Conclusions of survey on rent laws

The opinion survey shows that the problem of low rents is one that affects a considerable section of the Maltese population, spread among all ages and socio-economic groups. As many as 17% of those taking part in this study actually live in a low-rent dwelling. The problem appears to be most acute among those aged 65 and over (26.1%), but even those aged 26-35 reported an occurrence of no less than 17.6%.

That this is a social issue is further reflected by the fact that the incidence is similarly spread among all the socio-economic groups as follows: AB: 9.7%; C1 19.2%; C2: 18.2% and DE 14.9%. It is significant that the highest incidence is to be found among C1 and C2 members and not among DE.

The figures obtaining for newspaper readership further suggest that there are more persons with a Nationalist Party orientation than with Labour Party orientation, at 22.7% and 14.9% respectively, stating that they live in such premises.

This study further shows that as many as 12.7% also own low-rent property. Once again this is widely spread among all the age groups and the socio-economic groups, with the lowest incidence among DE (4.5%) and the highest among AB (25.8%). Again, from the breakdown of the data by newspaper readership, it transpires that persons with a Nationalist Party orientation (18.2%) are more numerous than those with a Labour Party orientation (10.6%).

That the current legislation is controversial is also established by this study. But many are against the status quo. In fact only 34.3% actually agree that this should be maintained, while 65.7% do not.

The highest level of agreement on this was registered among persons aged 51-65 (47.1%). Of the socio-economic groups, most in favour are persons in the AB and DE socio-economic groups, with 41.9% and 43.8% respectively. C1 and C2 groups respectively register 24% and 40.3% agreement with the situation prevailing at present.

This study tested several aspects of existing legislation, among which the rights enjoyed by persons living in a low-rent premises when the person they are living with, and who has the original title for a low rent, dies. Actually, the majority (58.3%) do not agree that rent can be inherited, as at present. Of the socio-economic groups, most against the existing situation are persons in the AB and C1 socio-economic groups, with 77.4% and 58.4% respectively. But there is wide disagreement with this aspect of current legislation even among members of the other two socio-economic groups: C2 and DE groups respectively register 51.9% and 56.7% disagreement.

Asked whether, as a general rule, rent should always reflect the commercial value of the premises, as many as 83% say it should reflect the commercial value of a property as if it were vacant. This opinion is very strong among all age groups and the socio-economic groups. Even so, it is interesting to note that members of the highest socio-economic groups (AB) registered the lowest level of assent, at 74.2%, in contrast to that of DE, at 83.6%. Readers of Il-Mument registered the highest level of assent in this regard, at 93.9%.

Respondents were also asked whether it is just that when one inherits a premises rented out at a low price one should pay tax as if the property were unencumbered, so that the tax paid exceeds the capitalisation of the rent received. As many as 67% consider this to be unjust, while only 33% see no problem in the current situation. With such a large number clearly against the current position, the need for change is very obvious.

The next question focused on maintenance issues and sought to establish what the Maltese think on who should be responsible to carry out extraordinary maintenance works. Only 35% think that such works should be conducted by the landlord in cases where the rent is low. The rest think that the person enjoying the low rent should be responsible.

The highest level of agreement on this was registered among persons aged 51-65 (70%).

In an attempt to gauge public sensitivity to a set of specific issues related to the rent situation, respondents were asked to express their extent of agreement with a set of statements, namely: whether Government should subsidise low rents, irrespective of who rents; whether Government should use taxation money to subsidise the low rents of persons who currently enjoy low rents and cannot afford higher ones; whether Government should initiate a scheme to help persons enjoying low rents to get subsidies to allow them to purchase their homes; and whether Government should never subsidise the rent of premises uses for a commercial purpose. An index was computed to provide an easy and standardised way of interpreting the findings from this set of questions.

From this index it immediately transpires that the majority do not agree that low rents should be subsidised, irrespective of who is going to enjoy the subsidy. This is evident from the negative index (meaning rejection of the statement) obtained for the first statement, namely: Government should subsidise low rents, irrespective of who rents. Albeit not so forcefully, general opinion is also somewhat against the idea that Government should subsidise the rent of premises used for commercial purposes: the negative rendering of this statement results in an index rating of 42.33 points, thus suggesting that there are more persons in favour of subsidies for commercial premises than against.

However, this study confirms that there are more in favour than against the two propositions that Government should help those who cannot pay commercial rates and that it should initiate schemes whereby people currently enjoying low rents would be able to purchase their homes. This is evident from the ratings of 55.67 and 52.89 points resulting for these two ideas respectively.

Accordingly, it would appear that the Maltese are generally prepared to accept Government's social responsibility in the housing sector, but are wary of the possibility that non-needy persons should benefit from policies intended to care for those in real need.

This study further confirms that the Maltese expect a common approach by Government and Opposition on this issue. As many as 85% actually said so in no uncertain terms. The highest level of agreement on this was registered among persons aged 18-25 (95.8%), but percentages are very high for all the age-groups.

Of the socio-economic groups, most in favour are persons in the C1 and C2 socio-economic groups, with 87.2% and 85.7% respectively. AB and DE groups respectively register 77.4% and 83.6% agreement that the government and the opposition should seek to work together on the issue.

At the same time the Maltese do not want Government to enjoy rights over property which an individual landlord does not. In fact, 70% do not agree with the current situation in which Government has the power to increase the rent of business premises owned by it, while a private landlord cannot do the same. Only 30% agree with the status quo. The full breakdowns do not show significant differences across the various social groups on the matter.

The last question in this study raises an important aspect of what property consists of. It sought to elicit views on whether goodwill (developed by the tenant and not by the owner of business premises) should be taken into consideration when a rent revision is due when/if rent legislation were to be modified.

This study concludes that there is a substantial majority (61.7% overall) who think that goodwill carries an element of property rights and provision for its value would need to be built into any rent revision. Once more, consensus on the matter is spread among the various social groups and this suggests that the Maltese in general are increasingly recognising that property ownership per se does not bestow full rights, and that the result of work done to develop that property, and therefore to increase its commercial value, should be apportioned between the owners of the property and the owners of the goodwill.

In summary, it can be stated that Malta's current rent legislation does not reflect the sensibilities of the majority. The legacy inherited in this area, while originally aimed at alleviating the burden of housing costs for the needy, might be imposing unwarranted burdens on an equally wide number of people, and in the meantime contributes to the general degradation of the housing stock as owners and occupiers refuse to carry out the maintenance required either, as is the case with owners, because of the high costs involved, or, as is the case with the occupiers, because they are not obliged by law.

The fact that the Maltese consider this issue as one on which political consensus is to be expected might encourage the decision-makers to implement change and ensure more justice in this vital sector of the community's life.

Socio-economic groups

AB: professional, managerial, administrative
C1: higher clerical, clerical, supervisor, skilled craftsmen and technicians, owner/manager of small business
C2: skilled manual workers and foremen
DE: semi-skilled, unskilled, labourers, casual workers and persons whose income is provided by the state.