Retailers risk eviction come 2018 - GRTU
Retail union wants clear commitment from parties to remove "guillotine" clause
Both major political parties must give a clear commitment to amend existing rent laws to remove a “guillotine” clause that would see many retailers with rental contracts pre-dating 1995 automatically evicted come 2018, the Chamber of Small and Medium Enterprises – GRTU – said this afternoon.
The GRTU also wants a rent revision index mentioned in the 2009 rent law reform but not yet part of the law to be enacted, saying that the index would allow both tenants and property owners a fair deal.
Rent law reforms introduced in 2009 included a stipulation that rental contracts on commercial properties dating up to June 1995 and which tenants can automatically renew will be nullified come June 2028.
For sub-leased properties, in which tenants pay rent to someone other than the property owner, that deadline is 10 years earlier – June 2018.
“This guillotine measure is turning many businesses into melting blocks of ice,” said GRTU director-general Vince Farrugia. “We expect both parties to clearly commit to rectifying this situation, and we expect them to make a commitment before the general election.”
The retailers’ union wants a new government to create a commercial rent committee tasked with assessing the impact rent increases would have on retailers’ outlets and to oversee the introduction of a property market value index.
The index is already mentioned in the 2009 rent law revision but is not yet law. Such an index would calculate rent increases through a mathematically-calculated formula and would, GRTU lawyer Jan-Karl Farrugia said, be a fair remedy to both commercial tenants and property owners.
In the absence of a property market value index, rent on such commercial properties with pre-1995 rental contracts will also start rising by an annual five per cent of the original rental sum from January 1 of next year.
“We’re not arguing that decades-old rents, which are sometimes ridiculously low, should remain unhanged,” Dr Farrugia said. “But to have a clause to automatically evict commercial tenants come 2018 or 2028 is draconian and unfair.”
Dr Farrugia argued that retailers often were a key contributor to the heightened property value of commercial properties.
“Many retailers have invested a great deal of money into these properties over the year. If these properties are worth much more now, it is also down to this.”
Mr Farrugia suggested political inaction on the matter was down to conflicts of interests. “Parliamentarians on either side have only taken notice of property owners’ rights. They paid absolutely no attention to commercial tenants’ voices. And that’s because many of them – lawyers, notaries, architects – have no interest in changing things.”
He turned to GRTU members. “Many retailers don’t even know about that they risk being thrown out onto the street in 2018. Wake up, your business is vanishing,” he exhorted.