When inequitable laws are left for long to inflict pain on sections of society, no remedy can ever compensate fully the victims of legal injustices. Court rulings on the unfairness of the 2009 rent reforms have forced the government into taking action.
The rent law amendments introduced in 2009 failed to resolve the freezing of rents on residential properties leased before 1995. After decades of inertia on the part of various administrations, a breakthrough in reforms now seems imminent. The government has outlined a scheme that should protect vulnerable tenants’ interests while partly compensating landlords for having their properties tied up in rental contracts that do not reflect the current market value of their assets.
Taxpayers will be financing this reform’s cost as the government has committed itself to ensuring that vulnerable tenants with limited financial resources will no longer have to fret about their tenancy security.
This reform is still not detailed enough to merit a final verdict on its fairness. But the details announced so far indicate this breakthrough is a positive development. There will be some who would define this development as doing too little too late. Others will argue that it is better to undertake reforms late than never to do so.
Since taxpayers’ money will finance the social support given to vulnerable tenants, it is crucial that the means-testing mechanism is robust enough to discourage cheating. The Malta Developers’ Association is right to insist that both the means-testing and the valuation of pre-1995 rented property should be done professionally.
Tenants who can afford to pay rents established by the formula defined by the government should do so. The first indications are that this formula, while not being perfect, is a vast improvement on the present rent-fixing arrangement.
Landlords seem to have been more cautious in welcoming these reforms. Nick Debono, a litigation lawyer who represents landlords in court cases, described the proposed reform as “the first step in the right direction”. But he goes on to state that “this is certainly not enough”.
Using taxpayers’ money to compensate for past injustices should not be considered lightly. Society’s collective interest is more important than that of individuals who feel they deserve higher compensation for past injustices they suffered.
The initial indications of this reform’s cost seem relatively low. If they are correct, one wonders why such reforms were not carried out earlier. It now appears that there will be about 10,000 families affected by these reforms but this estimate may be understated.
The Chamber of Commerce, Enterprise and Industry welcomed the proposals but asked for more clarifications to judge how they would affect landlords and tenants. Money spent on protecting vulnerable tenants could presumably crowd out some of the projected investment in social housing. Any administration’s financial resources are limited and tough choices must be made on the most pressing investment priorities.
The outline of the rent law reforms is a convincing indication that the problem of pre-1995 rental agreements is indeed being addressed after decades of government inaction. Admittedly, the reforms do not do full justice to landlords who have been adversely affected by legal restrictions for so long. But these reforms have, at least, prioritised the interests of taxpayers and vulnerable tenants with limited financial means.
It is now important that the input of stakeholders and of the opposition is well considered, in an open-minded, constructive debate that does not last too long, to fine-tune the reform before it is turned into legislation.
The government has finally taken a firm hold of this non-partisan issue and it would be to its credit if it achieves closure as soon as reasonably possible.