Solution to emphyteusis law lies in ‘increasing miserly rents’

The government is in the process of conducting a social impact assessment to see how increasing “miserly rents” paid to landlords would impact the tenants.

“The solution calls for an increase in the rent paid. I know this is not a popular solution but the other option would be facing eviction,” Justice Minister Owen Bonnici said.

The minister was replying to questions raised by tenants during a public consultation meeting with members of the Cabinet. The issue revolves around tenants of rent-controlled properties who are enjoying low rents thanks to the 1979 law that converted temporary leases into permanent rental contracts.

For years, tenants whose leases turned into rental contracts enjoyed their properties at ridiculously low annual rents. But now, judgements from the European Court of Human Rights in Strasbourg have left the government with no choice but to amend the laws – or face having to pay millions in compensation claims and damages in both national and European courts.

The government now intends to bring these leases created by the 1979 law, in line with the recent rent legal amendments of 2009 – a sure guarantee that landlords will be paid higher rents on these properties.

According to its action plan, the amendments will create a mechanism for the revision of the rent, as well as limit the inheritance of tenements, include the introduction of a means test, and also create measures to revert the leases to their owners.

Under the 1979 Act, which amended the Housing Decontrol Ordinance, a temporary emphyteusis gets automatically converted into a permanent rental agreement, but this has been found to be illegal by both the Maltese Constitutional Court and the European Court of Human Rights.

Tenancies cannot be inherited any longer and will be subject to a cut-off date for persons residing with the tenant for four years out of the last five years, but new rental payments will be determined by a means test.

“The solution lies in adjusting the rent,” Bonnici said.

With questions varying from culture to local councils, the public consultation with the Ministry for Justice and Central Government saw Owen Bonnici facing questions over the Gaffarena expropriation deal and the works-for-votes scandal.

The audience raised questions over whether beneficiaries of the works-for-votes scheme in Gozo would have to face the consequences for their actions; another one pointed out that while “some struggle to make ends meet, others keep on receiving”.

The minister, echoing comments given yesterday by the Prime Minister in parliament, said that he as well had a lot of unanswered questions over the expropriation of the building in Old Mint Street.

Bonnici said he too wanted to get to know the facts surrounding the case and said there as an investigation by the Auditor General and another by the Internal Audit and Investigation Department underway.

“Like the rest of you, I await the results of the inquiry to see what happened.”

On the Gozo case, Bonnici said the government’s interest was to see that any wrongdoing is reported and consequences faced.