Combine minimum rent contract periods with tax incentives, NGOs urge

Rent contracts should have a minimum threshold attached to them in terms of their duration, together with incentives for landlords offering leases of a longer duration, NGOs have said.

In a press conference on Saturday regarding the White Paper on rent regulation published this week, a coalition of NGOs said they were welcoming the government’s proposals, noting that several of their suggestions on the matter had been taken up.

The NGOs said the government’s two propositions in the White Paper, of either setting a minimum contract term or offering tax incentives should be combined, with landlords paying less tax on rental income the longer the lease term they offer is.

Since the White Paper did not itself suggest a minimum term, the NGOs proposed that contracts should not be less than three years in length.

“The paper is the first step,” Moviment Graffiti activist Andre Callus said, “It’s a good move, but it won’t solve everything.”

“The White Paper places emphasis on stabilising contracts and setting rules on minimum terms. But it doesn’t address the issue of high prices much – this needs to be dealt with in a better way.”

In connection to the exceptions which allow landlords to terminate rent contracts before their expiry, proposed by the White Paper, the NGOs said that such exceptions should never come into effect within the first three years of the contract. This would give tenants peace of mind that the landlord cannot evict them within this period.

The NGOs said that while contract prices should be allowed to be increased year on year, this should – rather than be pegged to the Property Price Index, as suggested by the White Paper – be instead connected to the Cost of Living Index.

“This will ensure that tenants are able to afford the increase,” Callus said.

Price stabilisation still has to be addressed, however, he said, and while the White Paper addressed contract terms, prices were only marginally discussed, the NGOs said.

In light of this, the NGOs suggested that there should be a limit of a 10% increase over the previous rent price when a contract is either renewed or when a new tenant starts renting the property.

The NGOs went on to propose the creation of a Rent Value Index, listing rent value in different areas and for different classes of property. Rents should not be more than 10% higher than the value of a property as identified in the index, they proposed.

They said they agreed wholeheartedly with the protective measures laid out in the White Paper, but added that there should be strong dissuasive measures and sanctions deterring landlords from renting without a valid contract.

Moreover, tenants who report landowners for not providing a contract, or for contract irregularities, should be protected from eviction, they said.

Other measures suggested by the NGOs are the creation of a tenants’ union, a nationwide information campaign on tenants’ and landlords’ rights and obligations, and the establishment of a public agency responsible for private residential leases.

Finally, they said that tenants with existing lease agreements should be protected from being evicted or from being subjected to a large and unaffordable increase to the property’s rental price.

To solve this, the NGOs said that landlords should be obliged to allow the tenants to continue living in the property and paying rent for a term not let than one third of the total time they had been renting the unit.

Government needs to help in housing provision

The NGOs said that, currently, the government is only involved in building social housing.

They suggested that the housing supply should not only depend on the private sector, underlining that the government and non-profit setups should build units to be leased at affordable prices, whilst still generating rental revenue.

This would serve to increase the stock of housing, as well as to provide the state with revenue while improving affordability.