Over the last five decades, different administrations have introduced laws to protect the interests of tenants, many of who would otherwise find it difficult to cope with rising rental costs. However, the right of landlords to get a fair return on their property has been ignored by legislators. The State has consistently failed to safeguard property owners’ rights.
The First Hall of the Civil Court, in its constitutional jurisdiction, has acknowledged the unfairness inherent in the government’s inertia when it comes to updating the relevant legislation. In a landmark ruling it pronounced that owners of property leased to tenants before 1995 “had no real hope of gaining effective possession of the premises nor real income” as the tenants’ children held a right to succeed in the enjoyment of the lease.
The court went further. In a specific case it awarded the owners of rented property €20,000 by way of damages payable by the Attorney General. Even more importantly, it ordered the tenants to no longer rely on the law, which was declared unconstitutional, to retain their hold on the premises.
The implications of this decision are onerous. No administration should wait for the courts to update or repeal legislation that is unconstitutional due to its infringing the rights of some citizens. The protection of tenants for social reasons is understandable but this should never be achieved by depriving property owners of their economic right to a fair rent for their property. Subsidies for tenants for social reasons should be financed by the State and not by private property owners.
The same argument should apply to commercial property leased out for rent that do not represent adequate compensation tied to the market value of such properties. Past and present administrations have acted in a way to protect the interests of tenants at the cost of property owners. This strategy is not viable or fair in a democracy, where a balance has to be struck between the conflicting interests of various groups of citizens.
While the property legislation of 1995 addressed some of the multitudes of problems that afflicted the rental market at the time, the inaction of different administrations since that time has perpetuated some of the injustices suffered by property owners. A reform of rental legislation is overdue. The government and the Opposition should ideally cooperate in striking the right balance between tenants’ interests and property owners’ rights.
One should not expect sitting tenants to acknowledge the unfairness of exploiting unconstitutional elements of current property legislation. It is crucial that the government take note of the court’s decree by proposing changes without further delay.
Legislation reform could, of course, create pressures on the government to provide alternatives for those tenants in private property who would be badly hit if owners’ rights were acknowledged. The court made it clear that despite the amendments to property legislation in 2009 the State had “failed to legislate to safeguard the rights of owners”. This should never be acceptable, it added, “unless adequate compensation were provided by the State”.
The necessary and overdue reform of the rental property legislation would come at a cost to the government at a time when it is under increasing pressure to provide more social housing. However, it is the right thing to do to restore some balance between tenants and owners.
The freedom to own property and use it as one wishes is a fundamental right in a democracy. The right of deprived families to have a roof over their head is also at the basis of a caring society. The mechanism whereby tax revenue is redistributed is efficient enough to ensure that the costs of guaranteeing the rights of both owners and tenants are financed equitably.
As for the rights of commercial tenants, these need not be safeguarded at a cost to taxpayers or private owners of leased property. In a free market, the cost of using property is an expense incurred in pursuit of profit. It is not much different from the cost of utilities like electricity and water needed to run a business.
It is time to hardwire fairness and respect of rights in rented property legislation.
This is a Times of Malta print editorial
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