the beginning, their recurrence spanning over decades served to accentuate the state’s reliance on property owners for the provision of social accommodation to fulfil its short-term aims.
Economic progress and growth in the property market only exacerbated this sense of injustice. Since the turn of the century, both Malta’s constitutional courts and the European Court of Human Rights pronounced themselves on these controlled rent regime’s violation of the right of owners to enjoy their property.
In retaining the continuation of leases by family members of the recognised tenants and by establishing an artificial minimum rate of rent, Act X of 2009 did little to align the rent laws with the dictates of constitutional and human rights’ norms.
In hindsight, it was a phenomenon that was purposefully left unaddressed because within it lies a delicate conflation of the protection of tenants’ housing needs, the owners’ right to enjoy their property and the state’s capacity to provide holistic housing support to the population.
This government set out to finally address the situation. A society’s social and economic progress ought to be reflected by its laws. A clear and unambiguous reference to old tenancies was, in fact, made in the white paper preceding the reform in the liberalised rental market. The regulation of the private rented sector, the introduction of an innovative housing benefit, the construction of adequate housing units and the several affordability schemes in place meant a robust housing system was put in place to be able to withstand shocks and changes in the sector.
The principled approach adopted by the government prioritised the protection of vulnerable households and the alleviation of social responsibility from property owners. The latter is ensured either through the return of the property to their rightful owner or by securing a fair rent.
Key to the reform is the extension of the housing benefit- Roderick Galdes
Central to the reform is the end of the legal anomaly of the continuation of tenancy by the family members of the recognised tenant. The demise of the tenant and their spouse will mean that surviving family members sharing the residence will need to vacate within five years.
Owners of properties subject to controlled leases preceding 1995 may rightfully file proceedings in the rent regulation board for the increase in rent. If the tenant is found to be in need of protection, the property will be evaluated by court-appointed architects and the annual rent established by the board may be as high as two per cent of the open market value of the property. Two per cent of the open market value, inclusive of the development potential of the site, is a fair balance that takes in consideration any investment made by tenants in the properties over years of occupation.
Trust in the new system will rely on impartiality and transparency necessitating the equitable discretion exercised by the rent regulation board as opposed to the creation of a new tier of administrative bureaucracy.
To ensure the protection of households in a vulnerable social and economic situation, the newly-introduced means testing criteria better reflect today’s property market. While they are based on a working adult household’s ability to acquire or lease property at market prices, they simultaneously intend to prevent the displacement of tenants in their old age. Tenants failing such criteria will need to vacate within a maximum of two years, during which the board shall have the full discretion to raise the rent payable to reflect the contemporary circumstances in the local rental market.
Key to the reform is the serious financial commitment made by the government through the extension of the housing benefit. This will absorb 75 per cent of the increased rent for employed tenants and the whole increase in rent for pensioners.
Rooted in politics of care, substantial changes will mean tenants and owners will find solace in the Housing Authority through professional advice, support services and legal assistance. All these elements combined make it a truly comprehensive social reform.
The reform presents a balance sensitive to the tenant’s right to adequate housing and the right of landlords relative to the enjoyment of their property. It is a just solution but is by no means the end of the road.
The benefits of the reform may be fully enjoyed by all parties involved if it is complemented by decisive measures that significantly bolster the supply of affordable adequate housing solutions and an expedient process.
Roderick Galdes, Minister for Social Accommodation