The gentle art of rent reform

Following the publicity accompanying the launch of the White Paper on Rent Reform, the actual legislation mainly amending the provisions of the Civil Code on the institute of lease has been introduced very quietly in June this year by Act X of 2009.

The now published legislation has departed significantly from what the White Paper promised, or threatened - to those on the other side, but, on the whole, the thrust has been to bring about what the government has called a fair balance between the financial expectations of the landlord and what in effect is the social service provided by these landlords in being forced to accept the renewal ad infinitum of leases way beyond the original contractual period at more or less pre-war levels of rent. An attempt, in other words, to give a bit to each side in the vain hope of being everything to everyone.

This it has sadly done with at times incomprehensible drafting. I first read the English version, assuming this was the original, and then in desperation switched to the Maltese version, which is slightly less ambiguous, indicating in my mind that the Maltese was therefore the original version and the English a translation. I have, however, likewise stumbled and, in preparing notes for a seminar due in October, found myself resorting to guessing what the legislator had in mind, though rules of interpretation should logically apply to contracts and not to the laws themselves.
The amendments start by dividing leases into three main groups: pre-June 1, 1995 leases, post-June 1, 1995 leases and post-October 1, 2010 leases. It is only the pre-June 1, 1995 leases that will really affect most of us as some of the rights previously enjoyed by the tenants have been, or will, in the semi-distant future be eroded, "removed" being in general far too strong a verb to describe the process.
In fact, the only surgical bit in the amendments is the removal of the right of automatic renewal of pre-1995 leases of private garages and summer residences beyond June 1, 2010. Hardly revolutionary but always a start.

The rest of the amendments are mainly concerned with not upsetting apple carts.

The law has retained unchanged the security of tenure for the tenant and his or her spouse till their death in respect of pre-June 1, 1995 residential leases. Following their death, there is a complicated list of persons who will qualify to renew the lease as subject to a means test, the criteria for which are as yet unpublished. There is also a three-year protection at double the present rent for those who fail the means test and a five-year protection, also at double the present rent, for those who fail to qualify as they are not related to the tenant, opening doors presumably for partners, same-sex or otherwise, who previously enjoyed no protection at all. The minimum rent is to go up to €185 per annum with effect from January 1, 2010 where it is at present below this amount and the rent is index linked on a three yearly review basis, unless the lease agreement provides for a different method of increase.

Tenants of pre-January 1, 1995 commercial leases have also retained the security of tenure they enjoyed prior to the amendments for themselves and their spouses and, following their death, for their heirs up to a maximum period of 20 years, which started running on June 1, 2008. There is no means testing here and the law does not go into the tenant's turnover or do away with protection for public companies as promised in the White Paper. The rent is to increase by 15 per cent every year on the previous year for the next four years and is then revised annually at five per cent or in accordance with regulations that are yet to be published.

The amendments also deal with leases of clubs by not dealing with them at all, shift responsibility for all non-structural repairs in residences onto the tenant and attempt to do away with subletting by protected tenants within 10 years' time but all this is beyond the reach of this overview.

The point remains that the amendments are on the whole a positive but very limited attempt at redressing the rights of long-suffering landlords. Pity about the drafting.

Published on the Times of Malta, Talking Point, August 28, 2009 by Peter Caruana Galizia

Property slowdown persists

A finished apartment advertised to sell at €80,000 in March 2008 would have had almost €9,000 cut from the asking price a year later, according to the Central Bank of Malta's property index.

The asking price for finished flats, the most common type on the market, was down by 10.8 per cent in the first three months of the year when compared to the same period a year before.
The figures published in the bank's quarterly review yesterday showed that the year-long slowdown in the property market accelerated in these three months of this year. Property prices in the first quarter dropped by 9.9 per cent when compared to the same period a year before.
The sharp decline was more than double the drop registered in the previous quarter when prices fell by 4.4 per cent.

The bank said lower asking prices were observed in seven of the eight property categories surveyed. Apartments in shell form and houses of character saw prices plummet by 20.4 per cent and 16.2 per cent respectively.
The price for townhouses also dropped by 11.8 per cent while finished and shell form maisonettes saw prices slip by 4.4 per cent and five per cent respectively.
Terraced houses were the only property type to buck the trend, with the asking price rising by 4.1 per cent.

The slowdown was not only visible in terms of price but was also confirmed by a 21 percent drop in the number of advertised properties and fewer permits granted for residential properties by the Malta Environment and Planning Authority.
Property prices last year declined by 2.7 per cent when compared to 2007, with the asking price for flats in shell form and in finished form, which together make up over half of the sample, going down by two per cent and 5.4 per cent respectively.

The first quarter figures are broadly in line with the findings of a Chamber of Commerce, Enterprise and Industry survey for the same period, conducted among members, which had found property prices were down by 15 to 20 per cent from the first quarter of last year.

Above article printed front page Times of Malta Sat, August 15, 2009 (Kurt Sansone)

New building site regulations aim to avoid damages to neighbours

The Resources Minister this afternoon formally launched new building site regulations aimed at reducing risks to third parties.They also introduce faster measures of redress when damages are caused.

Minister George Pullicino said the need for these regulations was borne out by the fact that 60 percent of development applications before Mepa now involved redevelopment, on sites which were inevitably surrounded by other buildings.

Regulations issued two years ago had addressed the environmental impact of building sites, he said, while the accent now was on safety and reducing inconvenience to third parties.
Mr Pullicino said contractors would have to be classified according to the nature of the work they could perform.

Building works would have to be preceded by a method statement which would show how the work would be carried out,the machinery to be used, and the time schedule. The method statement would be publically available and people would be able to file objections.
Contractors would be required to take out insurance to cover damages to third parties.
They would also be required to submit a bank guarantee of up to €40,000 to pay for damages not covered by insurance.

Disputes between the contractors and third parties would be submitted to mandatory arbitration - this method having been chosen so that redress could be given quickly and without burdening the law courts.
Mr Pullicino said the Building Regulation Office would be empowered to stop works not being carried out in line with the method statement.

The regulations establish that noise levels may not exceed 65 decibels and works may only be carried out between 8 a.m. and 2 p.m. and 4-8 p.m. Mondays to Saturdays.
There are also provisions to limit vibrations caused by such works.
The regulations are to be tabled in Parliament in October.

Source: www.timesofmalta.com