AD proposes abolition of lease inheritance

Alternattiva Demokratika yesterday branded the government's approach to rent reform "half-baked", saying Social Solidarity Minister Dolores Cristina was unable to keep her promises to have a White Paper published.

"It is utterly shameful that Government did not keep its numerous promises to present a White Paper," AD chairman Harry Vassallo said yesterday.

When AD launched its campaign in October 2004, Mrs Cristina had said that Government was working on reform and that it would publish its findings early in 2005.

"But nothing was done," Dr Vassallo remarked.

"In May 2005 we launched our rent referendum campaign, which is still on-going," Dr Vassallo continued. "The week after we launched the campaign, Minister Cristina promised to publish a working document in August. Again, nothing was done."

The deadline was then moved to October, Dr Vassallo pointed out, but again nothing was published. Towards the end of the year AD launched its public consultation exercise and a week later Minister Cristina announced that the White Paper would be discussed at Cabinet level and published in January.

January will be over in 10 days' time, he said, and yet nothing has been issued by Government. "It is a disgrace that Government chooses to play petty politics with a matter that has caused tremendous pain to thousands of people on whose back Government has ridden for over 60 years."

Pre-empting the debate, AD yesterday announced its own proposals for rent reform. Others will be announced at a later date.

The party made three proposals. The first relates to tax adjustments on income deriving from rent. AD is suggesting Government introduce a beneficial tax regime, lowering the tax to a flat rate of 15 per cent, while introducing harsher penalties for evaders.

"Government should send a clear message to the market that it is encouraging rent by rewarding the honest but punishing those who attempt to evade even a low tax rate like 15 per cent," Dr Vassallo explained.

Edward Fenech, the party's spokesman on economy and finance, outlined AD's proposal for the inheritance of leases. Save for cases of inheritance between spouses, AD is suggesting that the inheritance of leases be abolished.

A limited or temporary right to the transfer of title of a rented property to a deceased tenant's immediate relatives should be allowed only in exceptional cases.

In the case of legally sanctioned improvements made to rented property by tenants before their death, AD is proposing that the landlord be given an option to pay the tenant's heirs the equivalent of the improvements' value less five per cent depreciation for every year since they were made.

Alternatively, landlords could translate that same value as depreciated into an additional period rent in lieu.

Commercial leases

Dr Vassallo also referred to commercial leases, saying that following the public consultation held by AD, the party felt a distinction should be made between commercial properties of a retail nature, like shops, and those of a non-retail nature like warehouses or stores.

"A distinction is necessary because while the first category includes properties which could include goodwill, like high street shops, the second category involved properties like warehouses and stores that carry no goodwill," he explained.

Where non-retail properties are concerned, AD is proposing the complete liberalisation of leases following a six-month transition period for tenants. The tenants would then have the option to extend the lease period for one year upon payment of fair rent for one year payable in advance. The landlord will then have the right to repossess the property.

The government's cowardly attitude and insensitive procrastination on this matter, as well as the Opposition's complete silence, are shameful acts of crass immaturity by a political class, locked into stalemate by their greedy quest for votes, Dr Vassallo remarked.

"We will persevere in our concerted effort to bring about a change for the better in Malta's rent laws," Dr Vassallo insisted.