Those campaigning for the rent law referendum are trying to prick the national conscience by pointing out that there are very many empty houses and flats in Malta. They claim that these houses and flats are empty because their owners are afraid to lease them out to Maltese people – ergo, the solution is to join Alternattiva, press for a referendum and vote for the very change in the rent law that already took place in 1995.

How anyone can reach the conclusion, without a proper and thorough survey, that these houses and flats lie empty because of the fear of tenants who cannot be removed, is really quite beyond me. I dislike it when politicians jump into the water and begin splashing around wildly, trying to pass off the conclusions to which they have jumped as incontrovertible facts.

Without questioning the owners of the empty houses and flats, the best we can hope for is an educated guess, based on sharp observation that is unpolluted by political wishful thinking. This should lead us to assume, while standing to be corrected by the outcome of a scientific survey, that the real reason why so many houses and flats stand vacant is because the potential rental returns are too low when set against the value of the capital asset and the hassle with tenants who might cause damage. They are further reduced by income tax and the need to pay commission where an agent is involved. To many, it’s just not worth it.

With the obvious exception of the homes that people buy to live in, much of the property that has been sold in Malta over the past few years has been bought primarily as a capital investment which appreciates readily, reliably and incomparably well, rather than as a revenue-earner. The money that property makes in Malta is through capital appreciation rather than through rental revenue.

The negative equity that has adversely affected the property market in other European countries – where people have found themselves repaying loans for homes that came to be worth much less than the price they paid for them – shows no sign of happening here. I could qualify that with a ‘yet’, but I am reluctant to do so, because of Malta’s particular mitigating circumstances, that include a highly restricted land area and desirability as a second-home destination among non-Maltese. The only scenario in which I can see a crash in property prices is unemployment levels of the sort that one sees in economic depression.

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Rash remarks and ill-considered declarations reduce my confidence in politicians, and Harry Vassallo, who is otherwise a very decent man, seems to be prone to these when in the throes of passionate public speaking, particularly when there are reporters present. This is an unfortunate habit he shares with the Opposition Leader. One cannot be too careful when one is the leader of a political party.

Dr Vassallo claimed, rather wildly I thought, that the cause of Malta’s present economic difficulties can be traced to a sole source: that Maltese people are not renting houses and flats because Maltese landlords won’t let them (“This country is an economic disaster because renting is not an option. That’s why the price of property has gone sky-high, to the extent that even middle-class families cannot afford it.” – TMIS 19 June).

This single statement is fraught with fallacies. The first fallacy is that renting is not an option. It is. The truth is that many owners cannot be bothered with all the trouble of renting, preferring to allow their houses and flats to lie fallow, so to speak, while appreciating in capital value.

The second fallacy is that there is an insufficiency of houses and flats on the rental market. There isn’t. There is almost a glut, leading to downwards pressure on rental rates, and agents having to work hard to find tenants.

The third fallacy is that the Maltese want to rent but, unable to do so, they are forced to buy instead. The Maltese do not like to rent. As a general rule, money paid in rent is considered money wasted. You don’t get anything in return except the right to live in a certain place for a stipulated amount of time.

We don’t like paying good money for services, but we are prepared to spend large amounts on tangible objects, like cars, jewellery and houses, only the last of which can be considered an investment in the sense that it appreciates in value, rather than depreciating significantly immediately after purchase.

The reasoning is: why pay monthly rent when you can pay the same amount as a monthly installment on a home loan? It’s good, sound capitalist reasoning – the reasoning of the ant as compared to that of the grasshopper. Nobody should see fit to criticise it. It’s a relief from the socialist sentiments that are so manifest in other areas of our thinking and behaviour.

The fourth fallacy is that the Maltese need to rent. They don’t. The rental market in countries much larger than ours is driven by people who move around regularly because of their work, which makes buying impractical. Nobody moves around because of their work here in Malta. You might change your job in Sliema for a job in Mellieha, but you can still carry on living in Attard.

The fifth fallacy is that encouraging people to rent rather than buy is a solid economic proposition. It isn’t. The vast majority of people own their own home here in Malta, and from the economic point of view, that is a good thing, not a bad one. Encouraging people to rent their homes when they can buy them is to push them in the wrong direction. The longer you leave the purchase of your first piece of property, the harder it becomes, both in terms of rising prices and your own financial commitments if you are planning on having children.

True, your earning power increases, but the reality is that most of it goes out of the window. Climbing onto the first rung of the property ladder is a crucial and important step that has to be made as soon as possible in a person’s life, because after that it only gets more difficult.

The sixth fallacy is that a buzzing rental market will buoy up the Maltese economy. Of course it won’t; if only buoying up the economy took so little. A buzzing rental market is, at least in Malta, a by-product of a thriving economy, and not the other way round. It means that enough people can afford to throw away money on rent while still saving for the deposit on a home, and that plenty of non-Maltese are moving here for the short term, to take up positions with their companies or organisations, and they need to rent somewhere to live.

The seventh fallacy is that the market price of houses and flats is being pushed higher and higher by demand that is “artificially” created through unavailability of rental property. It isn’t. The demand for houses and flats is real. It has been created by vastly increased affluence over the past 20 years, by the reluctance of newly married couples to live with one set of parents as they would have in the past, by people remaining unmarried until they are in their 30s but being unwilling to live with their parents at that age, and by a greater rate of marital breakdown, which creates a need for two homes where previously there was only need for one.

But high demand is only one factor pushing up the price of property. The other is shortage of supply. While the common perception is that there is over-supply, and that there are unnecessary buildings going up all over the place, the reality is otherwise. The land area of Malta is what it is, and unlike other restricted spaces such as Hong Kong or Singapore, it is further reduced by the need to preserve from development agricultural land and other scenic spaces. Because land is in such short supply, it is very expensive, and consequently, the houses and flats that are built on that expensive land are expensive too.

Dr Vassallo’s eighth fallacy is that middle-class families cannot afford to buy their own home. If Dr Vassallo can find even one middle-class family who do not own their own home, and who rent or live with the in-laws instead, then he has found a rare thing indeed. He should tell us about it. Home ownership is one of the defining qualities, from the economic perspective, of the middle classes.

The middle classes can more afford to buy their own home now than they could in the past, even the recent past.

My parents’ generation invariably rented or borrowed their first home, at a time when available leases were few and far between and very hard to come by, and they weren’t fussy about how they started out. Many of them bought their homes at a point when they had already established families. Salaries were low, money was tight, and wives and mothers never worked, so the whole set-up depended on a single income. Affluence and the possibility of affording your own home are, contrary to what Dr Vassallo claims, very recent realities.

Even the premiss on which Dr Vassallo built his eight fallacies is untrue: that the Maltese economy is in a disastrous situation. It isn’t. It’s weak in many areas, faltering in others, there’s a good deal of worry and negativity around, but it’s hardly the crash of Wall Street or the Great Depression that provoked World War II. Those are an illustration of economic disaster, and they are rare. It is always useful to have a sense of perspective when you’re in politics.