Five Labour MPs yesterday emphasised the vast social implications of the rent reform Bill and urged the government to be prepared to face the problems that would ensue.

Speaking during the second reading of the Civil Code (Amendment) Bill, they underlined that it was not only the proposed minimum rent of €185 that might drive certain sectors of society into hardship but also certain conditions which were deemed to be discriminatory.

Carmelo Abela said that certain points raised by the opposition had been included in the Bill. There should be a balance between the rights of property owners and tenants. Increased rents would inflict hardships on those tenants who were already being hard hit by the utility tariffs and shorter working weeks. The state should see that nobody fell below the poverty line.

Mr Abela said the first clauses of the Bill should have been statements of policy which could not be syndicated in court. This would have given assurances that the state would help those in difficulty, thus putting many peoples' minds at rest.

No social impact assessment of the proposed legislation had been undertaken. It would have been better if a new piece of legislation had been introduced instead of amending part of the Civil Code.

Clause 7, referring to both domestic and commercial leases and which could be considered as the crucial part of the Bill, was not clear. What the legislator had in mind should be spelt out. Another sub-clause of Clause 7 begged the question as to what would happen to leases where the rent was more than the proposed minimum of €185 per annum. Would these also rise every three years after January 1, 2012?

Referring to commercial leases, Mr Abela said one must be careful because otherwise, certain businessmen would find themselves in difficulties. The cushioning period of three years, during which a tenant could seek alternative accommodation if no agreement was reached on the new rent, could afford to be longer. One must also consider that certain tenants had even paid large sums as key premium and invested heavily to make the place more comfortable.

Mr Abela criticised excerpts from the speech by Deputy Prime Minister Tonio Borg last week. He emphasised that family values were important and ideally, such families should be made up of a man and a woman and their children. However, the problems of cohabiting should not be further aggravated, especially where children were concerned.

Whatever view one held, legislators should address such situations. The Bill was affecting the family nucleus and the element of the extended family.

Mr Abela said Dr Borg seemed to be more interested in PL clubs than the social impact of the Bill. For transparency's sake, Dr Borg should have also commented on PN clubs and not on just three Labour clubs.

Concluding, Mr Abela said there should be the government's commitment as regards the state's role in ensuring social justice.

Alfred Sant said the Bill should aim to correct social injustices, consider that the housing sector was not fully utilised and show commitment to social justice. But the proposed measures showed the government did not have full knowledge of the accommodation sector, with 20 per cent of housing units still vacant and a situation of structural mismatch between supply and demand. The Bill did not consider the large amount of housing units under construction and the need to strike a balance between the urban and the rural environment.

The Bill lacked vision and represented a disjointed approach that aimed to solve problems on a micro scale when it lacked essential data on the sector. It also created more complex problems.

Dr Sant said the Bill did not consider the large number of young engaged couples in short-term employment and whose jobs could be considered precarious. When everyone spoke of promoting stable families, newly-wed couples had to enter into contracts tying them to long-term loans or accommodation where they had to pay exorbitant rents.

Before drafting a plan for the accommodation sector, one had to consider that Malta was a small, overbuilt and overpopulated island. The accommodation situation has to reflect the social circumstances and a rental market which was economically and environmentally viable. Therefore, the government had to be an active agent promoting certain developments while controlling others.

The state had to respect owners' and tenants' rights and to avoid contradictions and misuse.

Justyne Caruana said the Bill was socially and legally half-baked. Justice had to be done with owners but not at the expense of tenants. No data was available and no social impact assessment had been carried out by the government.

The Bill was moved at a time when families were burdened with high utility tariffs, with others working on a four-day week or adversely hit by the economic recession.

She said that the House Social Affairs Committee should have discussed the social impact of the Bill before its presentation to the House. Most tenants were elderly people who were passing through hard times.

Dr Caruana listed a number of instances where amendments were needed. She insisted that whatever the circumstances of the family, minors had to be protected. She also complained that means testing was being left to ministerial discretion.

On the non-use of tenements, the Bill unjustly distinguished between those receiving medical care in Malta and abroad.

