The need for rent reform

The basic goal of housing policy is to provide society with adequately equipped dwellings of suitable size in a well functioning environment of decent quality at reasonable cost. To render housing policy tangible, questions related to access to housing, affordability, adequacy and social needs must be addressed.

There is no doubt that successive administrations in Malta have sought to secure these fundamental essentials. The Housing Authority, and previously the Department of Social Housing, have through various schemes, such as HOS plots, provision of apartments and maisonettes, ownership of own residence and rent subsidy, achieved much in securing accessible, affordable and adequate housing for persons in disadvantaged and low income groups.

The rent laws that regulate the pre-1995 rental market are a legacy of the interventionist policy introduced by successive post-war administrations directed to securing resolution of the scarcity of housing stock following war damage. There is no doubt that the original intention is laudable. There is also no doubt that the drafters of these policies perceived such instruments as temporary until stability and equilibrium in the housing market was attained.

Yet these laws have remained active on our statute books. It is recognised, one would say by most, that these legislative instruments introduced over 60 years ago and still in play today in terms of regulating urban dwellings no longer apply to today's problems. What was necessary subsequent to the devastation of housing stock as a result of war damage is no longer appropriate today in terms of assuring a functional housing market.

The ongoing permanency of these legislative measures has resulted in a dislocation of social justice - with the landlord practically losing his right over the title of his tenancy. The state of play is compounded further by the fact that the level of rent for a considerable number of pre-1995 rented properties is less than €117 (Lm50) annually while the landlord is held accountable to carry out expensive repairs and maintenance at today's prices.

One other matter of serious concern is that pre-1995 laws have become a major obstacle that constrain the housing market from functioning properly across a tripod constituted of ownership, rental and social inclusion. One cannot lightly dismiss the extent to which the inability to flush out onto the market unoccupied housing stock for rental is directly correlated to the phenomenon of substantial increases in the cost of owning a terraced house or a maisonette.

The solution for rent reform should thus seek to: on the one hand, stimulate a balanced housing market with an axis around ownership, rental and social inclusion; and on the other hand, assure that the premise of social justice in terms of the continued impacts of the pre-1995 rental laws is borne by the party that is truly responsible for providing for social inclusion, the State, as well as by the tenant where it is so evident that possession of tenancy under the pre-1995 laws constitutes a misuse of the original spirit of why these laws were introduced at the first instance.

Through the enactment of the 1995 rental reforms Malta has established the national benchmark of what constitutes the essential rights and obligations of both the tenant and the landlord. Any reform of the pre-1995 rent laws must seek to bring, to the greatest extent possible, the rights and obligations of tenants and landlords on the same footing as those enjoyed by post-1995 tenants and landlords.

Yet, social justice demands equitable and balanced solutions - and where obligations are wrongly placed, the gradual resolution of such obligations.

The process of reform that is weaved in the recommendations proposed in the White Paper seeks to balance the concerns of the sitting tenants with the expectations of landlords. It is recognised there will be those, primarily landlords, who will argue for immediate rectification of wrongs - alleged or otherwise - committed over a period of decades.

The White Paper, in seeking to address this long outstanding issue, does not adopt a revolutionary stance: immediate liberalisation irrespective of the social and economic upheaval this may bring in its wake. Rather, the White Paper proposes a transitional process that is directed to place urban and commercial tenancies entered into under the pre-1995 regime under the liberalised regime as established with the post-1995 legislation.

A reform which transcends, among others, complex social economic rights and financial issues and concerns demands a process of transition. In this regard, the White Paper is establishing the demarcation parameters which bring an end to a continuation of what are today enshrined obligations, establishing the time of their demise and kicking off the time clock to reach that demise.

The White Paper does this in various ways - from the establishment of a new definition of who constitutes a beneficiary to causa mortis inheritance with regard to urban property, to the establishment of the conditions that a beneficiary must meet to inherit the title of tenant. Further to this it demarcates the end of successive inheritance of the title of a tenancy by means of establishing a one-time, right to causa mortis inheritance.

The White Paper also establishes similar parameters to leases relating to commercial property, removing the right of successive generation causa mortis inheritances yet at the same giving ample time - 20 years - to tenants to ensure that they adjust to the impacts of change.

There is no doubt that the reform of the pre-1995 rent laws is a sensitive issue that requires sensitive handling. There is also no doubt that the expectations of tenants and of landlords will be poles apart. Such a reform, thus, will only be successful if a consensual understanding, which also includes the political parties, is reached that for such a reform to occur the expectations of the parties concerned are bridged in such a manner that enables both parties, the tenants and the landlords, to adjust to the realities of a liberalised market by means of a transitional process that, as far as possible, is fair to either party.

Mr Bugeja is secretariat officer within the Ministry for Social Policy.