Rent control amendments strike balance between tenants’ and landlords’ rights, says minister

Justice minister Owen Bonnici on Tuesday evening stressed that proposed amendments to the 1979 Housing Decontrol Ordinance were fair and took into consideration the position of both landlords and tenants.

Bonnici was speaking in parliament as the House started to debate the proposed legal changes which the minister said would affect two categories of people – those living in rent-controlled properties on the merits of a 1979 law that converted temporary leases into permanent rental contracts, and band clubs whose tenancy was also subject to the same conditions.

Despite the fact that tenants were granted permanent contracts in accordance with the law, Bonnici explained that since its introduction numerous judgments both locally, as well as by the European Court of Human Rights in Strasbourg had left authorities with no choice but to amend the laws.

The minister explained that this had resulted in a situation where people living in homes that had been transferred to them in this manner, now risked eviction.

He stressed that the European court gave the government the right to regulate rent, on the condition that this was done for social reasons and that the fixed rent was not too low in relation to the value of the property.

What is being proposed?

Bonnici said the government was proposing that landlords whose property was being occupied by tenants who had a temporary lease converted to a permanent rental contract, could as of 10 April 2018, increase the rent to a maximum of 2% of the property’s freehold value.

In every case, the minister said, it was being proposed that the House Authority oversee the process.

Bonnici explained that under the proposed amendments would see tenants means tested to see if they actually needed to continue occupying the property.

“If a tenant is rich, they can leave the property and find another place,” he said. “If not, they will continue living there and will be given protection because today they are living at risk.”

If the tenant’s financial situation were to change, the minister said that a landlord could ask for them to be means tested once again.

Turning to the country’s band clubs, of which 20 are currently risking eviction, Bonnici said that this was the “moment of truth” for politicians on both sides of the House to show that they really supported musical societies.

He said that in cases where the rent being paid by musical societies was determined to be too low, the law would come in as a safety net and would prevent them from being evicted, while introducing a rent that was equivalent to not less than €5,000 a year but not exceeding 1% of the property’s value. Bonnici said the government was open to discussing other figures at the committee stage.

Moreover, he stressed that the provision would only apply to band clubs that were more than 50 years old, and which had occupied a property for at least 50 years. Again, the minister said this number could be revised at a later stage.

Read more: New Bill aims to seize premises without fair compensation, band club owners say

Law comes into force once tenant have been evicted

Opposition MP and human rights’ lawyer Therese Comodini Cachia said the law did not in fact protect band clubs.

She stressed that the Opposition wanted a strong legislative framework, and that both parliament and the band clubs had no time for “weak legislation”.

“I am afraid to say that when you produce a law that only applies once you have been evicted, you are ridiculing the constitution and charter of fundamental human rights,” she said.

She insisted that a rent of 1% of the property’s value would not end conflicts between clubs and owners, and would at best offer temporary relief to the band clubs.

Comodini Cachia also insisted it did not make sense for the government to pass legal amendments specifically to offer some a way round decisions handed down by the courts.

The Opposition MP accused the government of not taking enough time to carry out a proper study to determine the number of people who were currently in this situation, the commercial value of the properties in question as well as who was inhabiting them.

She said that many in Malta had a sense of entitlement when it came to given social accommodation. She said that this attitude by some that did not deserve government help prejudiced the position of those who were genuinely in need.

She said that rather than enforcing laws that created a “special class” of landlords that could not maximize on the potential of their property, she would have expected the government to take on the burden itself, in cases where tenants were really in need.

Read more: Controlled rents to rise according to property value in new government plan

Comodini Cachia said it was interesting how the government intended to means-test tenants but had decided that landlords would not get more than 2%, irrespective of the location or characteristics of the property.

Opposition criticizing bill without offering solutions

Government MPs Stefan Zrinzo Azzopardi and Edward Zammit Lewis, speaking after Comodini Cachia, both insisted that the Opposition was being negative without offering any solutions.

Comodini Cachia did not state whether or not the Opposition would be voting in favour or against the bill during her speech.

Zrinzo Azzopardi pointed that the law was not introducing a flat rate, but rather one that was pegged to the value of the property in question, while highlighting the fact that the law would include the requirement for tenants to be means tested in order to clamp down on abuses.

Edward Zammit Lewis rubbished Comodini Cachia’s defense of landlords, insisting that the government was not there to protect landlords, but to protect elderly women who were about to be evicted.
He said it was one thing for the Opposition to criticize the bill, but stressed that people in the streets needed solutions to their problems, something the proposed changes were seeking to do.

Zammit Lewis pointed out that the law addressed a number of issues that were flagged by various court judgments over the years, including the lack of proportionality with rent, adding that rather than affront to courts, the amendments were within the parameters of what the court was saying.

He insisted that while the law was not giving landlords as much as the market could give them, it was a fair return on their property.