NEWS | Wednesday, 15 October 2008

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Court precedent says rent control is a breach of human rights

Matthew Vella
It is not just Maltese landowners who have to contend with the restrictive and anachronistic regime of rent control.
Some 2,000 km away, the Polish system of rent control lives on, but a European Court of Human Rights (ECHR) judgement in the case of a Poznan landowner has clearly established that European governments must resolve fundamental problems in housing legislation.
The decision by the Strasbourg court set a European precedent, when it found that Maria Hutten-Czapska’s right to the peaceful enjoyment of her property had been breached because she could not use her property or charge adequate rent for its lease.
Hutten-Czapska filed a complaint in 1993 challenging the legality of government rent control.
She complained under Article 1 of Protocol No. 1 to the Convention that the situation created by the laws imposing tenancy agreements on her and setting an inadequate level of rent, amounted to a continuing violation of her right to the enjoyment of her possessions.
She said the very essence of her right of property had been impaired because she was not only unable to derive any income from her property but also, owing to restrictions on the termination of leases of flats subject to the rent-control scheme, she could not regain the possession and use of her property.
Hutten-Czapska was one of around 100,000 landlords in Poland affected by a restrictive system of rent control, from which some 600,000 to 900,000 tenants benefit, which originated in laws adopted under the former communist regime.
Polish legislation on rent control, like Malta’s, has been the result of many historical and recent factors. Legislative schemes restricting rights of landlords and regulating increases in rent were already in operation before the Second World War.
The system imposed a number of restrictions on landlords’ rights, in particular, setting a ceiling on rent levels which was so low that landlords could not even recoup their maintenance costs, let alone make a profit.
On June 19, the ECHR ruled in her favour, adding that the Polish government had to change the laws to secure a fair balance between the interests of landlords and the community.
The ECHR accepted a friendly settlement reached between the Polish government and the landlord, observing that the legal reform was under way, offering compensation to those affected by the rent-control legislation would be proposed later by the government.
It also awarded Hutten-Czapska €30,000 euros in non-pecuniary damages and €22,500 for costs and expenses.
The judgement, delivered in 2006, was awaited with bated breath by landlords in the Czech Republic, where some 750,000 rent-controlled apartments exist and landlords say the money they collect isn’t enough to cover basic maintenance costs.
The judgement prompted the Polish government to amend the law to enable landlords to increase rent to cover the costs of property maintenance, obtain a return on capital investment and to receive a “decent profit”.
Additionally, the government also introduced a mechanism to monitor rent levels to ensure the transparency of rent increases.

mvella@mediatoday.com.mt

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