Rents without tears

The back page of this newspaper last Sunday carried a story about a landlord discovering from reports in the media that his tenant was in some sort of legal trouble. The report went on to refer to some of the problems encountered by landlords when their tenants fail to pay their rent for some reason or another.

With the Maltese rental market in an unprecedented boom, the number of problems with tenants not abiding by their tenancy agreement is bound to increase. At the moment the situation is plain ridiculous since, as the report heading ran, ‘Landlords are ‘powerless’ when dealing with non-paying tenants’ because as the lawyer quoted in the report said, ‘landlords cannot simply change the lock’.

The process to evict non-paying tenants involves court action that takes ages, with the landlord having to finance the legal expenses while he is not getting any rent. 

A friend of mine who had let a garage to a foreign self-employed person realised that the foreigner had left Malta after he went to look for him when the rent had not been paid for some time. The hassle he took to get his garage back is incredible. He had to go to Court, explain his predicament and he was allowed to get his property back only after the case was concluded with court marshals forcing open the door of his property as he could do no such thing. The hassle did not stop there as he then found that Enemalta had cut off the electricity service to the garage as the tenant had not paid his electricity bills. When he tried to reinstate the electricity service Arms Ltd blackmailed him into paying his tenant’s bill as a condition for the return of the electricity service. But that is another story.

Nowadays lawyers are advising their clients who are landlords to write down a special condition in the lease agreement stating that if the tenant does not pay one rent instalment or does not adhere to any condition of the lease, ‘the lease is ipso jure terminated and the landlord is authorised to change the locks of the premises without any further notice, which action is irrevocably consented to by the tenant and which therefore can never constitute an act of spoliation at law’.

This legal mumbo jumbo in effect means that the tenant is consenting to his giving up his rights at law. I seriously doubt whether one can bypass the law by imposing such a condition.

A friend of mine who lived a good number of years in Australia laughs at the way landlords get into fixes when they have a non-paying tenant. In the part of Australia where he lived, all leases are registered at the sheriff’s office and as soon as the sheriff’s office is satisfied that the tenant has failed to pay his rent, the sheriff’s men will not only change the lock, but also remove any furniture or other possessions that the tenant may have had, naturally after informing the tenant. 

My friend laughs because this process takes three days in Australia while it could take five years or more in Malta. Incidentally when registering lease agreements, the Sheriff’s office keeps any deposit asked over and above the normal rent. When the lease expires the deposit is returned to the former tenant less any expenses the landlord claims. This applies to both residential and commercial leases.

In Malta there is no such system, or anything that is remotely similar. At the same time, there are also a large number of undeclared leases, with the landlords avoiding to pay tax on their rental income. This situation is now a bit better after the introduction of a 15% final withholding tax on rents received, but the number of cases remains nevertheless substantial where landlords are still opting not to report their rental income at all.

It is about time that a modern tenancy law is put in place in Malta with some office where lease agreements could be deposited. This will not only protect landlords from unscrupulous tenants but would also keep Inland Revenue informed of leases that unscrupulous landlords do not declare.

Landlords will find that the price of having their rights protected will be the paying of the 15% withholding tax! Such a way of doing things will see the government embarking on drawing up and enacting a tenancy law – not to control the cost of rents but to regulate the interaction between landlord and tenant in a civil way without undue hassles and incredible delays that diminish the rental market’s contribution to the country’s GDP.

Promises, promises

What do Boris Johnson – the UK’s pro Brexit Foreign Secretary – and former MLP leader Alfred Sant have in common?

Certainly not their hairstyle, of course. 

The similarity rests in the fact that it took some time for the electorate to find that they had no idea how their promises could be delivered!

In 1996, Alfred Sant’s promise to remove VAT within six months undoubtedly played a part in his electoral victory. On assuming power, it was evident that Sant had no idea on how to deliver his promise to remove VAT and replace it with another system of revenue. More than six months had to pass before the Sant government enacted a hotchpotch law – a chimera of excise duties and consumption taxes that no one could understand. That incredible failing re-dimensioned Alfred Sant in the eyes of the electorate for many years.

Boris Johnson is in the same predicament now. He and his ilk campaigned successfully for Brexit and have now discovered that they do not have the faintest idea on how Brexit will come about. 

According to reports in the UK media, the British government is in a quandary. While two new ministries have been created – one for the Brexit and one for international trade – they don’t have enough qualified personnel and aren’t yet quite sure what exactly they’re supposed to negotiate. Trade Minister Liam Fox and Foreign Minister Boris Johnson have been reported as squabbling over who is responsible for trade relations with the EU and the rest of the world.

This messy situation is certainly redimensioning the Brexiters!

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