Planning and implementing change

I would have to take up much of the limited space of this paper had I to refer to all the letters and articles submitted by various stakeholders on the subject of rent reform. But the recent addition by Peter Caruana Galizia (September 16) prompted me to make my modest contribution on the subject.

I would beg your readers to allow me to refer to my article - Rent Reform Through Social Justice (The Sunday Times, August 24, 2003). That article was written in response to a public opinion survey conducted by Mario Vassallo on behalf of the same paper that touched on the rent reform issue.

Dr Caruana Galizia's contribution was made following an article by Frank Salt that lately has felt the urgent desire to put pen to paper on several issues. Both Dr Caruana Galizia and Mr Salt escaped the fact that the rent market has been liberalised way back in 1995 since property owners and tenants may enter into an agreement which is binding on both parties and that does not afford the protection of the 1939 legislation.

It is useless for the so-called experts to claim that, for the regeneration of the rental market, politicians need to engage in a rent reform programme. With their public contributions, it is these same writers that are killing the market as they are giving the impression that property owners would be in the same position of those that rented their property by a chicken a day before World War I.

I cannot understand why these contributors call on politicians, as if the initiation of change in Malta is the domain or monopoly of politicians. In modern democracies, the civil servants have become agents of change and initiate several reforms that finally would be approved by their respective parliaments. Other issues have been resolved through the setting up of not-for-profit organisations (civil societies) that were able to bring change and reforms on many controversial issues, such as genetically-modified products/foods.

The rent reform that is being suggested only affects those properties that are bound by this legislation. From this binding, one can dispense with commercial property that should have never been afforded the protection of the 1939 legislation.

When a person, human or corporate, enters into business this is done on the principle of risk and there should be no cover-guarantees through legislation. Hence, the government of the day can immediately state that in 2010 the 1939 legislation will not be applicable to any business property and provisions will be made for the adjustments of rent in an equitable manner.

As for private property, the main causes of concern are twofold. First, the low rent at which these properties are rented out, sometimes not even covering the cost of structural repairs that owners have to carry out. Secondly, that these properties are inherited by those living in the same household of the original tenant. For this purpose there are a lot of wheeler-dealers to transfer the identity card to parents' addresses as evidence that a person lives permanently at the low-rented property.

When I published my article in the Sunday Times, a good Samaritan wrote to me in an anonymous letter telling me that I will not get any votes as I have no socialist principles. Socialism was not created to create injustices but to make the world richer, through social justice. People that abuse the 1939 rental laws cannot be called people with social justice principles. It is for this reason that I have made the proposals delineated below.

Under this scheme, tenants will be given enough time to make the necessary adjustments in their plans. One cannot continue to justify that a person earning an income in 2004 and living in a rented property with a contracted rent based on the incomes/prices pertaining to the 20th century. Had the rent agreement been made with the original person that is justifiable but not if the rented property has passed through the first, second and third generations, if not the fourth too.

This is the plan I set out in 2003:

Based on the information available, a possible long-term solution to the issues involved could be based on the following model:

¤ The government should initiate a census of rented residential buildings through special legislative provisions - collecting data about the owner, current tenants, annual rent, household annual income, etc.

¤ Property owners would have to pay a sum of money, similar to that pertaining to the purchase of temporary leases.

¤ The funds so collected would be divided as to 30 per cent to pay the scheme's expenses, 30 per cent to set up an inner-city regeneration fund and the other 40 per cent will be distributed to the tenants according to an index based on their personal income and rent payable. The latter part to be apportioned on the principle of social justice.

¤ The 1939 regulations would cease to apply to tenants that fail to register their rented property.

¤ As from the end of this census, only the current tenant would be recognised and under no circumstances may the rent agreement be terminated.

¤ A matrix of rent adjustments would be proposed taking into account the household income of the tenants, the current annual rent payable and the value of money.

¤ The proposed changes will take effect after a moratorium of five years so that tenants would be given adequate notice to make their plans.

¤ The whole plan would be carried out by a private entity on behalf of the central government.

This model for a solution should be tied with an inner-city/town/village regeneration programme to attract the use of existing stocks of property and reduce the demand for new built-up areas. The internet is full of successful initiatives that have been applied in other countries. We can learn from these experiences without falling into the pitfalls of others. Local councils should be actively involved in such plans and development.

I also believe that such a programme may attract EU funding and have a much higher economic-social value than building a tunnel between the Marsa port and the Freeport.

Another factor that may be considered is the introduction of fiscal (taxation-related) incentives for property owners to put their property on the market rather than keeping their property unused.

These reforms should be based on a planned change environment. Each process to be made under wide consultation within pre-defined periods. The whole reform would not take longer than one year. This means that in a period of maximum seven years we would have brought forward a socially acceptable reform plan for the rental market in Malta. This is the way forward: Making viable reforms that work and create opportunities.