Affordable rents: White Paper to address the new gap

The recent price hikes have resulted in a drastic increase in the number of people who are finding it hard to make ends meet. Such tenants are “not poor enough” to benefit from subsidies but are “not rich enough” to live comfortably. 

The government is thus planning the publication of a White Paper with the promise of zero rent control. 

The idea is to create a solid legal framework that aims to be fair with both tenant and landlord. The White Paper, which will be up for consultation, proposes the obligatory registration of the rent contract. 

Failing to do so, the landlord won’t have any legal protection.

The contract would regulate the amount by which the rent would increase and the period of time. The White Paper will propose a discussion to increase the minimum rental period, which currently stands at six months – whilst retaining “the flexibility” for short lets and the tourism market.

In a bid to protect the tenant’s deposit from a landlord’s abuse, the government proposes a deposit retention scheme where the government will act as a middleman for the security deposit paid by the tenant.

Another proposal is to revise the law and make it easier for the landlord to take steps against tenants who breach the contract or fail to pay the rent.

Increasing social housing property

Building up on a scheme first launched last year, the government will be widening the thresholds of those who will be able to benefit from rent subsidies. Moreover, elderly persons aged 65 and over will enjoy special thresholds.

In just a month, the Housing Authority received 200 applications from owners putting their property up for social housing. The scheme, which sees the Housing Authority renting the property from private owners for 10 years, will be open for a full year.

Additionally, the Housing Authority will be offering financial assistance of up to €25,000 to owners of unused property, helping them to restore the property with the condition that these are rented out to the authority for 10 years. This scheme will be open to the first 100 properties and the property must be rehabilitated in six months’ time.

Through EU funding, the authority will spend close to €16 million to install lifts in some 109 blocks of apartments. The spend is over and above the planned regeneration and maintenance of further property used for social housing.

From social housing to residences for the elderly

In a bid to free unused social housing property – or social housing property that is being used illegally – the government will be reducing the fee that is paid by the elderly who are now residing at St Vincent de Paul. There are multiple situations where a pensioner retains the key to a social housing property, despite having moved into the elderly care residence. In a bid to get back the key, instead of the usual 80% cut from the pension, an elderly person who returns the key to the Housing Authority will only have 40% of their pension deducted.

The scheme will apply to any residence for the elderly, including private and church homes.

Depending on the pension level, an elderly person will be able to save up between €1,350 and €2,700 that would have otherwise been used to cover their stay at an elderly care residence.

Bank of Valletta to join social loans scheme

Like APS Bank, Bank of Valletta will start offering social loans to 100 prospective owners. The aim of the scheme is to help more people become owners of their property. Priced at a reduced interest rate, the APS loan currently provides successful applicants with up to 100% financing for amounts not exceeding €100,000 and will not require saving up for a front contribution. 

Introducing the second-time buyers scheme

Whilst extending the first-time buyers scheme – exempting tax duty on the first €150,000 – the government will be introducing a scheme for second-time buyers. 

The scheme will apply to homeowners, who own just one property and decide to sell it, to buy a second one. The property owner will benefit from a tax reduction, with a maximum of €3,000. Persons with disability will benefit from up to €5,000.

The government will retain the financial support offered to owners of property in Urban Conservation Areas (UCA). Preserving a UCA property will translate into a stamp duty of 2.5% – as opposed to 5%.

A 2% stamp duty will also be offered to those who buy a residential property in Gozo.

Using a property to increase pension or income

The government will set up a working group to discuss the introduction of equity release facilities, by which a person would receive a monthly income for their property from a financial institution. The institution would gain ownership of the property at the passing away of the owner whilst the heirs would receive the remaining balance that would not have been paid to the owner in time.