Rent reform - get on with it!

Over the last few weeks several articles have appeared in this paper and its sister daily on the subject of rent reform. As a veteran in this field, having written and lectured on the subject for over 40 years, I thought I should add my personal comments as a contribution.

The first article was "Rent heart" by Dr Harry Vassallo (The Sunday Times, August 22) who has now got a very good grasp of the subject. He strongly denounces the enduring and counter-productive injustice of the system and is bitter about the Government's "customary trick of involving stakeholders in confidential discussions and doing nothing at all about the issue. For a number of months they gain the silence of the lambs and perhaps deprive the issue of momentum. They are excellent at making nothing happen again and again and again."

He rightly points out that "the alternative is to have the countryside disappear, to allow a priceless architectural heritage to deteriorate beyond repair and to exacerbate the present distortions until the market tells us it is payback time". He concludes: "The Green Party is upping the pressure on Government to move on this issue and anyone willing to co-operate is welcome on board."

In the "Classified" section of the same issue there was also a very well researched article entitled "Sustainable housing policy and national budgetary measures", by my colleague Denis Camilleri, who has been studying housing affordability for a long time. I highly commend this article which concludes with:

"The link between sustainable development and social sustainability, especially in the context of urban renewal and regeneration, as outlined above, may be obtained by a shift of subsidies, legal restrictions and taxation to create long-term structural incentives for sustainable housing."

He falls back on the BICC (Building Industry Consultative Council) Property Market report, including the immediate revocation of the lease inheritance, and the factoring by eight of the 1939 rents "considering the index of inflation to be standing at 80 in 1939 and at 640 in 2002" with subsequent updates.

He also insists on updating the rents of commercial properties so that "a level playing field is created". This had been strongly advocated by the president of the Chamber of Commerce.

My good friend Frank Salt also wrote about "Our rent laws" (The Times, August 31). He is a public-spirited person with boundless energy and is naturally concerned that "our rent laws and their related problems have been created by successive governments for different reasons. It is a problem no political party seems to want to tackle seriously as it might upset the apple cart and lose favour with a sufficient number of the electorate." He suggests long-term solutions which, in my opinion are too long drawn out, especially in view of the 65 years or so that have already elapsed and the changed context where the "protected" tenants are now often better off than the "penalised" landowners.

Dr Peter Caruana Galizia follows up with "Recovering one's possession" (The Times, September 16). Combining legal erudition with a fine sense of humour, he divides the problem of the rent laws, like Caesar's Gaul, into three parts: residential property, commercial property and other urban property. For dwelling houses, "a social service managed by the state at the expense of the owners", he proposes updated rents "based on a combination of square metres, location and condition" (like the Italian equo canone) with subsidies in proven deserving cases which would be largely recovered through taxation of the higher rents.

For commercial properties he has no social qualms but advocates a certain amount of graduality to avoid trauma, while for other urban properties, like garages, he sees no reason for circumspection as "cars don't vote". He also makes the very valid point that "the government is protected as a tenant but not subject to the 'rent laws' as an owner". A very shameful situation indeed, putting the government in an obvious conflict of interest.

Jimmy Magro in his "Planning and implementing change" (The Times, September 27) takes issue with the two preceding writers because they both "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 (sic). 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 who are killing the market as they are giving the impression that property owners would be in the same position of those who rented their property for a chicken a day before World War I."

Neither of the two "experts" need my defence, but are we not forgetting that the 1995 law does not apply to the 35,000-odd leases current before June 1, 1995? Or that hundreds if not thousands of emphyteutical leases legally entered into between owners and tenants were arbitrarily frustrated by Act XXIII of 1979? Or that the pre-1939 lease agreements were made perpetual with the rent frozen at the 1939 figure, not level, mind you, by Ordinanace XVI of 1944? Or the hundreds of requisitions that even imposed new, post-1949 tenants?

Mr Magro no doubt means well and he also makes some positive suggestions. He has no time for "commercial property that should have never been afforded the protection of the 1939 legislation" (sic). However, a suggestion that I fail to understand is that "property owners would have to pay a sum of money, similar to that pertaining to the purchase of temporary leases". Is this some kind of "ransom money"? Or "key money"?

I would have thought that some form of compensation for the 60-odd years of hardship was more appropriate. On the positive side is the expressed hope that "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... may attract EU funding".

Lino Spiteri, in his "Wide Angle" of September 26, entitled "Peanuts from Delimara to Qormi", draws attention to a recent court judgment (still under appeal as regards the quantum) regarding compensation payable because of deleterious effects and the diminished enjoyment of a private property, and contrasts it with the blank wall being shown to another individual whose property has practically disappeared as a result of a requisition 24 years ago. He condemns past requisitions under whichever regime and hopes they would never recur. What could be a more "diminished enjoyment" of a property than having nine-tenths (or more) of its revenue withheld, or its repossession postponed to the Greek kalends?

Harry Vassallo returns to the fray with his powerful article "Rent referendum" announcing his party's intention to present a petition for a referendum, seeing that Government and Opposition are afraid of losing votes even on an issue that should have universal support. "If the Government had a shadow of a spine it could tomorrow amend the law to make it impossible to pass on a lease of a property to one's heirs. In this madhouse it is not the owners' heirs who effectively inherit the property but the tenants'." And without paying inheritance tax.

The Times' Natalino Fenech, after some snippets like "Tax on idle property unlikely" and "AD to petition for rent law referendum" came out with a scoop - "Rent law reform study presented to Minister" in the same issue of October 1. Quoting Family Minister Dolores Cristina as stating that "Rent reform is very much on the agenda", he informs us that the uncompleted report of the 1997 Commission is now in the hands of Dr Peter Grech to go through it and draw up a résumé of its findings.

I have no idea of what the commission studied or recommended, but judging from the over-cautious stand which the minister appears to have taken, I suspect that it was something in the nature of finding a recipe for making omelettes without breaking any eggs. At least she concedes that "Contributions to the press emphasise the fact that there exists an anomalous situation". As we used to say in Latin: "Parturiunt montes et nascitur ridiculus mus". (the mountains finally give birth to a puny mouse).

In the meantime three letters were also published complaining of the injustice of the system and the lack of action in spite of various promises from all sides. As usual I get a few phone calls when the subject is brought up, including one from the doyen of our profession, Joe Barbara, who at 91 (God bless him) is still as sharp as a razor and fights injustices perpetrated against him right up to the Privy Council. They all urge me to support them, but what can I do?

I believe the government is wrong in failing to take remedial action. The injustice of the rent laws is clear and manifest and there cannot be any doubt about it. It has led to a great waste of assets and a wasteful use of resources through attempts to solve the demand for accommodation through home ownership or government housing at the expense of our economy and our environment.

The government is pouring out money when it could be reducing the deficit through taxation of the revenue being lost. It is losing the support of the disillusioned majority by ignoring the fact that the "controlled properties" are in multiple ownership because of the practical impossibility of selling or partitioning them so that the number of their owners or co-owners is probably three times that of the "protected" tenants, who in a large number of cases do not need or deserve the "protection" they are getting. Some of the people who phone me up have given me some outrageous examples.

Our rent laws are in full breach of all EU principles regarding human rights, discrimination and the rights of enjoyment of property, or fair compensation.

Being prudent is one thing, but being pusillanimous is reminiscent of Lady Macbeth's "poor cat in the adage"!