She insisted that the government had to take action to help such Gozitan students studying in Malta, who were being charged abusive rents.

While the Bill amended the civil code there was a number of rent laws emanating from other Acts. This would create confusion.

Concluding, Dr Caruana said the government lacked commitment to social justice because it failed to consider those who were most vulnerable, adding that it had to help them through social housing and social assistance.

Noel Farrugia said Labour agreed on the need to rectify injustices perpetrated by the current rent laws, but felt that more protection was needed for tenants. The opposition was insisting on the most drastic reforms in rent laws to be phased in over a period of up to five years.

As it stood now, the Bill raised the possibility of a co-tenant just under 60 years of age finding himself without a roof over his head if his tenant sibling passed away. Social Policy Minister John Dalli had written in The Times that all the tenant's siblings would be protected, but this was subject to interpretation of the law.

Labour's lawyers were working on such unclear aspects of the Bill and drafting the necessary amendments. They were trying to ensure that solutions would be found to the most pressing problems, although it would be humanly impossible to solve all of them at one go.

Mr Farrugia said his speech did not constitute scaremongering. He just wanted a final Bill that would be progressive and supportive, with the government working for the people and not the other way around.

Charles Mangion said that the fact that the whole House was in agreement on the need to update rent laws was very important. This meant that this socio-economic aspect would not remain unheeded.

There were too many cases of owners who looked on their property as a liability rather than an asset, with tenants who could well afford better residences. A great number of these tenants were protected by the law to an extent that some of them admitted it was not fair. On the other hand, any change or new onus on other tenants could well constitute a hardship.

The House must be careful not to amend the law in such a way that rectified injustices could be replaced by other injustices. One very important aspect would be the enforcement of the changes. It might be the right time to consider reviewing the constitution of the Rent Regulation Board and equip it better to meet the expected workload. Any delays in solving problems would in themselves constitute new injustices.

Dr Mangion wondered how many leases were covered by the present Bill and how many tenants and families were involved.

Besides establishing a minimum residential rent of €185 a year for pre-1995 deals, the Bill was introducing the concept of periodical review of rent levels. It was also introducing aspects of tenant responsibility for damages to the residence and revision of the rent for maintenance works shouldered by the owner.

This effectively lightened the onus on owners but constituted a new onus on tenants.

All possible data on the present rental situation should be made available to enable any party in government to plan ahead.

Another phenomenon that needed careful consideration was the mushrooming of new types of relationships, which had been given due recognition overseas but only piecemeal consideration locally. There were laws in Malta that recognised some types of such relationships, and in reality it was not the onus of the Bill to cater for such consideration.

On commercial rents, Dr Mangion said that even those dating back to pre-1995 were in the most based on written agreements. One thing that constituted a contradiction was the fact that a written agreement would continue to be valid, while in others the owner did not include a definite timescale but left things up to automatic renewal.

The Bill held that written and unwritten agreements would have to lapse in 20 years. Such written agreements, especially, could challenge this proviso in a court of law. Commerce was a sector in which market values held sway.

The criteria which the government intended to set up in order to evaluate the real value of a commercial tenement would have to be well thought out. These constituted a veritable headache to many tenants. It certainly did not make sense to say that commercial leases should go untouched.

Dr Mangion said it was important how to arrive to these criteria. He suggested studying if this sort of situation existed overseas. In any case, the goodwill of each property would have to be carefully considered. It was one thing evaluating empty premises and quite another evaluating premises with years of hard work behind them. The goodwill depended not only on the premises' location but, even more importantly, the tenant's efforts to set up the business.

Where there was no existing deadline for termination of a commercial lease, the timespan of 20 years seemed to be balanced. If there existed a good relationship between owner and tenant, developed over the years, it was very important that such a relationship continue to be nurtured.

Concluding, Dr Mangion said that no matter how hard everybody tried, it was a foregone conclusion that problems would arise. This constituted a warning that the current Rent Regulation Board would have to be strengthened in its infrastructure. Care must be taken to ensure that cases before the board did not drag on endlessly, to the extent that a tenant spent five years in the place without paying rent until the board came to a conclusion.

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