The other day an 80-year-old pensioner phoned me. He was worried about the impact of legal amendments addressing rent, which will result in a hefty increase of the annual amount he pays, from 300 Euro to 1,500 Euro.
There are many other persons in this situation, and it is no wonder that evictions are on the increase. Malta’s legal reforms, some of which had also been subject to decisions by the Constitutional Court and the European Court of Human Rights, came into effect last Summer.
Consequently, owners of properties subject to old rental law provisions can file a request for tenants to be means tested at the Rental Board. If the latter are found to not have the means and sufficient resources to find alternative accommodation, they will be entitled to continue residing at the property, provided that they start paying the owners up to two per cent of the property’s market value at January 1 of the year in which the request was made, as well as other conditions the board may set. If the means test established that the tenants had sufficient resources, the new amendments would not apply and the tenants would have to pay double the rent and move out in five years’ time.
This is resulting in a social policy quandry. On the one hand it is only fair that owners of property get a fair market price for rent. And some property owners are themselves not high income earners. Government figures reported in the press show that income from rents increased from €36.9m in 2014 to €85.8m in 2017. 15.4% of this went to the bottom 50% of earners in Malta, up from 6.1% in 2011.
But on the other hand, it is clear that many people simply cannot afford the prices being demanded. These include not only elderly persons who were benefitting from the old rent laws, but also others such as younger age cohorts who are being pushed out of the rent market and are having to live with their parents as they cannot afford otherwise. The increased demand for property resulting from the importation of thousands of workers is contributing to unaffordable prices.
In the meantime, government has failed to provide social housing in the past years, and the queue of persons in need of this service seems to be bigger than what government is promising to supply once it eventually builds housing units for this purpose.
In the meantime, however, that the flat tax on rental income introduced in 2014 has collected €84 million in four years. In 2017, the last full tax year, the government earned €37.4 million from this tax.
A logical question comes up: Cannot government ring-fence a percentage of such revenue to assist persons who genuinely cannot afford rent?
Social justice demands fairness for both property owners and tenants. With many persons in the latter category facing hardship, it is time for political consensus to ensure that Malta avoids housing poverty.
This article appeared in The Malta Independent, 3 April 2019
