The widening divide between the haves and the have-nots

I recently saw a four-bedroomed townhouse available for a long let in Sliema advertised at €4,500 monthly.

Yes, you read that right (and you can be forgiven for spluttering up your morning coffee). And while the amount being requested sounds beyond ridiculous, I figured this is an upmarket area and it’s quite a large, decently furnished house, so maybe the owners are not being incredibly and foolishly optimistic. Who knows, they might just find a sucker willing to cough up that much money just to lease a house. But then, I heard of another property, a three-bedroomed apartment, this time in the more prosaic village of Luqa, which is going for €900 per month. (Hope you haven’t choked on your cereal by now.)

What is going on here? Has Malta suddenly morphed into New York or London?

Obviously it is a free market, and anyone can attach any price tag they wish to their own property. However, it is also clear that the rental market is completely out of control. The thing is, you cannot look at these prices in a vacuum, because they are having a spiral effect on the cost of living in Malta and, as a result, are affecting everything.

First, let us ask the most obvious question: exactly who are the people who rent in Malta?

There was a time when we could have ruled out that tenants are Maltese. It is practically something you learn at your mother’s knee that renting a property is an unwise decision, when you can save money for a deposit and put a down payment on your own property, paying a monthly mortgage which roughly equals the amount you would be paying on rent.

The majority of young adults continue to live at home until the day they get married precisely for this reason and it is why long engagements are the norm as couples start saving every cent, the minute they get serious, in order to have enough to go towards “il-post” (the home). In fact, the house is such a crucial part of getting married, that for a long time no one ever really bothered about “proposing” because the minute you started looking at houses together it was taken for granted that this was code for “we’re getting married”.

However, over the last 10 years or so, more Maltese people have been forced to rent because of unforeseen circumstances, such as a marital break-up where, after splitting up the assets, or being forced to leave the marital home, they are not left with enough money to cover the purchase of a new property.

Or the growing trend of those who want to leave home without necessarily getting hitched or even adult children from broken marriages who do not wish to live with their parent’s new partner. In fact, it is usually single people or single-parent households who are forced to rent because the lack of a joint income makes getting a sufficient loan impossible.

So while many assume that “everyone” owns their own home, it is also the case that there is a growing percentage of tenants who are Maltese who are not destitute enough to qualify for social housing, and are therefore forced to turn to the private sector to rent.

The majority of tenants, however, continue to be foreign nationals who can be split into two groups: first there are those who are high earners for whom the rents mentioned above are acceptable (or else who are buying citizenship, in other words, millionaires, and simply need an upmarket rental property for their Maltese address). Then you have those who are working in ordinary jobs ranging from the minimum wage to, at the most, €1,200 per month. For this latter category, €900 (or even €500) is completely out of their league, so what is happening is that landlords are now renting out bedrooms (and in some cases, I have even heard they are renting out beds) so that the rent is split between several people.

That is the situation with housing on an island which is simultaneously (and paradoxically) groaning under the weight of over-development, empty properties and over-priced rents. It is a market which is edging out Maltese tenants completely while also being unfair to foreign nationals on an average wage who similarly cannot afford outrageous price hikes.

In some cases, the rental properties being offered are sub-standard. We are in a situation where tenants are having their rent almost doubled from one month to the next with a “take it or leave it” attitude. Addressing this issue during a recent Anti-Poverty Forum, researcher Dr Kurt Xerri pointed out, “…it did not make sense for (political) parties to be in favour of increasing the minimum wage, whilst being against rent control”. In many cases, he argued, rent consumed more than half of people’s income, and tends to increase at a faster rate than wages.

Quoting statistics for 2015, a report about the conference on inewsmalta said that the cheapest areas to rent were in Cottonera and Marsascala, with the minimum for a one bedroom apartment being €382 per month. When one considers that the minimum pension is €130 per week and that the maximum subsidy is that of €130, one can conclude that on average, a low income earner was spending 55% of his income on rent.

This was confirmed during the same conference by a woman who works as a carer and has an income of €900 a month. She said she has to live in a garage because the landlord at her previous apartment which she used to rent for €400 a month had decided to raise the rent and threatened her with eviction.

There is some hope though. APS Bank, which is owned by the Church, has announced a social lending scheme to help low income earners. According to a statement, “these would allow applicants to obtain 100% home loan financing at low interest rates, extendable also to contents, furnishings and appliances. The bank is also studying the possibility of facilities to assist with monthly home rental commitments. These social-oriented lending initiatives will also be largely exempt from the bank’s standard tariff of fees. Prospective applicants would be subject to due diligence and tests in order to establish their eligibility.”

Housing costs are just one part of the reality of those who are living on the edge of poverty. Groceries, water and electricity bills as well as school expenses for those with children means that every day is a new challenge to be met as they try to scrimp and save to make ends meet. It is probably difficult for many to believe how a country with an economic boom can still have so many who are just scraping by. But this is what happens when you have such a wide gap between the haves and have-nots – those who are making money hand over fist and those who are being exploited.

Let’s just say it is not a coincidence that pastizzi shops and other cheap (and unhealthy) takeaway food outlets are everywhere. And when you hear of parents who do not send children to school on the day when there is an outing because they cannot afford to pay for it, or of children who are sent to school without lunch or with a threadbare uniform, then you cannot keep ignoring that poverty exists. There are those who will counter this by saying, “but these parents have enough to spend on cigarettes, and gambling and to get their hair and nails done”, but while these type of parents do exist, it does not detract from the fact that there are others who do not fritter away their money on useless things.

Taking a swipe at all low-income earners or people on benefits just because there are some who abuse the system is an easy way out, to salve our conscience. It makes us feel smug to claim that, no, it’s not true, there is no poverty in Malta. But if you just move outside of your comfort zone and really talk to people “who are not like you”, and if you really open your eyes whenever you are out and about, you will realise that the people who are always shopping, wining and dining always tend to be from a certain slice of society.

There is another hidden, unseen slice which is not on the radar, but which is still, very real.