The government will reduce the final withholding tax from 12 per cent to three per cent for owners who sell their property to their tenants after five years and will not interfere in already existing contracts as part of the new rent reform, Social Policy John Dalli said yesterday.

Mr Dalli was speaking after a meeting with members of the Malta Council for Economic and Social Development where he briefed them on the outcome of the consultation process of the White Paper on rent reform.

During the one-and-a-half hour meeting, the minister gave a detailed analysis of the feedback received from unions, organisations and the public, on the proposed rent reform.

“We received very strong feedback from many sectors of society and changed our position on a number of points listed in the White Paper,” said Mr Dalli. These amendments will be included in the bill which this week will be presented to parliament for its second reading.

However, Mr Dalli pointed out that the bill is not set in stone and that everything can be changed around again. He also called on the opposition to give their consensus to the bill.

Describing the meeting as positive, Mr Dalli said that even the feedback from the social partners was very positive.

“We listened to what they had to say – in fact, the main objections raised to certain proposals in the White Paper were mainly neutralised,” he said.

Among the new amendments is the government’s lack of interference in already existing contracts. “The government will not interfere in contracts that already exist between owners and tenants. This step has already pacified many concerns,” he said.

Mr Dalli also said that several changes were made in the bill in the sector of private tenancy.

Furthermore, he added, with regards to commercial tenancy, several thresholds that exist in existing legislation have been removed. In fact, one of the proposals involves a gradual increase in rent over a three-year time frame.

“During these three years, a property value index will be drawn up to clarify the correct property value in different areas. In fact, the government suggested setting up a working group to draw up the index,” said Mr Dalli.

Furthermore, he added, premises used as political party clubs will fall within the new rent reform law as from 1 January, 2010.

The new proposals also state that siblings of people aged 60 years and over will be able to apply for joint tenancy if the main tenant passes away, he said.

The amendments also include the possibility for children of tenants also applying for joint tenancy in case the parent dies, said the minister.

However, the amendments also include the possibility of including means testing to see that the tenants are paying the rates they can afford.