Rent Regulation is always a highly debated topic to reach a balance between the rights of the landlord and those of the lessees. Nonetheless, there are still arguments in favour and against rent regulation in fact according to the University of Cambridge, 2012, as quoted in this White Paper held that regulation constrains investment, whilst on the other end, it is seen as addressing market failures and providing a more secure environment for investors as well as tenants.
One of the major drawbacks for landlords under all systems of law is the problem of eviction, since the process to evict a tenant may not always be efficient. Maltese legislation facilitated this process as cases concerning leases are assigned to the Rent Regulation Board, which Board deals specifically with rental issues. It also established a procedure in cases dealing solely with eviction to hasten the process. Nonetheless, as illustrated in the White Paper itself in 2017 only 184 cases were brought before the rent board even though there has been an increase in the rental market. This was a clear indication that improvements need to be made to ensure the board’s effectiveness.
The changes foreseen in this proposal will include;
- Clarifying the wording of Article 16A (chapter 69) which relates to the procedure allowing the Chairperson to order the eviction despite certain pending claims like those relating to the rent or utility in arrears.
- Introducing a second chamber within the RRB
- Introducing an arbitration panel for minor disputes
- Expediting the Service of Judicial Acts
Another distinguishing feature of the Rent Market White Paper is the introduction of an Agency, which will be the official entity dealing exclusively with the Private Rent Sector, not only from an administrative point of view but also from a research perspective. In addition, new governing practices including the registration of contracts, blacklisting of defaulting tenants and abusive landlords, are being proposed.
Registration is a concept agreed upon across the board as it is instrumental in ensuring there is more transparency and better fiscal monitoring. Moreover, such registration also ensures that the rights of both the landlord and tenant are safeguarded. The registration of contracts will be so important that if rental contracts are not registered with the fiscal authority, they are considered to be null and void.
“Nevertheless, even in the cases of a failed registration, the tenant’s rights would remain intact since s/he could request the Court to formalise the de facto lease at a rent that would be in line with a below-market index.”
(Rent Market White Paper)
Another important task of the proposed Agency is that of ensuring that cases of abuse by either party to the contract, are reported, investigated and addressed. Examples of this are cases of serial defaulters or tenants who move from one tenancy to another, leaving behind substantial arrears. Therefore, the Agency could verify such bad practices by collecting evidence and monitoring judgments by the Rent Regulation Board in order for such tenants to be listed as unruly tenants. The same would also be done in cases of abusive landlords. Access to such a list would be dependent on the proof of legitimate interest by the person requesting the information, in line with data protection rules.
The proposed Agency will also have the duty to establish minimum standards for properties that need to be reached by landlords in order for them to be able to rent them out. This was an initiative that had to be introduced in order to ensure that tenants live in decent conditions, especially given the recent circumstances whereby the lack of affordable properties for rent were leading the most vulnerable categories of tenants to live in sub-standard housing.
Apart from the structural changes, there was also the proposal of new financial incentives like the grant given to owners of vacant dwellings which can go up to a maximum of €25,000 to restructure and carry out repairs in order to make the property habitable.
Finally, the most innovative proposal is the Third Sector Housing. This will be ideal for those families with low to medium income to move from one housing sector to another, with eventually them becoming homeowners.
“This operates on a Social Enterprise, not-for-profit model, the sole purpose of which is to provide low cost social housing and manage excess revenue from its operation by re-investing in the future development of the sector.”
(Rent Market White Paper)
This proposal is also sustainable as the rent that will be collected will be primarily used to repay the loan and eventually to maintain the property and reinvest in the same social enterprise. Thus it has no cost on the State except for the allocation of land on emphyteusis, which means that the land would revert back to the State upon the expiration of the stipulated grant.
This shall not be construed to be as advice but shall merely serve as a brief description of the White Paper on Rent. If you would like to get to know more how these proposed changes will affect you please do not hesitate to contact us on [email protected].