An NGO representing roughly 7,000 landlords is calling for the authorities to put all leases back onto the free market after a seven-year transition period to avoid more court cases and a waste of taxpayers’ money.
According to Malta Property Owners Association (MPOA) head Mario Debono the recently proposed pre-1995 rent reform is rife with human rights infringements and needs to be amended to prevent more compensation claims.
In February, Prime Minister Robert Abela announced that landlords of properties covered by pre-1995 leases will be able to claim up to two per cent of the property’s market value in rent as part of a major reform. The reform was debated in parliament last month. The government will, in most cases, subsidise the difference between the old rent and the new one.
However, the MPOA says this is not enough and is demanding that, after seven years, properties are returned to owners and, in the meantime, rent be upped to between 3.5 and five per cent of the property’s market value.
This should be done right away rather than incrementally and should be calculated on the property’s potential value, seeing as the landlords had been restricted in maintaining and renovating their properties, a report by MPOA says.
“The government is perpetuating a number of injustices by the ridiculous law which has not taken on any of the conclusions of our discussions,” Debono told Times of Malta.
“The law will simply send all of us back to the constitutional courts and to the European Court of Human Rights because it is still unconstitutional in that it deprives us of the right to property,” he explained.
“And what is significant is that, apart from getting back our properties, the amount of compensation the government is going to have to pay for prolonging the situation will be a big waste of taxpayers’ money.”
The MPOA argues that capping rent at two per cent did not reflect local rental trends set at four to six per cent of sale value.
The state itself endorsed these rental trends, the report illustrates, since state-financed residential services rates consider immovable property to provide an annual income equivalent to 5.5 per cent of its capital value even if not rented.
The rental value should be strictly calculated on the free market and tenant means testing should be solely used for government subsidies, he said.
“Contrary to popular perception, many of the landlords involved are not rich and these properties were a way of securing income,” Debono said.
A good number of landlords of protected rent units have a low income, he added, and the failure of this reform to address a list of injustices would be hurting the vulnerable.
He detailed cases where elderly people could not afford to pay for adequate care as the rental income from their property did not reflect the income they should have been getting.
Debono also cited many cases of children of property owners forced to take on big mortgages because their parents were unable to pass on their own property, “rented out to protected tenants at peppercorn rates”.