Malta Chamber welcomes pre-1995 rent reform, calls for ‘clarification and discussion’

The Malta Chamber announced it “welcomes” a reform of pre-1995 rents on Sunday, but said it requires “further clarification and discussion”.

The Government reform, announced on Saturday, aims to provide a solution for anomalous rent rates for rent deals that began prior to 1995.

Rent control measures currently mean that tenants who entered their rental agreement before 1995 cannot have their tenancy rights challenged, as long as they meet the terms of the rental agreement from their end.

This has created a phenomenon where landlords of these properties are unable to raise property rents, even as market prices rise. However, in 2019, a court ruling declared the regulation unconstitutional.

The recently announced reform will remedy these anomalous rents without forcing tenants out of their long-term homes with the state absorbing up to €10,000 in rent as prices are raised.

Pensioners and social welfare beneficiaries in housing bound by pre-1995 leases will have their rental costs covered in full by the state up to a maximum of €10,000 per year, per family.

Tenants in full-time employment will pay a maximum of 25 per cent of their income on rent, with the state paying the balance up to that €10,000 yearly maximum.

The Malta Chamber comments that it recognises that some components of the proposal reflect those made in its 2017 policy recommendation “Rent Reforms: Eight Years on – A Review”, in which it also suggested the capping of rent payable to a maximum of two per cent of the property’s market value, as well as the provision of an alternative mechanism for persons with limited means. 

The Chamber comments “the announced reform introduces the principle of reasonable rent payable to landlords. It makes a distinction between pensioners and social welfare beneficiaries on the one hand, and tenants who are in full-time employment on the other.”

“Moreover, if properties are valued at more than €500,000, the state will offer alternative accommodation to tenants who are unable to cover the rent increase”, the Chamber continued.

However, whilst it welcomes the reform, the Chamber feels “certain issues still require further clarification and discussion, not least on the amount budgeted for the implementation of this scheme, which the Malta Chamber deems too low”. 

It also calls for additional clarification about the mechanisms to assess the market value of the properties concerned. 

It asks that means testing of incumbent tenants is accompanied by a “valuation of all their assets, including any other properties owned, and whether they effectively reside in the rented property or merely hold tenancy by virtue of the address on their identity documents”. 

In conclusion, the Chamber says it will study the proposed reform in greater detail in the next days, and “will be requesting a meeting with the Prime Minister and the Parliamentary Secretary Hon Roderick Galdes to further discuss and possibly refine [the] proposal”.