Press Conference 24 February 2018
A coalition of seventeen organisations working in different sectors, including aditus foundation, are today launching a document with a Proposal for Rent Regulation in Malta. Malta has almost no regulation in the rental market, and the law of the jungle currently applies. This is forcing many tenants to lead precarious lives, with only temporary roofs over their head and no place to call home.
There is a pressing need for rules in the rental market in order to establish some fairness and to create more stability. Thus, we applaud the Parliamentary Secretariat for Social Housing for working on a White Paper about regulation in this sector, to be published shortly, and look forward to contributing to the consultation process.
The Proposal for Rent Regulation in Malta is based on the recognition that people have a fundamental human right to adequate housing.
Skyrocketing rent prices over the last few years are hitting vulnerable groups the hardest, such as pensioners and low-income groups. Tenants regularly paying their rent are finding themselves forced out of their homes due to overnight exorbitant increases in the rent price requested, or having to use the largest part of their wage/pension for rent payment.
This reality is also increasingly affecting other groups, such as the youth, some of whom have no other option but to live in rented places due to unaffordable property prices.
As property prices continue their steep rise, the number of Maltese people living in rented places is destined to increase at a fast pace and, in a few years, it will not be uncommon for Maltese people to live in rented places. The introduction of effective rent regulation at this juncture is essential to ensure that the rental market is not driven exclusively by the urge for quick profits, without any consideration to the impact on individuals, society and the economy, but is sufficiently regulated for the benefit of all.
We believe that landlords will benefit too from a regulatory framework since this will increase clarity and peace of mind. Rent regulation will not stop landlords from making profits out of rented property.
The rent regulation model in this document has been developed by looking at rent regulation laws in other European countries. In fact, Malta is one of the very few EU countries where there is no effective rent regulation in place. The type of rent regulation present in European countries ranges from controls on initial prices (present in countries such as the Netherlands, Austria, Denmark, Sweden and France) to regulating contract length and rent-price increases (present in countries such as Belgium and Germany).
It is to be underlined that the model in our proposal has no relation to pre-1995 rent legislation that existed in our country. The model we are proposing here would not impose any tenant-landlord relationship, other than that established in contracts that have the agreement of both in the context of clear and fair rules.
The main points of our proposal are:
- A tax regime that incentivises long-lets through lower tax rates for longer leases
- The creation of a state registry of properties on the rental market as well as the establishment of a public entity responsible for rent regulation
- The registration of properties that are up for rent, where the first price set in the first contract will be considered as the ‘initial price’
- The possibility for landlords to increase rent-prices yearly during the duration of a contract by a percentage that does not exceed the cost-of-living-increase percentage. Once a contract expires, the landlord is allowed to draw-up a new contract with the same, or a different, tenant. In either case, the price set in the new contract cannot be higher than 10% of the last monthly rent paid under the previous contract. Besides the 10% limit, the price set in any new contract cannot be more than 25% higher than it was five years earlier. This is to avoid having landlords entering into short-term contracts in the knowledge that following each contract, they would be able to increase the rent by 10%
- The establishment of a Rent Price Index that lists prices in 1) different areas and 2) for different classes of property according to their size and quality. Landlords would input in the state registry specifications pertinent to their property. An initial price should not exceed 10% of the price listed for that particular category within the Rent Price Index. This would prevent abuse (such as setting unrealistically high initial prices) whilst giving landowners ample leeway in setting initial prices, since the Rent Price Index would in itself reflect market prices, and the initial price can even be 10% higher
- A system for the termination of contracts similar to that outlined in employment law
- Provisions for clear rules on deposited money, payment of utility bills and upkeep of property
- Protection for persons on existing lease agreements
- The regulation of Agencies and a legal standing to a Tenants’ Union
- A tax on empty rentable property that disincentivizes rent on the black market and increases the amount of properties for rent.
Rent regulation, which is the focus of our proposal, should only constitute one dimension of a strategy on affordable housing. Our country still lacks a comprehensive Housing Policy that aims to ensure the availability of affordable housing, including both affordable properties and affordable rent prices.
Affordable housing depends also on other factors, such as the availability of social housing and the overall strategy with regards to property and construction. Thus, it is being suggested that rent regulation is placed within a broader National Action Plan on property and affordable housing.
The following organisations are putting forward the Proposal for Rent Regulation in Malta:
Moviment Graffitti, Alleanza Kontra il-Faqar, Forum Komunita’ Bormliża, Malta Tenant Support, Malta Humanists Association, The Millennium Chapel, Żminijietna – Voice of the Left, aditus foundation, Malta Gay Rights Movement, The Critical Institute, Spark 15, Mid-Dlam għad-Dawl, Women’s Rights Foundation, African Media Association Malta, Koperattiva Kummerċ Ġust, Integra Foundation and Third World Group Malta.