‘Parties must commit on commercial leases before election’ - GRTU

The Malta Chamber of SMEs (GRTU) has accused both the Nationalist government and the Labour Party in opposition of ignoring the interests of commercial tenants in the recent rent law reform.

The chamber has called on both Labour and the PN to commit themselves to rectifying what GRTU Director General Vince Farrugia described as an unfair situation for commercial tenants which he said is endangering thousands of shop owners and small businesses.

During a press conference, Farrugia insisted that the recent rent law reform ignored the realities faced by shop-owners depend on commercially rented premises for their livelihoods.

He said that the political class is forgetting the fact that 15% of the local economy is generated by SME's, and insisted that a significant portion of these depend on commercial leases for their shops.

Farrugia accused politicians of both sides of the house of "heeding only to the interests of property owners and landlords, while ignoring the rights or interests of commercial tenants."

The issue, GRTU Lawyer Jean Karl Farrugia explained, hinges around a number of a clauses in the Lease of Commercial Properties Act that came into force when the Civil Code was amended in 2009.

According to the amendments, commercial premises leases prior to 1995 and which fell foul of a few other conditions were arbitrarily short lived by the legislator through an "imposition" that established an "ultimatum" of 20 for leased properties and 10 for sublet properties.

This means that commercial leases dating back to before 1^st June 1995 would be terminated within 20 years of that day - i.e. in 2018.

In the case of commercial subleases, these would be terminated on 21^st may, 2018, unless an agreement between the tenant and the landlord can be reached.

However, GRTU Lawyer Farrugia explained, such an agreement depends on the presence of a Property Market Value Index which would act as a guide for the rent value.

However, Farrugia said, the Index has not yet been established by the Minister responsible for accommodation.

GRTU Director General Vince Farrugia hit out at government for to-date having refused to take any action to rectify what he described as "a discriminatory measure that curtails business' civil rights of enjoyment of property, as provided in our Constitution and which are regulated by the Civil Code."

Farrugia said that the introduction of the Property Market Value Index, together with the introduction of provisions relating to sensitive enterprises such as cottage industry establishments situated in village cores, represent a fair remedy of safeguarding the rights of landlords whilst safeguarding and not prejudicing the rights of commercial tenants.

Farrugia also insisted that the GRTU is envisaging the removal of the legal "guillotines" which would terminate commercial leases and subleases after a pre-set period of time.

Farrugia insisted that the current situation means that government is wilfully endangering "the investment made by thousands of small enterprises who over many years have provided service to the community, generated employment and economic growth and were successful without any state aid whatsoever."

He also said that the GRTU is recommending that a new government immediately appoints an Independent Commercial Rent Law Review Commission, which he said should be chaired by a retired Judge or Magistrate.

One member of the commission, which Farrugia said could be as small as three people, should be a person nominated by the GRTU representing commercial tenants, while the other representative can be nominated by government, or domestic tenants.

"This Commission will establish what negative impacts exist for commercial tenants and make recommendations to Government to mitigate the identified negative impacts," he said.

Farrugia also insisted that the commission should be appointed within the first month of a new administration's legislature, while the commissions' report should be presented two months later.

He added that the implementation of the proposed amendments and solutions stemming from the commission's report could take place three months following the report's presentation.

Farrugia said that while there are hundreds of commercial tenants who are aware that they will soon lose their place of business because of this "ultimatum" in the law, there are thousands who are as yet unaware of this approaching "guillotine."

"Wake up," Farrugia warned. "Your business is vanishing. You think you will be able to leave your business to your children, but it is nothing more than an ice cube slowly melting in the sun."

He called on both the Labour Party and the Nationalist Party to deliver a clear and solid commitment regarding what their stand regarding this issue should be "before the country goes to the polls."