Saturday, 28th June 2008 - 10:30CET
Long awaited rent reform White Paper published
Malta’s pre-1995 rent laws are to be gradually phased out under a proposed reform based on protecting the tenure of current residents, ensuring that rents are fair, and enabling landlords to eventually repossess their properties, Prime Minister Lawrence Gonzi announced this morning.
A White Paper on the reform was launched at a press conference with Social Policy Minister John Dalli.
Among its near future recommendations, the minimum rent of residential properties is being set at rent for pre-1995 rented property will be set at €185 (Lm79.40) per annum. The maintenance obligations of the landlords are being restricted to structural works and landlords will be able to raise rents to 10% of the costs. Rents can be inherited only once by children living with the tenants, subject to specific conditions.
Dr Gonzi and Mr Dalli explained that the existing right of a lease enjoyed by a current tenant will be retained and will be extended to the spouse who is separated. A lease can be inherited once only by a child of the tenant who would have been living with the tenant for a minimum of five consecutive years or the child who would be younger than five years of age.
Occupants who live with a sitting tenant but who do not meet the eligibility criteria to inherit the rent will be afforded the right to continue to live in the residency for a period of not longer than five years from the date of the death of the tenant subject but will pay market value for the rent.
When a child who inherits a rent has an economic worth of more than €125,000 or an income higher than €25,000 the rental value will be 3% of the value of the property for the first three years, subsequent to which any further renewal will be subject to agreement between the landlord and occupant.
People who have rented property but actually live permanently in an old people’s home will be required to either transfer their rent to one of their children or return it to the landlord.
As from January 1, 2009 the minimum rent for pre-1995 rented property will be set at €185 (Lm79.40) per annum and will be adjusted every three years according to the rate of inflation.
With regard to maintenance of rented properties, the White Paper the obligations of the landlord will be limited to the structural building and roof works and all other repairs and maintenance responsibilities will be borne by the tenant. When repairs are carried out by the landlord, the rent will increase by 10% of the full cost of repairs at the time the repairs are completed.
Contracts for commercial property that have an ‘inbuilt’ mechanism for inducing termination by abnormally increasing the value of the rent at a particular date will continue to be in effect for a transition period of 20 years provided that in the event that during this period the ‘inbuilt termination’ clause is applied this will act as a de facto termination clause and the title of the property will revert back to the landlord.
The White Paper says the value of the rent paid for commercial leases should not continue to enjoy protection under the pre-1995 rent legislation and the value of the rent of such property is to reach full market value as follows:
- turnover =< €50,000 (Lm21,459): 1990 inflation indexed rates as at 1st January 2009 and will increase automatically every three years to 1996, 2002 and so forth - until full market value is reached over the 12 year transition period.
- turnover => €50,001 (Lm21,459.6) but =< €500,000 (Lm214,592): established at 1995 inflation indexed rates as at 1st January 2009 and will increase automatically every three years to 2001, 2007 and so forth – that is six year steps - until full market value is reached over the 12 year transition period.
- turnover => €500,001 (Lm214,592.7): 20001995 inflation indexed rates as at 1st January 2009 and will increase automatically following every three years to 2006, 2012 and so forth – that is six year steps - until full market value is reached over the 12 year transition period.
All tenancies of pre-1995 commercial properties, unless otherwise agreed to by the parties, will terminate within 20 years from 1st June 2008; with the title of the property to revert back to the landlord.
Pre-1995 commercial property leased by legal entities listed on the Malta Stock Exchange will have the lease terminated as at 1st June 2009; with the title of the property to revert back to the landlord and with the future leasing of such property to be governed by post-1995 legislation.
A third party enjoying a lease sub-letted to him by a sitting tenant prior to 1st June 2008 will, unless an agreement is in place with the landlord, continue to enjoy the said lease for a period of 10 years as from 1st June 2008, following which the lease will expire and the title of the lease will return to the landlord.
The White Paper says there is no rationale for which the principles of social justice can be applied for dwellings used as summer residences and garages and these should be liberalised with effect from 1st January 2010.
In order to ensure that a benchmark of what constitutes a fair market value for the level of rent to be sought from a property the Government will introduce an index mechanism that will establish the market value of the level of rent for a premises in a particular area and locality.
The recommendations proposed in this report apply not only to private landlords and tenants but also the government but excludes social clubs, including political party clubs.
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Comments
Whilst sorry to read about your plight do you really think it's fair that you take a property that does not belong to you?
Anohter point i would like to ask, is the tax and NI we pay considered as part of the sum included in our income. I hope not. Maybe the commissioner for disabled persons can look into the matter
No dear chap, I own several properties that were inherited and I never met the current tenants who are freeloading in my property. The rent in 2 cases was frozen by the government to pre 1939 rates, and in 3 cases the properties were requisitioned and rented.
Whatever I want to do with my property is none of anybod's business because it is MINE to do with as I please. Tell me David Gatt, who in his right mind does a contract that can be inherited and with the rent never increasing?
The answer is simple, NOBODY!! Property owners are being forced to subsidise freeloaders!
