Rent law wrangling

Let us start on where we all agree. It is totally wrong for anyone in this day and age in modern Malta to be paying rents of Lm5, Lm10 or Lm20 per annum. If the State wants to do this for those who have little income, that is its prerogative. But this obligation cannot be extended to those who just happen to be owners of property or potential landlords. That is the situation today.

However, it is dishonest and misleading to claim, as so many are doing, including one political party desperate to gain votes, that only by changing those laws can we somehow solve our housing problems by releasing all this affordable housing for rent on the market.

Indeed, taking action in this area beyond getting rid of that ridiculous right of inheritance will actually make the problem worse, not better, and will result in even more vacant units and certainly not increase the supply of affordable housing for rent.

Just think about it... if you were or are a landlord, would you say the ability to throw out your tenant or to increase his or her rent a hundredfold (which he wouldn't pay anyway so you would have to go to court to throw him out) then entice you to rent to a Maltese tenant again? Of course not!

Two and two does not equal five in any circumstances. Perhaps those who write this kind of twaddle do so because they have absolutely no knowledge of the housing market for low-income families in Malta.

There are around 9,000 government-owned units and many low-income families are housed there. Others, pensioners particularly, are living in these old fixed rents. No government, not even with that as yet elusive AD seat in Parliament, is going to be able to make these pensioners or those living on social security pay an economic rent.

So those who write and talk about the loss to the economy and to our tax coffers from those who are admittedly paying ridiculously low rents, and the landlords who are consequently not paying tax on these rents, need to look at what's happened since 1995, and then ask themselves honestly how the situation can be improved without putting a huge burden on the taxpayer.

I maintain that ultimately this is going to be the only real solution and it is just pie in the sky to think that the private sector, or the fashionable PPPs (private-public partnerships) is going to be the supplier of decent affordable housing to those on low incomes or currently living off state benefit.

The proof of all this lies in what has happened since 1995. Although AD and others conveniently rarely choose to mention this, the rent laws were changed in 1995. This means that landlords could start to rent at market rates confident in the knowledge that tenancies were not forever, that they could put up rents, etc. Did anyone ask what's meant to happen or who is going to pay these high rents when you suddenly become a pensioner, for example?

If rent law reform really was the answer in eight years, we would by now have had the beginnings of an affordable rental market, but we don't. No-one expects landlords to charge Lm10 per annum but when they are charging Lm90 per month for a room which combines a kitchen-living room and bedroom and which does not even meet minimum PA standards I start to worry. Or Lm135 per month for one room divided into two with a disgusting old shower I begin to wonder. And I am not talking Portomaso areas.

How do we know of these problems? Well, people come to the Housing Authority to claim some rent relief. We pay out up to Lm315 per annum for families who are renting.

First problem

These modern post-1995 renting landlords will not give these tenants a receipt, so clearly they have no intention of paying any tax at all on their income. So who has been saying the government will get all this tax if the rent laws were changed?

Second, if the tenant does get the benefit (which is very strictly means-tested) they then put up the rent by the amount of subsidy the tenant has received.

And third and worst of all, tenants get threatened with being thrown out if they come to us for help with rent and help with repairs.

The situation is ugly, very ugly.

Let us please recognise that it is ugly and unfair on those landlords who have been stuck for years with low rent payments and who at the very least deserve to hear that the right of inheritance will be removed.

But let us also admit that the situation is getting very ugly for those who want to rent too and that bullying and dishonest landlords are not a rarity.

Some solutions

1. Yes, first let us remove the right of inheritance with safeguards for certain cases (e.g. 90-year-old mum with disabled son of 50 living with her).

2. Let us police the rental sector more effectively for good standards and reasonable rents.

3. Let Government introduce a flat tax rate of, say, 10 per cent on private rental income to stimulate some more declaration of rental income and hopefully reduce the bullying of tenants.

4. Social security in Malta must start to develop a system of funding reasonable rent levels in the private sector for those who need them. The government does not have enough land to provide enough units itself and private rents must come into the picture, but social security will need to foot this bill as housing costs are as esential as anything else.

But make no mistake. There are no easy solutions. The changes, when they come, will be very hard. And let us not kid ourselves either. To really solve housing problems and to give low-income families and pensioners good standard, subsidised rental housing is going to cost the government many millions. There are no cheap solutions.

And we the taxpayers will eventually foot this bill as taxpayers do all over Europe to have more equity in their housing markets than we do currently.

Those who write and attack the government should tell the public the truth. That rent law reform has happened and it hasn't worked! That only through taxpayer subsidy are we really going to have enough of a decent supply of affordable housing for rent. More taxes: are we prepared to foot the bill?

Ms Micallef Leyson is chairman of the Housing Authority.