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Rent reform: minimum lease periods but no fixed prices

Government White Paper seeks to encourage longer leases and regulate rent increases

Updated 3.30pm with AD statement

Minimum lease periods are being considered in the government’s proposed reform of the rental market, but rent prices will remain at landlords’ discretion.

The new White Paper published on Monday proposes mandatory minimum leases as one possible means of tackling the instability and uncertainty of six-month leases, the other being financial incentives for contracts longer than a year.

The consultation document also proposes that increases in rent be pegged to the Property Price Index, with the government imposing additional caps to prevent sudden increases.

However, the proposed reform does not consider fixing initial rent prices, which housing parliamentary secretary Roderick Galdes said would stifle the market and dampen investment.

Mr Galdes said the aim of the reform was to create stability and transparency in the rental sector, and to ensure predictability for the growing number of long-term renters across the spectrum who sought to create a home in their rented properties.

The White Paper includes a compulsory period for the tenant at the start of the contract, during which they would not be able to end the lease, after which the tenant can end the lease with due notice, intended to ensure the landlord a guaranteed minimum return upon entering the contract.

Similarly, the landlord must give notice of termination at least three months before the lease expires, if they do not intend to renew the contract.
Fixing prices would stifle the market and dampen investment- Roderick Galdes

The White Paper would make mandatory the registration of the rental contract, as well as an inventory of the property together with the security deposit.

It would introduce measures to guarantee tenants access to water and electricity, at the appropriate residential tariffs - throughout the lease.

The changes would be regulated by a new department within the Housing Authority, which will oversee the market and become responsible for registration and enforcement issues.

Kurt Scerri, one of the experts involved in drafting the document, said the comprehensive study of the sector - the first of its kind - that preceded the proposals had identified a shortage in affordable properties within the €400 to €700 per month range.

Stressing that this issue concerned many medium-income earners stood apart from social housing issues, he said this could be addressed through a joint foundation with the private sector or a partnership with private developers who would develop public land and receive part of the rental income in return.

AD says it has become 'a real jungle' out there

Alternattiva Demokratika, which has long lobbied for reform, said that the publication wasa genuine effort to tackle the issue in some detail, focusing on the rights and obligations of all stakeholders.

In a preliminary reaction, AD chair Carmel Cacopardo said that the island had not had an effective rental market for more than 70 years.

“This means that our legislation has not been kept abreast of the rights and duties of landlords and tenants. We have ended with a real jungle where the economically mighty rule and the weak and vulnerable try to struggle on, often without success,” he said.

Public consultation on the White Paper is open until November 30. For full details and to make submissions, those interested can visit socialaccommodation.gov.mt.
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