Issue link: https://maltatoday.uberflip.com/i/782193
14 THERE is something vaguely ironic about the venue for this interview: a hotel lobby in the heart of Sliema. It may have been chosen purely for the sake of con- venience... but the purpose of the interview is to discuss issues con- cerning the rental property mar- ket: and here we are, slap-bang in the middle of a town where rental value has skyrocketed by a barely believable 80% in the past six years alone. Johanna Axisa McRae is current- ly the chair of an NGO called the Malta Tenants' Association. She has, for some time now, been lob- bying for awareness on tenants' rights; and, whether or not due to her efforts alone, similar com- plaints seem to have finally made their way onto political/govern- mental channels. In a recent press conference, Prime Minister Joseph Muscat hinted that his government would consider other possibilities – in- cluding rent control measures – if the current strategy of increasing subsidies fails. But what are the problems faced by tenants in Malta, anyway? And, more importantly, what can actu- ally be done about them, in what is effectively a free-market-governed EU member state? "It's a complex issue to sum up in a few words. Let me give an ac- tual example: I have a relative, who is representative of many people caught up in similar situations. She has had to move back with her par- ents in her mid-40s, because she's been unable to work for many years. She basically has to survive on €400 a month. She is not eligi- ble for social housing, and in any case the waiting list is too long. So she had to rent privately. Rents have steadily been going up, from €200, to €250, now to €300... so out of an income of €400 a month, she is left with only €100 to actually live off." Many people are finding them- selves in similar situations: prop- erty is becoming more unafford- able to first-time buyers, so more and more people have to rent. This reminds me of a recent interview with Finance Minister Edward Sci- cluna. When I raised the issue of rental inflation, he conceded that it was a problem, but added that it only affected a small number of (mostly foreign) tenants. Is this a correct appraisal of the situation? "It's not just foreigners; and while the numbers are small for now, this is changing fast. Maltese society is changing, in fact. There are more people looking for alter- native accommodation for a wide variety of reasons: divorce, sepa- ration... young people are leaving the family home earlier than previ- ously... it's no longer the case that young people live with their par- ents until getting married." Admittedly, however, the prob- lem remains difficult to actually quantify. "I have anecdotal evidence, from my own experience and that of other members of the association. For proper statistics you should speak to an expert. But I extrapo- late from what I see around me. I have young colleagues who have just started teaching, who can- not afford to buy a property. Part of the problem is that salaries are very low here. But there's another reason which is really quite..." she breaks momentarily. "I get very upset about this. Com- ing back to that relative of mine, her landlord was not declaring rental income. This is pervasive. There are two problems with this: one, obviously the tax coffers are not going to be as full; and two, it causes problems for the ten- ants. They cannot apply for social services and say, 'this is my rental contract, could I have a subsidy?' And they cannot go to ARMS Ltd for subsidised utility rates either, because they need their landlords' permission. There seems to be a triangle between ARMS Ltd, the landlord and the letting agent. "No one tells tenants that there are actually two utility tariffs, and the default tariff is the incorrect one: it's for summer residences. To get the proper [lower] tariff, you have to have your landlord's signature on ARMS's 'Form H'. A lot of landlords aren't doing that: I would say around 90% of them. Most of the tenants in my group have this problem..." But isn't this a straightforward case of tax evasion? If so, couldn't this relative (or anyone else in the same predicament) report the abuse to the relevant authorities? She shrugs. "Nobody seems to want to know. I wrote to Inland Revenue quite a while ago, and the response I got was along the lines of 'we can't do anything about it'. I can't remember the exact wording but I still have all the correspond- ence at home…" What about ARMS? "I wrote to Konrad Mizzi when he was still Energy Minister, and copied it to Joseph Muscat. But nothing was done about it..." Well, in that recent press confer- ence, Muscat claimed his govern- ment IS doing something about it... by increasing rental subsidies. "I think subsidies are important, but they do not address the core is- sue. The subsidy amounts to €80 a month... and is now set to increase to €160. It's still not enough. You cannot live properly on €200 a month, which is what my rela- tive would be left with after pay- ing subsidised rent. Besides, what has happened is that some land- lords have interpreted the subsidy as 'permission' to increase rents even further. This is inevitable, if there are no measures to stabilise or control rent... we're not talking about draconian measures: like a post-world war scenario..." Before turning to what measures can be implemented, let's take a look at those currently in force. What sorts of regulations exist at present to govern the rental mar- ket? "There are three rental regimes: private, social housing and [perma- nent or temporary] emphytheusis. All three are... crazy. With social housing, you only pay around €200 a year... and good luck to them, I have no problem with that. But then, the two parties have been ar- guing about Labour's implemen- tation of a Nationalist proposal, which was to increase the cost of social housing from €185 to €203 a year. An increase of €18 euros a year: that's €1.50 a month. They've been fighting about this; it's been in the papers. But at the same time, until recently both parties have been adamant that they were not going to consider rent control in the private housing sector. To me, that's an insult. All this fuss over €18 euros a year, yet they ig- nore a much larger problem..." Speaking of which, how big is this problem, anyway? By any stand- ard, anywhere in the world, the 80% increase in Sliema rental pric- es would be considered an alarm- ing rate of inflation. Admittedly Sliema is considered an upmarket location... but it is reasonable to suppose that the rental market as a whole has similarly skyrocketed. Is that supported by her experience? "Definitely. It is out of control, in fact. Also, I think there is a basic is- sue with salaries here. Why should a landlord get as much for renting out a property, as a teacher gets as a salary? It's not a skilled pro- fession. There are social consid- erations, too. If accommodation is priced out of reach of ordinary salaried employees, we can only expect poverty and homelessness to increase..." Coming back to her communi- cation with the authorities. What sort of response was expected? What should be done about it at government level, anyway? "In my opinion we need to sort out all three rental regimes. Social housing has to increase. They have to look at who, exactly, is eligible for social housing. They need to build more social housing units. In the private sector, we urgently need the registry of landlords. Other issues include vacant prop- erties: these need to be bought onto the market, through various measures and incentives... such as a vacant property tax. In the past they had introduced some measures, like limiting rental in- creases to not more than 20% in three years... or that the minimum rental contracts have to be for three years. The situation now is that, every time a rental contract expires – usually they are one-year contracts – the rent goes up. Con- trolling that would calm the mar- ket. But we have reached a point where, because of the situation with the post-war reform – which was unfair on the landlords in the long term – we can't even talk about this issue anymore. It comes down to the history of renting in Malta..." In this sense, is the emphytheu- Interview By Raphael Vassallo maltatoday, SUNDAY, 5 FEBRUARY 2017 I see it as a case of: 'foreigners can't vote, so we don't care about them; and the Maltese vulnerable tenants... are a worthwhile sacrifice on the altar of economic success.' SACRIFICE Tenants cannot go to ARMS Ltd for subsidised utility rates either, because they need their landlords' permission. There seems to be a triangle between ARMS Ltd, the landlord and the letting agent. TRIANGLE The rental market is