Upsetting the rental market... again

Last Tuesday, Silvio Schembri, Malta’s minister for the economy and industry, announced a ‘scheme’ regarding a new procedure to be used by the Lands Authority for the revision of commercial leases and the recognition of the lessors in the case of government-owned commercial premises.

Actually, these are two separate issues. One is the issue of the fair rent that should be paid by retail outlets that occupy government-owned properties. The other is the matter of the recognition of such leases as a result of many cases where the government did not know that the tenants were dead, because the inheritors never informed the then Lands Department (now the Lands Authority) of the demise of the tenants, with inheritors keeping paying the rent in the name of their dead ancestor.

Technically, such leases are terminated with the death of the lease holders – quite a difference from what happens in the case of privately-owned property where leases were inherited by law. The government had the right to impose a new lease with new conditions and an increased rent; so people never notified the government that the leaseholder had passed away.

This resulted in a big mess in the Lands Department database, showing that dead persons kept paying rent many years after their demise. In some cases, there were even two generations that had passed away with people paying rent in the name of their dead grandparents.

The Lands Authority sought to overcome both problems by setting up a system whereby an ‘independent’ architect appointed by them carried out an inspection of the premises and established the fair rent of the property in line with current market conditions.

This made sense and obliterated the unfair advantage that retailers in government property had over retailers renting their premises from private landlords. In the second case the revision of unrealistic rents had to be carried out in view of the now obsolete – and unconstitutional – right for people to inherit leases of shops that could never be revised. As I have already pointed out, this did not apply to government property.

We have seen numerous landlords seeking compensation in the Constitutional Court for having to accept ridiculous rents for shops in pristine places like Republic Street in Valletta. The Courts could not but protect the landlords’ rights that were being insensitively trampled upon by the state.

I thought that the lines were now clear and landlords’ rights have now been clearly established and recognised.

Not so when the landlord is the government, it seems.

Apparently, a number of lease-holders went to complain to government on how they could not have a profitable business with the new rents the architect in question was establishing. In other words, their business could not succeed without their rents being subsidised by government!

Never one to miss an opportunity to upset an apple-cart, minister Sivio Schembri decided to make a concession to these shopkeepers – some 400 of them – and concocted a ‘scheme’ to help them; a truly cunning plot if there ever was one.

The ‘independent’ Lands Authority, ditching its mandate and obligation to get the most it can get for state-owned property, apparently had no qualms about Schembri’s scheme. They just promptly accepted and adopted it. The fact that the ‘scheme’ was announced within the last few months of the administration, just before a general election, is just a coincidence – or so the ‘Ġaħnijiet’ of this fair land believe.

The scheme considers three ‘scenarios’: leases that have elapsed or will elapse before end of 2013; leases where the occupiers had accepted new rates for leases elapsing before 1st June 2028; and leases that occupiers had already accepted the new rates.

The solution for all of them is the same – existing rents to be increased by 5% every year. In the case of unrecognised tenants, a one-time increase of yet another 5% (apparently 5 being the magic number) will lead to the recognition of the occupiers as legitimate lease holders.

And those who had accepted the architects’ assessment and paid the rent at higher rates will be given a refund!

The work of the architects who estimated the realistic current rental values of all these properties was swiftly sent to the waste-paper basket.

Minister Schembri explained that government does not want anyone to fall behind and is helping to lighten the burden of these leaseholders. He even said that this solution will be applied in other cases, without specifying what these are. In contrast to housing, which has a social dimension, in deciding rents for commercial premises, neither the Lands Authority nor the government itself – in this case minister Silvio Schembri – have a right to consider the social circumstances of tenants.

To be fair and righteous as Schembri tried to give the impression, government should therefore also subsidise the rents of those who have private landlords.

Otherwise, this is an unjust decision giving occupiers of state retail outlets an undeserved advantage over their competitors.

Upsetting once again the rental market by new forms of discriminatory government interference is a disservice that Schembri – who holds university degrees in economics – should be ashamed of.

End of U.S. hegemony

Writing in a recent issue of The Telegraph, Alistair Heath concludes that decadence and hubris have finally brought down the U.S. that is in retreat on all fronts. Moreover, he believes that incompetent U.S. politicians are incapable of reversing the decline.

In his appraisal, “the heart-wrenching, humanitarian calamity that is the botched Afghan retreat is merely the latest sign that the American era is ending: Washington is no longer the world’s policeman, and an unsettling future of clashes between expansionist, authoritarian regional powers beckons.”

Now the U.S. is in sharp decline. Twenty years after 9/11, “America’s global plan lies in ruins, its elites confounded on almost every issue, the stupidity and incompetence on display over the Afghan withdrawal confirming that they don’t understand the rest of the world, and aren’t fit to govern their own country, let alone the globe. Blinded by a simplistic universalism, they no longer understand religion, tribalism, history, national differences or why countries want to govern themselves.”

This assessment is so near perfect, that I cannot resist not quoting it.