Sociologist, Local Councillor, Politician from Malta
MEP Candidate - Partit Nazzjonalista (EPP).

Wednesday, December 05, 2018

Housing Remedies - Michael Briguglio

Picture by www.pellikola.com

Times of Malta 3 December 2018

In my previous two articles I discussed various realities, quandaries, inequalities and challenges in Malta’s housing situation.

It is clearly the case that the policy-driven increase in Malta’s population resulted in an increase in both the demand for housing and prices. Consequently, those who could only afford to rent at the low-cost end are being squeezed out of the market.

Those individuals and families who do not own property or whose salary prohibits them from purchasing or renting are thus facing unpleasant choices. 

Such persons require immediate policy interventions which ensure an adequate supply of social housing and/or low-cost rentals with the possibility to purchase.

Currently there are around 3,300 applications for social housing and around 600 applications for a change in social housing due to inadequate conditions. With the current increase in evictions, sub-standard accommodation and persons living with relatives out of necessity, it is imperative that no more time is wasted for the provision of new social housing stocks and for other initiatives such as public-private partnerships to supply decent low-cost accommodation.

Given that salary and pension increases are a far cry from what is needed to cope with inflation, the government should also create a mechanism to ensure that subsidies to low-income earners are not disclosed to lessors to avoid further inflationary pressures on rents.
In relation to public-private partnerships, perhaps it is time to discuss whether Malta should allow smaller forms of decent and safe development which are affordable for low- and middle-income earners. The introduction of such accommodation could thus increase supply and help combat inflation. Otherwise, the only affordable properties for such persons would be sub-standard and often unsanitary forms of accommodation.

At the same time, and as I explained in my previous article, the government should be wary of introducing reforms that unintentionally encourage property owners to move their properties out of the market. This would reduce supply and encourage further increase in prices unless there is a corresponding introduction of new properties in the market.

In this regard, I encourage the government to consult economic, psychological and sociological evidence to ensure that policy changes are as equitable, efficient and rational as possible.

Another reform which the government can consider is to reduce tax rates to landlords who bind themselves to longer lets. Of course, this would need to be matched with government initiatives against undeclared and illegal rent of property.

May I remind readers that according to the National Statistics Office, households in Malta earned €85 million from rent in 2017, a 132 per cent increase over 2014. This statistic covers declared rents and can be compared with other figures, such as the increase in income from employment (17 per cent) and the increase in income from interest and dividends (three per cent).

Statistics show that rental income for bottom 50 per cent of earners has doubled since 2012.

The introduction of a template for rent agreements could also encourage good practices, especially if this is accompanied by educational campaigns for landlords and tenants, where rights and responsibilities would be better known by stakeholders.

Indeed, this is an area which requires more civil society participation and empowerment to combat market failures and encourage fairness for all.

Other policies which could be considered include the creation of a national price index to show rent prices within the market and harmonised tax regimes across the different sectors involving property to avoid flight from one sector to the other, although the latter requires thorough research and evidence before being introduced.

Finally, it is also important to ensure that tenants have fair and transparent access to utility bill mechanisms to do away with any abuse in such transactions.

As I said in my previous articles, it is positive that the government is discussing rent law reform, especially since its own policies have resulted in runaway inflation.

Let us strive for national consensus in this sector, keeping in mind that any policy reform has opportunities and risks, but that the status quo is no option as it is resulting in housing poverty.

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