There’s a social time bomb ticking away in the national background. And it’s called ‘Housing affordability’. In a couple of years – if not months – property prices will have become so expensive that there is absolutely no way even a couple of decent-wage earners will be able to afford to buy anything. At the rate property prices are skyrocketing, there will be no affordable properties for people who want to scrabble onto the first rung of the property ladder, or even to buy a slightly larger, more amenable property.
It’s not a question of people being too choosy, or wanting a palace with a pool – as implied during a recent conference about property. But if most of the properties are geared towards the high end of the market, the reasonably priced properties are being snapped up and practically everything else is seeing a huge price inflation.
Incentives such as tax exemptions for first-time buyers are a step in the right direction. However, they are sometimes simply being abused of by sellers who put up prices so that the exemption is effectively utilised towards covering the price hike.
And people may be earning more money and higher wages; however this is not true across the board. Many entry-level salaries will not bring you anywhere within range of the few remaining reasonably-priced properties. The influx of foreign workers is not restricted to those earning six-figure salaries. Most are employed in catering and construction. It is no secret that they are employed because they are a source of cheap labour. But even if legally employed with wages hovering above the minimum wage, they are not going to be able to access much property. The likelihood is that they can only afford communal living in less than salubrious conditions.
With this scenario in mind, it makes sense to try and adopt measures to address the issue of the first generations which are priced out of the housing market and that cohort of society which does not have access to loans. And that is why provisions to encourage and promote the rental market are a good idea. The media reports that legislative measures to do this are in the pipeline. It’s not easy to introduce regulation or enforcement in an area that has been either too harshly regulated (as in the pre-1995 rent laws) or a free-for-all (for leases which are not governed by the old rent laws).
Why sabotage the possibility of fair rent regulation with this unconstitutional retroactive legislation?
But the proposed measures are seeking to find that elusive balance between the rights of property owners to earn a decent return from their property, and the rights of tenants to have some stability with regard to duration of lease and amount of rent payable. It is light-touch regulation that may be the best model to adopt in our scenario. If successful, they would create a flow of rented units for people who can’t afford to buy. Such measures should be commended.
Unfortunately the potential success of rent regulation is seriously threatened by other legislative proposals contained in another Bill. Some background is in order. For far too long, the old rent laws have extended great protection exclusively to the tenants. The landlord is effectively dispossessed of his property or of the right to earn a decent income from it. This has traumatised property owners who prefer to leave their property empty, rather than to have it enjoyed exclusively by others with no proportionate return.
Government intervention in agreements made between landowners and tenants has been heavy-handed. It has made many wary of leasing out property. This is even more true for plaintiffs who have been struggling through the law courts after having filed lawsuits to have their rights recognised and enforced by the court.
The owners of a big building in Paola did just that after unauthorised works were carried out in the property which they leased to a band club. The Court of Appeal concluded that the band club had breached the lease contract and ordered its eviction within a few months.
What happened next is alarming to anybody who recognises the need for legal certainty. The government proposed a Bill specifically aimed at annulling the court judgment. The Bill introduces retroactive legislation – meaning that the band club cannot be evicted – even after the court has ruled that it should be.
This is an effective castration of the courts where the judiciary interprets and pronounces itself on a law, only to have that law changed the next day. Any judgment is rendered worthless. It is a moving of the goalposts at the legislator’s whim and discretion. This kind of legislative intervention threatens people’s access to justice. It will only serve to instil distrust in the laws and turning away from any form of regulation. There is still time to get this right – why sabotage the possibility of fair rent regulation with this unconstitutional retroactive legislation?
drcbonello@gmail.com