The outcry surrounding yesterday’s announcement of a new Government complex in Birkirkara reminds one that the recent Court decision belatedly recognised landlords’ rights on pre-1995 rental property, rented at below current market values, will increase pressure for low-cost housing and lead to more building congestion.
It is clear that the situation is now such that average Maltese residents are being squeezed out of the property market both as regards sale and rental costs. If government fails to provide specific solutions to these two situations then it would have shown reluctance at coming out in favour of the common good, which is not at all the same as economic benefit.
We are still rightly seeing allocations in the national budget for the building of social housing. However solving the social housing problem through the building of more Government units, creates several problems, including more take-up of open areas, increased congestion, demolition of heritage buildings, more construction waste for our over-full landfills and more pollution caused by construction.
Besides causing great hardship, the eviction of tenants who are unable to pay higher rents, increases housing demand exponentially. It is now undeniable that homelessness is on the rise in Malta. And yet, mainly because of the total absence of property tax levied on hoarders of multiple properties, there are still too many properties being purposely left vacant by owners waiting for the “right” offer, or the “right” form whatever of money-inspired speculation.
However the fact remains that the authorities stubbornly refuse to relate the increasing demand for such social housing to the unregulated building industry being allowed to freely continue with unabated speculation. The end result is that we have two trends pulling in opposite directions, exacerbating the present situation to a point where government may find itself forced to put ever more resources into its own housing projects, but at the expense of other badly needed spending, e.g. education, public health, pensions, child care, roads, etc.
It is not reinventing the wheel to suggest that developers should be obliged to make 10 or 15% of their units available for purchase or rental to low wage earners. This has been successful in the UK and the US, bastions of free-market capitalism. Part ownership and other schemes are also available to allow new low earners an opportunity to climb onto the property ladder.
In the circumstances FAA also suggests that the State offsets the burden placed on some landlords who may also be shouldering part of the housing provision problem, by allowing them deductions of taxes on their incomes. Of course controls would also have to be in place to ensure that such owners do not end up benefiting from the tax deduction while also charging high rentals.
