Rent law reform - Pole or poll position?

There has been a relative lull on the subject of rent law reform since Natalino Fenech's scoop "Rent law reform study presented to Minister" (The Times, October 1, 2004).

Minister Dolores Cristina was reported as saying that "rent reform is very much on the agenda", and that the uncompleted report of the 1997 Commission was in the hands of Dr Peter Grech to go through it and make a resumé of its findings. A six-month period was being envisaged and in the meantime the minister was trying to get a better profile of the people concerned on either side of the problem. Since then not much has been heard on the subject, but the Prime Minister, in one of his periodic dialogue meetings with the people, was reported as saying that work is still going on.

Breaking the loud silence of the last seven and a half months, Dr Claire Bonello (The Sunday Times, May 15) came out with a well-researched article entitled "Is rent law reform still in Pole position?". In it she traces the evolution of the European Court of Human Rights' (ECHR) mindset away from their traditional Pilate-like stand of avoiding the real issues by hedging behind the smoke screen of the "general interest". The recent case of Hutten-Czapska vs Poland appears to have persuaded the learned judges to look out of their ivory tower and face facts, and the minority Moldovan judge (Judge Pavlovschi) was prepared to go much further.

Once the ice is broken - and I do not see why it should have taken so long for this august body to glimpse the obvious - I think the Maltese landlords should consider briefing a good human rights lawyer, possibly Dr Bonello herself, to present a case before the ECHR on their behalf. I understand they have already set up a fund for the purpose.

Unfortunately, a constitutional application in the First Hall of our Civil Court (Barbara et vs Attorney General) was recently decided against applicants before the ECHR Poland case judgment and its ground-breaking deliberations could be taken into account, along with the time-honoured pleas of public interest. The case is now under appeal, so I do not have to belabour the points that six multiplied by nothing is still nothing, and that a tree without its fruits, even with the privilege of watering it, manuring it, pruning it and paying taxes on it, is not much of a tree as property!

Nobody questions the legitimacy of controlling rents and tenures during the acute housing shortage in the immediate aftermath of the war, but 60 years on, the raison d'être starts wearing woefully thin - especially in the changed context of a large and increasing surplus of houses over households, and a very large number of vacant dwellings.

Public or general interest

The public interest now is to remove the spectre of requisitions and the scandalous inheritance of leases so that a healthy rental market can be re-established. The public interest is to stop this waste of resources and to cut the budget deficit through the resulting revenue. The public interest is to provide adequate housing to those who cannot afford it, but through the public coffers, and not by forcing random individuals to provide a social service whether they can afford it or not and whether the beneficiaries need it or not.

Cristina notes
lost her votes
And doesn't know how to find them;
Have a short pause,
Mend the rent laws,
The votes may be behind them!

Pegging rent to the 1939 numerical figures is as big an economic heresy as keeping wages at their 1939 numerical figures. Money is all the time losing its purchasing power, at times faster than others, so that to keep wages (or rents) at their 1939 level, their numerical monetary quantum has to be constantly updated to keep pace with inflation. If you had a wage of say five liri a week in 1939, with which you could buy a certain basket of goods and services, you would need a weekly wage of five 'x' liri in 2005 to be able to buy the same basket of goods and services. You would not be 'x' times richer. You would have just kept up with an 'x' factor of inflation.

When the eminent legal luminaries of the immediate post-war period thought of "freezing" rents, they probably had in mind to keep them at their "relative 1939 level", which would have been fair enough, for a time. In any case, we can be quite sure that it could never have occurred to them that an emergency measure would carry on for over half a century - so far. By keeping rents at the same numerical monetary value, the measure became "melting" rents rather than "freezing" them, because, like ice cubes in the sun, they keep losing their consistency.

Environmental factors

Officially, we pay a lot of lip-service to the environment. We cry shame at people throwing papers in the street and raise hell if they cut down a carob tree, which is as it should be. But the environment is much more than this. At its most "macro" level it is also securing urban regeneration and avoiding urban sprawl into the countryside.

The Malta Structure Plan was enacted by Parliament in 1992, and one of its kingpins is the reform of the rent laws to help achieve just that. We have highly and increasingly degraded inner urban areas with dilapidated, non-maintained, under-utilised buildings, squallid, semi-deserted, de-gentrified neighbourhoods losing their young people, their shops and other social facilities, and an exodus of people towards fresh pastures in the countryside.

The Structure Plan's objectives of urban renewal, containment, mobility and proper "housing fit" are disappearing over the horizon.

Minister Dolores Cristina, in whose court the ball seems to have been thrown, was reported as saying that she wanted to have a good profile of the players involved - owners and tenants. Apart from the Census of Population and Housing published by the National Office of Statistics, The Sunday Times, through Professor Mario Vassallo, carried out an ad hoc opinion survey, reported on June 22, 2003, which brought out some very surprising facts. The thousands of inspections that I have carried out in my professional career are also very much in line with these findings:

¤ 17.6% of all tenancies in Malta are rent-controlled;

¤ only 20% of the rent-controlled tenancies relate to tenants in the lowest income group;

¤ 6% of the rent-controlled tenancies relate to tenants in the highest income group, some of them extremely wealthy people;

¤ 8% of the rent-controlled properties belong to owners in the lowest income group;

¤ around 50% of rent-controlled properties (my personal observation) are wastefully used (say one or two persons in five or six rooms), as there is hardly any difference between the controlled rent of a large or a small house.

Government factor

One aspect which is hardly ever mentioned but which, I suspect, may have something to do with the Government's - and the Opposition's - reluctance to take any real action, is that a number of Government offices and a number of political party clubs are housed in properties, often requisitioned, with restricted rents. The Government is practically exempt from all provisions of the rent laws. This is doubly disgraceful, and the old legal maxim of nemo judex in causa sua ought to apply.

The old excuse of possible hardship is of course irrelevant in the case of commercial properties. Two successive presidents of the Chamber of Commerce, Reginald Fava and Louis Apap Bologna, have spoken out strongly on the subject. They insist on a level playing field for the proper development of the commercial sector. The factor of goodwill, which is often bandied about, is a matter for which provision could be made, possibly through vanishing rebates.

The duty of governments is to do what is right, irrespective of whether this would be popular or not, but understandably they are also interested in being voted in... so that they would be able to continue to do what is right!

In my youth I was an unconditional admirer of our great statesman Nerik Mizzi, and I was proud to be one of the student pall-bearers at his funeral. One of his favourite sayings was: "Always do what is right without fear or favour; if you don't you will make one ungrateful friend and a hundred enemies".

I strongly commend this dictum to our politicians, but for their peace of mind I would suggest that, with the fragmentation of ownership over the last 60 years or so, the number of aggrieved owners and co-owners is probably far in excess of that of the privileged tenants, who sometimes are owners of other properties in their own right! The sizable drop in votes in the last elections has been blamed on a number of factors, among these the lack of action on the rent laws. Quien sabe?

André Zammit was senior lecturer at the University of Malta on Urban Studies (including Housing) and on Valuations (including rent laws)