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Print Posted by Kiribiss.com on 01/10/2017

MDA proposes entire revision on current rent laws as part of six housing proposals to government

MDA proposes entire revision on current rent laws as part of six housing proposals to government

Helena Grech      Thursday, 28 September 2017, 16:54  


Head of the Malta Developers Association (MDA) Sandro Chetcuti believes in a serious revision of Malta’s rent laws as more and more problems continue to arise for both tenants and landlords.

Chetcuti was presenting six proposals drawn up by the MDA to Parliamentary Secretary for social accommodation Roderick Galdes.

In talking about a complete revision of post-1995 rent laws, Chetcuti spoke of numerous instances where landlords experience “fear” from experiences where tenants seriously damage properties or fail to pay their rent and then abscond. He added that should the landlord decide to take up the issue in court, more often than not it takes years for cases to conclude and justice to be served.

On his part, Galdes promptly reminded him that many tenants suffer from inordinate increases in rental prices, landlords not offering tenants contracts and abruptly informing them they need to vacate their property just after a few months or abusive practices where deposits are not returned to tenants.

Both sides agreed that a serious revision of the current laws are needed, with Galdes adding that the government is launching a white paper on the housing market in Malta in order to get a clear snapshot on the real issues people on both sides of the aisle are facing, through the employment of independent experts on the issue. 

Chetcuti also proposed the introduction of a social gain for developers. Currently, Malta has in its laws the provision of a planning gain, which is a sum of money developers may have to pay to compensate for detrimental consequences of the development itself.

Chetcuti proposed an additional gain, for social purposes, in order for developers to “give something back” to the community, which could come in the provision of a payment to social funds or the provision of some form of open space within the vicinity. The details of the social gain had not been ironed out in the presentation to the press.

“With this proposal, we hoped for any added wealth on top of what the developer makes back to not just end up in their pocket, but for that wealth to be spread around”.

Another proposal was for the Housing Authority to identify abandoned properties where the landowners either do not have the money to fix up the place themselves and rent it out or possibly the owners are elderly and do not have the energy to run after contractors, etc.

Chetcuti specified that the MDA is not talking about completely derelict houses, but properties where €15-20,000 would be enough to get it up to scratch.

It also proposed a scheme whereby developers would allocate apartments for social cases in return for extra floors on their developments. This would translate into the PA coming into an agreement with developers so that part of their revenue is dedicated to social purposes, or even allocate a number of apartments within the development for social purposes. This would prevent ghettos from arising in Malta.

Developers would benefit from advantageous permit conditions, such as being allowed extra floors, in certain areas however where this would be suitable. 

He reiterated the MDA’s concern that the controversial citizenship-by-investment requirements for rent are far too low, at €1,300, ( must exceed €16,000 per year) leaving those citizenship-buyers to choose to rent out such properties rather than opt for the purchase requirement of €350,000.

A long-term approach to the government’s newly launched rent scheme was included in its proposals, where the government is incentivising people to lease out their private property to the Housing Authority for the purposes of social housing.

This scheme has attracted 149 applicants to the scheme so far, and while not all will be served immediately, Galdes hailed it as a “big success”.

Galdes revealed that the government is close to concluding a “social loan” with a “big bank” for the purposes of social housing.

On this note, Chetcuti stressed that the price of land, distinct from the price of properties, has doubled since 2012. This means that for those buying the land in order to develop it are incurring much higher costs, which has a big impact on how the return on that investment is achieved.

He also stressed that the anomaly in the pre-1995 rent laws mean that many landowners are forced to rent out their property at a pittance. Another situation arising from those laws is when people inherit land that is tied up to a rental agreement pre-1995, cannot alter the pittance that is being charged for that rent and wind up taking up big loans and struggling to purchase a property as a primary home for themselves.

“There are thousands of people in these situations, which is seriously distorting the market”.

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