Chamber of Commerce welcomes proposed pre-1995 rent reform, but says further clarifications needed

The Malta Chamber of Commerce has welcomed the Government’s announced reform which is set to absorb up to €10,000 in rent for the pre1995 residential rental agreements.

On Saturday, Prime Minister Robert Abela announced reforms to the laws government the aforementioned agreements. As part of a major reform centred on pre-1995 rents, Prime Minister Robert Abela announced that landlords of properties bound under pre-1995 rents will be able to claim up to 2% of the property’s market value in rent. In addition, among other things, Abela remarked that pensioners and social welfare beneficiares in housing bound pre-1995 rents will be provided with benefits covering their rental costs in full by the state, up to a maximum of €10,000 per year and per family.

The Chamber said: “The mechanism that is set to be introduced reflects the position of the Malta Chamber in its policy recommendation ‘ Rent Reforms: Eight Years on –A Review’ from 2017. In this document, the Malta Chamber had suggested to cap the rent payable at a maximum of 2% of the property’s market value, as well as to provide an alternative mechanism for persons with limited means.

The announced reform introduces the principle of reasonable rent payable to landlords, the Chamber said. “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. This also follows on recent Constitutional Court judgments in Malta and decisions of the European Court of Human Rights.”

While the Malta Chamber welcomes this reform, it felt that 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.

“In addition, further clarification is required about the mechanisms to assess the market value of the properties concerned. The Malta Chamber also asks that the means testing of the sitting tenants be 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. It is also unclear whether or not tenants in parttime employment will be fully subsidised.”

In conclusion, over the next days, the Malta Chamber said it will study this proposal in greater detail and will be requesting a meeting with the Prime Minister and the Parliamentary Secretary responsible for the sector, Roderick Galdes, to further discuss and possibly refine this proposal.