MaltaToday | 9 March 2008 | Rental burdens still and open wound for landlords

NEWS | Sunday, 09 March 2008

Rental burdens still and open wound for landlords

David Darmanin

The pre-1995 rent laws, still subject to an archaic regime where tenants pay rents of just a few Euros or maybe even a chicken, place enormous burdens on landlords. They remain responsible for 90% of extraordinary maintenance repair for the property they rent, in return for controlled rents from their tenants, irrespectively of their incomes. Commercial landlords have to finance maintenance repair in full.
In 2005, AD announced their rent reform campaign to start collecting some 30,000 signatures for a referendum that would abrogate four laws regulating the contract between landlords and their tenants, whose rent-controlled properties can be inherited by anyone still living in the property.
The campaign was followed by Family and Social Solidarity Minister Dolores Cristina’s statement to submit rent law proposals to Cabinet by mid-2005 – and since then, a white paper on the subject allegedly presented in December 2007 has not yet been published.
With AD’s campaign to collect 10% of the electorate’s signature to force a referendum into action never having collected enough signatures, the PN are now proposing in their electoral programme a revision of rent laws, and the removal of tax on income from monies due to owners of rent-controlled properties and schemes to give fairer rates to landlords to repair their properties at fairer rates.

Vacant properties
Over the years, critics attributed the alarming rate of vacant dwellings in Malta to the possibility that property owners did not trust Malta’s rent legislation enough to rent out their empty properties, irrespective of the 1995 reform which liberalised post-1995 dwellings.
In October 2007, a Property Census revealed that one out of every five properties in Malta, and one in three in Gozo, were uninhabited all year round. In total, the amount of unused properties stood at a staggering 53,126: since 1995, empty homes had shot up by 17,403, while in the past seven years MEPA had issued permits for 47,821 new dwellings.
The census also showed that 76% of properties put on the rent market had been rented out very cheaply for less than Lm17 a month.

Property owners like Milica Micovic are rightfully unhappy about the situation where a social injustice is endured by families who may be property-rich, but money-poor: under the 1939 rent laws, they cannot tell their tenants to move out, they can only increase rents to capped limits every 20 years, and they have to bear costs for maintenance.
“This is a social injustice to all owners of such property,” Micovic told Maltatoday. “We give out properties at peppercorn rents, and tenants aren’t to blame for this. After all, they are covered by the laws of Malta.”
Micovic, who represents a family-run estate management company, mentioned the case of a Gzira property they own, which was requisitioned in 1980 for social housing purposes. “The tenants eventually returned the key to the Department for Social Housing, and instead of it coming back to us, it was reassigned to another tenant.”
A letter sent to the Department of Social Housing in 2005, signed by Milica’s legal representatives Fenech and Fenech Advocates, reads: “It is abominable that in the year 2005, the government still deems fit and proper to allocate property owned privately to third parties without the owners’ consent at a paltry rent of Lm60.”
“That’s nothing,” Micovic continued. “We had 16 seafront apartments in Qui-Si-Sana requisitioned in one blow by the Labour Government in the late seventies. One of the apartments requires repairs that will most probably end up costing into the thousands. Of course, the apartment is not occupied by the original tenant, but by his daughter, whose relatives ensure visiting her on regular basis – which makes me only assume that they aim to inherit the tenancy. To this day, my family receives an annual rent of less than €200 yearly for the apartment.
“We had another property in Valletta that had been vacant for years. When we approached the lessee to relinquish his title of lease, he accepted on condition that we pay him a substantial sum of money. It was either that or spend the rest of our lives arguing in court.”
Micovic says she expects any future government to recognise the unfairness of the rent laws. She surely speaks from experience: even the Malta Labour Party club and the Valletta palace housing the Ministry for Investments and IT occupy their property and pay a pittance for rent. The MLP pays them lm80 yearly; Palazzo Verdelin is a miserable Lm800.
She is even more incensed about the lack of compensation for land expropriated from her family and others for the old airport in Luqa. “After we were informed the Lands Department was discussing compensation, we were told that there was no money. It would have been understandable only if they would have told Minister Ninu Zammit the same thing for compensation he was due,” referring to the minister’s recent compensation for his land.
“My family is happy to contribute to society, and we have no intention of evicting socially deprived tenants from our properties. We also respect the fact that the government may not be in a position to pay us for all we’ve suffered. However, it just needs to be done fairly.”

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