Sunday, 2nd March 2008
Housing: a priority
Housing should be given priority by a new government. In particular, Malta requires a national plan which aims for more social justice and less hardship in the housing sector.
The price of housing in Malta has continued to go up over the past years, and this is resulting in a growing burden on thousands of families, who include young people preparing to buy their first home, low and middle-income earners, and those who approaching pensionable age. Housing is a social issue, and should not be dictated by market forces or textbook solutions.
Malta requires policies which result in more affordable property prices. Policies in this regard can include subsidies on loans for the purchase of first properties, financial aid to those who shall buy their first property and to those who are facing economic difficulties such as loss of employment, and better provision of affordable social housing by the state.
Żminijietna - Voice of the Left opposes further liberalisation in the housing sector, as this will result in serious problems and difficulties for thousands of families. According to the latest census, the majority of families living in rented properties are getting older. Aging is an important factor that can lead to poverty. Therefore, policies based on social justice should not result in more liberalisation in this sector.
The abolition of the pre-1995 rent laws should not be seen as a simple technical exercise. It can result in people being evicted from their homes. A more socially just solution can be found, whereby the owners of such properties could be compensated by the State. This will also ensure that there are no social shocks, no instabilities, and ultimately, no homeless people.
We also believe that land and property speculation should be addressed. Vacant properties increased by 17,000 over the past 10 years while development permits rose by 48,000 in the last seven years. The census shows that 22.4 per cent of properties in Malta are permanently vacant.
It is ironic that while vacant properties are increasing, the rationalisation exercise of 2006 increased the size of land available for development. Zminijietna believes that ODZ (outside development zone) land should be revised and reduced, and properties which are vacant purely for speculative reasons (say from the third vacant property onwards) should be taxed.
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Comments
Rent control laws have been implemented in many countries. The end results are always the same: fewer units available for rent and deterioration of existing units due to lack of maintenance. Investors and property owners do not build rental housing if they know that the government is going to impose draconian and unfair restrictions on rents. Property owners will not bother maintaining their buildings if they cannot recover the maintenance cost.
Taxing vacant property at higher rates is also not the answer. This is a simplistic socialist approach that does not provide any real solutions to the problem. Compensating property owners is also not the answer since such a scheme assumes that people living in rental units are all low-income or fixed-income people thus subsidizing the rich as well as the poor. Another approach taken by many governments is social housing. Without many exceptions such housing eventually creates slum-like living conditions and attaches a stigma to the people living in such housing.
The real answer is to allow the market to dictate the rent and for the government to provide subsidies to renters based on their assets and income. Doing this is fair to both renters and property owners.