Editorial

Alternattiva Demokratika and its chairman, Harry Vassallo, deserve the gratitude - and support - of the thousands of Maltese owners of rent-controlled property, and of thousands of couples and others who are seeking a home but are put off by the prospect of spending their entire working life paying for it.

With its campaign to collect enough signatures to oblige the government to hold a referendum to repeal the existing rent laws, AD is the first political party to do something concrete about removing a monstrous injustice which has been allowed to fester for 60-odd years: the freezing of rents at 1939 levels on property whose ordinary annual maintenance costs today would gobble up two, three years' rental income.

Not only, many owners are hardly likely ever to take back vacant possession of their property since tenants, enjoying such property at nominal rents of as little as Lm15 a year, are given the right to pass it on, after their death, to their descendants - ad infinitum!

It is calculated that there are 17,000 rent-controlled properties under a law originally intended to make up for the housing shortage caused by the destruction of so much building stock by enemy action in World War II.

Needless to say, today's circumstances have completely changed. Not only are there about 20,000 vacant buildings but in many cases, tenants of such rent-controlled property are themselves owners of property let at thousands of liri a year as furnished holiday accommodation.

In 1995 rents of new property were liberalised, yet many property owners are reluctant to rent to Maltese tenants, seeing the absolute protection which tenants enjoy.

The situation is much worse in the case of old commercial property whose rent is tied to 1914 levels! Again, in many instances, it is virtually impossible for tenants to resume possession of such property, since tenants - who could well be among the wealthiest people in Malta - can pass the tenancy on to their descendants. In some cases tenants even have the right to sub-let commercial property, earning five or six times what they give the owners in rent!

Neither of the two major parties which have alternated in government since the war have really tackled the problem. As years go by, of course, the situation becomes worse for the owners who are at the mercy of their tenants when it comes to dividing an inheritance, for example. With a number of heirs having a share of the same property, the tenant is "begged" to buy it - at any price - to enable the heirs to take their share.

When and if such an offer is made, the sum offered is a tiny fraction of that property's real value - but it is an offer which the heirs cannot refuse! The new owner then merrily proceeds with selling that property for 20 times or more what he had paid the hapless heirs for it! For example, one property in a prime location in Valletta, which was sold for Lm18,000 to its tenant (who was paying Lm72 a year in rent) about 22 years ago, changed hands for Lm500,000 about 15 years later!

There are countless other examples of the iniquity of the current rent laws. Apart from causing a constant injustice to thousands of property owners whose forebears had left them property in the conviction that they were leaving them real, appreciable wealth, these rent laws are also causing a gross distortion of the property market.

To begin with, the almost complete absence of affordable housing to rent (the Housing Authority provides rental accommodation but this is necessarily very limited) means that couples are obliged to take ever higher loans and mortgages. The price of property as a result continues to shoot up. No property owner would now consider building housing to rent unfurnished. As a result, the weighting given to housing in the cost of living index is totally unrealistic - it is either too high or too low, depending on each case.

The current rent laws should be scrapped; the rental market should be liberalised. Old and new property alike should be allowed to fetch realistic rents. Tenants should be given protection in certain circumstances but should not expect to have rents fixed for more than four years at a time, much less for 60 years! A mechanism could be established where rents are automatically revised to reflect inflation. This applies particularly to commercial rents.

It is now time for action, seeing that the long-promised recommendations of a government commission have not yet been delivered. All owners of rent-controlled properties and their families now have the opportunity to support Alternattiva's initiative by endorsing the referendum petition and also by contributing to its costs. The success of the initiative is in their own, and the nation's, interest.