Longer rental contracts, rental contract registration and regulated annual price increases are among a set of reforms that the government’s much awaited White Paper on the Rental Market is proposing.
The white paper, which focuses specifically on residential leases, has set out three mains aims; working towards the stability of the family, working towards the transparency and the professionalization of the private rental sector.
One of the main sources of instability for families living in rented property, the research found, was the fear that they would have to vacate their homes in a matter of months and have to find somewhere else.
The White Paper aims to make the rental sector become an adequate alternative to purchasing a house, and hence looks towards having longer contracts which would put residents minds at rest and allow them to plan their future in a house which they could consider their home.
Another notable proposal is related to the registration of contracts. The white paper proposes that all rental contracts must be registered, and that those landlords who do not register these contracts will be subject to fines. The tenant will also have the right to institute a case in court if he or she is not presented with a contract.
The idea behind wanting all contracts registered is to avoid any abuses that may come about due to hidden fees, and to improve transparency in the market. Forms from ARMS must also be presented, as does an inventory with pictures, which must be signed by both the landlord and the resident, of what is in the residence, along with a deposit paid by the tenant.
A new department will also be opened within the government’s Housing Authority, which will focus specifically on the private rental market. This new department will be responsible for the registration of rental contracts, an increase in monitoring the market, and for strengthening enforcement which will see a considerable rise in resources.
The notice period is also on the agenda of the white paper, with a proposal to implement a minimum notice period that the landlord must give to the tenant. However this will not apply in exceptional cases, such as if the landlord must use the residence in question to live in.
Another significant proposal is the investment of the state in affordable housing which could be in the form of foundations or public private partnerships. The idea is to provide accommodation that is available at a monthly price of between 400 and 700 euros.
Parliamentary Secretary for Social Accommodation Roderick Galdes said that when undertaking this study, the government wanted to understand the dynamics of the market so that if it should intervene, it does so in a proper and well thought manner.
Galdes said that this white paper is the first link in a chain of reforms that the government wants to introduce on accommodation.Galdes said that this was part of a long term visions for the housing market, one which will be further revealed in the upcoming Budget.
The parliamentary secretary left things open, saying that the white paper may not be perfect, and that the government was ready to listen and change its contents if necessary.
Speaking about implementing a fixed cap on what private landlords can demand for rent, Galdes said that doing so would kill the market. He said that the government believes in a free market, but that at the same time it is the state’s responsibility to offer an alternative and to offer stability to families, and that this was the intention of the white paper.
Finance Minister Edward Scicluna lauded the white paper, saying that with the amount of challenges faced, it was much like “squaring a circle”.
Minister Michael Falzon meanwhile spoke about the changing dynamics of Maltese society, saying that this was reflected in the property market. Today, he said, 78% in Malta are home owners. That means that 22% remain, and these include people residing in government housing, others still living on the benefits of laws implemented in the 1940s which were heavily skewed in favour of the tenant, and a segment of people which indicatesnew social and demographic realities such as separation of families, even at late ages, and increasing populations even due to an increase in foreigners in the country.
Falzon also reminded that the white paper is still just that; a white paper that can be changed. He lauded it as a courageous step, and also reminded that the free market was still being left untouched. There is still work to be done, Falzon said, especially in the sense of social accomodation, but said that this white paper was a step in the right direction.