'Labour fully committed to contributing to rent reform'

Labour's deputy leader for parliamentary affairs Anġlu Farrugia said his party felt it should commit itself to fully contribute to the rent reform. So much so that it had launched its own consultation process and set up a commission to make suggestions and help in the drawing up of the Bill.

Speaking on the Civil Code (Amendment) Bill on Wednesday, Dr Farrugia said the party saw the reform as something that should help future generations and it made sure to keep partisan politics out of the equation. The current legislation had been enacted for a reason.

It stood to reason that ripples would be created because of the proposed reform, and the state had to see how it could mitigate the impact that could be created by market forces.

He noted that Malta had the lowest number of leased properties in Europe. But while a threshold was being set, there were people who would not be able to afford even this threshold. If a real effort to address pre-1995 rentals had to be made, a balance had to be found.

Dr Farrugia said there were people who had inherited property which they never enjoyed, even though they needed it, because it was rented to third parties. On the other hand, 72 per cent of contracts had been entered into before 1995 and 46 per cent of tenants would be paying more than at present. Two of every three of these tenants were aged 60 and over and currently paid, on average, much less than €100 a year. So socially, nearly half the population in rented properties were to start paying a higher rent.

If a reform had to be carried out and if a line had to be drawn, the government had to see how it was going to deal with the social dimension of the problem. The Labour Party would be meeting again to discuss this matter and see what its final position was going to be.

Dr Farrugia asked what was going to be the effect on those who could not afford to pay the new rents. The transition had to be adequate and one which ensured that the existing social problems were also addressed. It made sense for rents to be increased, but would the government address the criteria which had to determine the value of the rent, such as the size of the property leased?

What about the investment the tenant would have made over the years, even with the owner's approval? Would he be compensated or would he be at a disadvantage when the new rent was calculated?

What was the state going to do about unmarried couples who had been cohabiting for years? On what criteria should existing rights be limited?

The Bill was also limiting inheritance to children and descendants. But there could be particular circumstances which needed to be dealt with differently.

Dr Farrugia said the government's aim behind the White Paper had been to stimulate the accommodation market, relying on open rentals. This was because the cost of property had continued to rise over the years, but people who wanted to go their own way had to buy their property.

Turning to businesses, Dr Farrugia said that there were people whose livelihood depended on the places they rented and used for business. It was true that owners should not continue to carry the burdens they were currently carrying, but in such instances there should be a transition period.

The government had not taken enough consideration of the inheritance of property used for business. This was something which also needed to be addressed.

Many people, he said, were worried because they were seeing the reform creating major problems for them. But this should not be the aim of the reform. Everyone had a responsibility to tell the people that they should not be alarmed and that if there were problems, they would be addressed by the legislators.

Dr Farrugia said it was good that the minister had invited the opposition to take part in creating a balance when there were issues to be addressed. Unless such issues were addressed, concerns would remain.

More consideration should be given to existing circumstances. One should look at issues where, while the owner was paying a small amount, other persons or companies were making big money out of the sub-renter.

Dr Farrugia then focused on clubs and said that while one understood the social aim behind several clubs, such as band clubs, political parties and their clubs were also serving a social aim. Why was the law distancing political clubs from all the others?

This could lead to discrimination, especially if one considered that where there was no agreement with property owners these clubs would have to close their doors if the lease came to an end before January 2010.

It would have been better to address the issue of vacant households. According to the latest census there were about 53,000 vacant residences, with 10,000 other properties only used as summer residences.

Between 2006 and 2007 MEPA had issued permits for the construction of 21,000 units. One also needed to consider that on average the number of families was dwindling, with the result that for a substantial number of years there would be thousands of vacant households on the market.

He said that 48 per cent of vacant residences were also in a deteriorating state. Such a large number of vacant properties meant that wealth was not being distributed evenly.

Dr Farrugia said the Labour Party (PL)believed that the government had to collaborate with the private sector and give incentives to put these residences to good use, to conserve property and the environment by preventing unnecessary development. He also called for a census of government property, adding that the government should lead by example and put vacant properties on the leasing market.

Dr Farrugia observed that the definition of "beneficiary" in the Bill should include legally-separated persons living under the same roof and also persons who had been cohabiting for a long time.

The government had accepted proposals by the opposition on this matter. One also had to see how the Property Market Value Index would function. Right had to be given to question the index with checks and balances.

He invited the minister to revise the period of stay in an institution before a person lost the entitlement to the lease. This should be extended to 18 months because there were many cases of people who had left institutions and resumed living at home after a period of recovery.

He referred to the Rent Regulation Board, adding that if it was to be given more powers, one should ensure that it would be given the tools to meet its legal obligations.

Concluding, Dr Farrugia said the Labour Party had given a valid contribution in its feedback to the White Paper, adding that the Parliamentary Group would reconvene to fine-tune the Bill.

The debate continues next Monday.