A rent reform announced by the prime minister last week went before Parliament on Wednesday.

Housing Parliamentary Secretary Roderick Galdes spoke on how the reform aimed as instilling transparency and stability in the sector.

He said that private residential leases must last at least one year.

Where shorter rental periods were necessary, evidence needs to be submitted to demonstrate and justify the temporary nature of the rental agreement.

Mr Galdes said that the reform would not eradicate poverty, but it would attempt to offer stability and peace of mind to those who rented their accommodation. To this end, Prime Minister Joseph Muscat had called the law a “landmark” piece of legislation because its effects were intended to thoroughly change the mentality prevailing in the country.

The approach which had been taken in the drafting of the law was to address some of the consequences of the “great economic leap forward” which the country had experienced in recent years, and which had reinvigorated the rental and property markets. The “middle-of-the-road” approach adopted by the government would take into account the needs of the rental market while making the leasing of accommodation viable.

In terms of the new legislation, lessors would be bound to register new rental contracts within 30 days, and would be able to do so online or through the offices of the Housing Authority.

Although the signing of a contract for every rental agreement had been envisaged in amendments to rental legislation introduced in 1995, many lessors were failing to live up to this obligation, leaving lessees at a loose end.

The law would render lessors failing to register contracts liable to pay a fine of up to €10,000. It would also allow lessees to register rental contracts themselves in cases where their respective lessor had failed to do so, at the lessor’s expense.

The new law would prevent rental increases from being effected more than once a year, and would restrict these increases to the annual variation registered by the national Property Price Index. It would furthermore cap these increases at a maximum of five per cent per year.

Dr Galdes elaborated new rights for lessors as well as for lessees. In cases where tenants were in default of their obligations, he said, and proceedings were brought before the courts, a decision regarding whether the tenant should be evicted or not would be taken during the first court sitting. This would avoid a long wait for the lessor, returning access to the property while allowing other matters related to the eviction to be discussed during subsequent sittings.

Tenants defaulting on their obligations would also be “blacklisted,” in order to allow other lessors relative certainty about the reliability of those with whom they were entering into rental contracts.

Minimum notice periods

The law would also introduce minimum notice periods for lessees’ withdrawal from rental agreements, which would increase depending on the length of the original contract. It would also stipulate a minimum portion of the contract which would have to be honoured by the lessee.

Mr Galdes said that the changes would allow flexibility in the rental market while introducing and developing the best practices which had been adopted elsewhere. It would avoid problems faced by owners who were suddenly left to pay for unexpected damages, and of tenants whose rents were doubled at short notice. However, it was important to avoid “solving today’s problems with yesterday’s mentality.”

Opposition MP Ivan Bartolo said the prime minister’s statement that the reform would not impact current prices meant that those who were presently in an unpleasant situation would remain where they were. However, some of the aspects of the new law were a good start for further reforms.

Apart from further amendments which the Opposition would move at committee stage, Mr Bartolo proposed incentives for longer-term contracts. He suggested the removal of the five per cent cap on annual rent increases for contracts lasting longer than five years as one possible incentive.

Furthermore, he said that the law presently obliged the lessor to summon the lessee in cases where the lessee was in default. However, he suggested that this should be left up to the discretion of the lessor.

The government was obliged to intervene in the market in order to ensure social justice,