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Housing challenges - John Consiglio

Edward Zammit Lewis’s close-to-absolute belief in the free market being allowed to run rampant in Malta’s rental market, ekes out in a very evident manner in his treatment (November 4) of Malta’s rental market challenges. Indeed there is so much in that article that deserves to be challenged.

From early in the article, Zammit Lewis’s first and overriding concern with the legal “right to property” emerges clearly. He comes over as breathing blind condescension to European Court of Human Rights decisions, and smartly juxtaposes these on what he describes as being only the 15 per cent of local residential properties that in Malta are rented, the rest being owned.

But it is precisely because the number of people who rent being in some sort of a minority that they need much, much more protection by the government from landlords. As things stand they are indeed at the total mercy of owners who can, often with the assistance of lawyers, craft squeezing subservient relationships between the parties.

What Zammit Lewis needs to appreciate is that the exploding values of property are simply not an acceptable (on the basis of social justice) excuse for allowing the turning into penury of people who rent.  Indeed the 1995 and 2009 thrusts towards a more liberalised market, emanating from legislation, now should, with a government that cares, swing back towards giving more rights to workers who rent.

Blind belief in the market, and that “rental cost should be proportionate to the value of the property at that time”, and acting/legislating guided by predominantly that concept, will not do anything to introduce some balance of power between owners and those who rent.

Will clearly splitting the market between properties, which can be rented only to foreigners and holidaymakers (duly registered of course with the MTA and honestly controlled!) and those which can be only rented to Maltese, help in the redressing of present rampant abuses? This could be a question for the upcoming White Paper to tackle.

But accepting the concept would inevitably imply that, rightly, we would have at least taken some step towards getting away from, in this small country, any ill-guided approach to “the market as supreme”, and “government does not need to intervene”.

Zammit Lewis correctly states that some of the foreigners coming to work here are not in the “high-income category”. But the inevitable implication from this would be that these would also be in direct competition with low income earning locals.

Knowing the mentality of Maltese property owners it is this grouping that, using ruses galore, will be favoured for renting at still higher rates than those to Maltese workers’ families.

It is precisely because the number of people who rent being in some sort of a minority that they need much, much more protection by the government from landlords

It is also a mistake to think that government scrutiny of the rental market should only be made on the basis of some sort of distinction between the so-called “social housing” and “the rest” markets.  In the short-term, the government will never be able to build and rent, at reasonable rents, enough properties to satisfy the needs of all who are on its requests list.

So it is an illusion to think that any form of social justice will be coming from that direction towards those who are at the end of merciless landlords. Ergo, again, the need for laws that will aim at controlling towards just and more sensible rents.

Such as what? One basis would be to make it illegal to charge Maltese a rental that at any time is over a certain amount (e.g. 25 per cent?) of the basic employment income of the occupant renting party.  A second route would have to be to declare illegal all rentals that are not evidenced by a written, and duly registered, agreement.

And on this latter Zammit Lewis and myself seem to be in agreement. Thirdly, my long defended baby, impose sensibly drafted taxes on all the owners of long vacant and unutilised property who chose to leave them in such state…

Recent developments are also suggesting that there could even be yet a new potential route. With developers clearly lobbying government for ever more “permits”, “projects”, “freedom” (to continue ruining the environment) this group should now be clearly roped in to become active participants in, no longer solely “buildings” as such, but in the massive new seven-year plan to redo all of Malta and Gozo’s roads.

So, you apply for a permit to “develop” a block of 12 flats… you will only get a permit to build eight flats and you will also have to agree to become involved in doing the roads of X village, through of course the normal government tendering process. Otherwise no permits.

In that way that “industry” can be weaned from its present disaster-wrecking of practically everywhere, and possibly once again to start doing something for at least one aspect of our environment.

I realise that this exposition has moved away from the original essential high rentals problem. But the basic issue remains unchanged. At least Zammit Lewis and myself agree that the government has a duty to safeguard and protect vulnerable members of our community. Continuing to think and argue that this will be done by “the free market” is an outright economic chimera.

Roll on the eagerly expected government White Paper which, hopefully, will be moving away from this approach of “building and construction” as being some sort of economic activity that this country simply cannot do without. In our country’s economic history there have been many examples of activities that over time simply vanished… and we are all still here.

John Consiglio teaches economics at the University of Malta.

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