The perception in Malta is that the respective housing needs of the different income categories are being catered for but, beyond the appearances, the system is beset by a number of emerging difficulties.
To start with, nine per cent of the total occupied housing stock (almost 14,000 households) is composed of protected tenants whose legal entitlement to remain in occupation of their dwellings at disproportionately low rents is becoming increasingly questionable in each European Court of Human Rights judgment delivered against Malta.
There is also a considerable shortage of social housing and, according to what the Minister for the Family and Social Solidarity said in 2013, the Housing Authority is no longer seeking to build any more. Although it was claimed that the authority was in search of new ways to utilise existing housing stock, the government has failed to renew the Skema Kiri, whereby the authority would rent private premises to sublet.
All this is increasing the pressure on the private rental sector because both formerly protected tenants and social housing applicants have few other options.
The private rented sector comprises 15 per cent of Malta’s total housing stock. Of this, just one third pay full market rents. This figure is, nevertheless, on the rise due to a sustained influx of migrants and a surge of foreign medium-to-high-income workers who are mostly EU nationals.
Renting has, however, been relegated in the political agenda by subsequent administrations, which persistently promoted home ownership.
This reinforced the idea that households would only need to rent due to being economically disadvantaged, although recent trends, particularly because of the EU worker influx, have challenged this idea.
Current rental policy is now inadequate in many respects.
Today’s realities justify a revision of the workings of the private rented sector
The rent and energy subsidies are not reaching all the rightful tenants because of some landlords’ refusal to give rental agreements in writing. As well as barring access to subsidies, verbal agreements bring increasing uncertainty to tenants since the law itself states that residential tenancy contracts must be contained in the written form.
Recent studies have also revealed that, regardless of State assistance, certain low-income households still face affordability problems, while estate agents report that rents in certain commercial areas have grown by double figures.
This situation is also leading to difficulties for tenants in establishing whether the asking prices truly reflect market rent values in the area. The absence of any index of reference is leaving tenants with little or no bargaining power when agreeing an initial rent.
Another problem not covered by regulation is landlords illegally retaining tenants’ deposits, regardless of whether the property has been left in a good condition or not. Lack of safeguards in this respect means more undue costs for renting households who would generally require the deposit paid to the previous landlord to pass it on to their new one.
Moreover, it would be mistaken to think that these difficulties are only being faced by lower-income households, as can be seen in the ongoing wrangle between ARMS Ltd and a group of expatriate tenants (Up in Arms) who, until recently, were not allowed to benefit from lower residential tariffs available to Maltese renters.
Today’s realities should therefore compel the government to start reviewing the workings of the private rented sector.
Measures to be considered include greater tax scrutiny of landlords (which would ensure subsidies and beneficial energy rates get to everybody entitled to them); the introduction of a standardised landlord and tenant contract; the establishment of a rental index to allow tenants to better negotiate rents and the government to monitor the market more effectively; and, finally, the establishment of a deposit-protection scheme to safeguard tenants’ monies.
With the recent growth of the sector, as well as its crucial role in securing adequate housing conditions for the population, both native and immigrant, the government cannot keep viewing renting as a second-class tenure.
A better-regulated private rental sector is key both for an effective welfare policy and, most importantly, to guarantee housing rights for all who live in Malta.
Kurt Xerri is a lawyer and doctoral researcher at the Universitat Rovira i Virgili in Tarragona, Spain