And I really believe you don't live in a 'rented' property! Yes right!
You guessed wrong! Now let me make a guess... do you own a property which you rented and now want to make more money from?
Let me guess, you live in a ripped off property?
No legal contract does not allow for increase in rents, it is just the usual 'Pajjiz tal-Mickey Mouse' we live in that allows it.
@Joseph Borg
If you paid market rates then you may have a point, otherwise tough bloody luck.
This white paper is an insult to all property owners! Who will set the "Market value"? The market or the government? Of course party clubs are exempted with the excuse of social clubs.
If the Government really wants to subsidise these 'social clubs' then it should pay the effing rent.
This white paper is a reverse salute to justice.
Well, what you may say may be true for certain cases. But every person I know, family or not, got to rent the house they are living in without 'forcing' anyone. They met normally with the owers and they made a contract. The contract was supposed to bind both parties. So what is wrong in this? I still can't see how these contracts can be breached.
The state and nobody else should give social support. 70 years later landlords are still being repeatedly deprived of their property. And now we are asked to let it pass for "just one more generation".
And by which stretch of the imagination should political party clubs fall under social support, this time not even for "just one more generation"?
What's this about if an off-spring lives for the last 5 years with the parents, then s/he automatically gets the property for yet another generation (at ridicules rent). This has always been the problem. At the first sign of their parent's fraility, in moves a son or daughter (or just switch ID card), and the landlord can once again kiss his property good buy.
€185 per annum? Come off it!
Far too little, and far too late.
why don't you both write in response to the white paper and suggest that political party's rented properties be included as well it has been omitted from the white paper. It is a known fact which of the tow political parties that have benefited from the present situation. I do not think that Joseph Muscat will be so happy with such a proposal.
Just a second though, could this be a plot by the PN to flash out poor Joseph Muscat. OH well, sooner or later had to happen. Time to stop talking and to staart taking some tough decision.
Instead of bithing over here, take your time and submit your ideas in response to the said white paper. I am quite sure that the final legislation will look much different thaen what is being proposed in the white paper. So take a breather.
About 'tenants' permanently living in an old peoples home....why the hell should they have the right to pass it on to one of their children?? Whoever came up with this brainwave is a real plonker, I will explain. Someone living in an old peoples home is ...old , like 80 or over 70 at least. Their children are likely to be in their 60's. So you tell me my dears Donzi and Galli... where do these 60 year old children live at present?? They have their own homes!!! why give them mine?
robbed of their property?? Is a person being robbed when he is getting exactly what he signed up for in a legal contract?
..........................you'll need much more than "il-ftit minghand il-hafna" to pay the rents for the properties whose tenant is the MLP..........probably you'll need to ask for some help from the contractors who went to Dubai behind everybody's back..............if you look at this rent reform from the red glasses of a die hard Labourite like Effie and regard the MLP's interests paramount to any other interest than yes Effie Carbonaro is 100% right----this is indeed sheer madness!!!!
Let me tell you dearest Mr.Carbonaro, my family owns an old property in the southern part of this island.....they are paid less than Lm50 ( 116 euros) per annum (pitiful peanuts) and not very long ago the tenant had the sheer audacity to ask (demand would be more approriate) the owners i.e--all my extended family...to repair all the pipeworks as these needed changing.....something which costs more than Lm600 ( around 1,600 euros)...so dearest Mr.Carbonaro subtract that from the rent and you'll find that my family is going to be Eur.1,480 in a loss............and I'm underestimating the costs big time..........and if thats not enough the law ,up till now, has protected this particular tenant!!
.......so dear Mr.Carbonaro you can shoot from the hip as much as you want, you can say that this is sheer madness as long as you like but that won't change the fact that something needs to be done....and the Govt seems to have realised thank god!!
But PLEASE do NOT be so cheeky as to exempt political party premises!
The €185 (Lm79.40) per annum rent for pre-1995 rented property is far too low. At a minimum it should be adjusted to a market value rate over a period of five to ten years.
that's two words.
You singled out political party clubs being excluded from the provisions of the White Paper. In fact the exclusions apply to all social clubs such as band clubs and other venues which depend on a large extent on membership fees. Many of these clubs would simply fold and disappear, which would be a pity since many provide important services to members of all ages. Unbeknown to you, many such clubs already pay market value rents, if not more.
Social Policy Minister John Dalli made sure not to tread heavily on the tenants while moving substantially in favour of the landlords. It appears to be a first step to gradually arrive at more defined and black and white rent laws in the future. Many tenants and landlords will no doubt express their disappointment for various reasons including political and the feeling that the announced measures are either too onerous or not generous enough. This usually happens when an initiative such as this happens to strike a balance between two affected parties.
The only criticism, if I can call it that, is that the announced changes are somewhat stretched out unnecessarily. The sooner reality sets in the better.
on a political note I cannot but feel very satisfied with the fact that up to now this government seems to be much better, more sensitive and more no nonesense than the same government in the last legislature..............I think someone somewhere is listening after all!!