By Dr Annalise Seguna
Owners of immovable property leased before 1 June 1995 for an amount which today can be deemed as a pittance, will be able to commence proceedings in front of the Rent Regulation Board to request a fair rent once the amendments come into effect.
The rent could be increased by up to 2% of the value of the immovable property. The value of the property will be established by an architect appointed by the same Board. This formula can only be availed of by the landlord if the tenant does not satisfy the ‘means test’. If, however, the tenant exceeds the amount projected by the ‘means test’, the Board will allow five years within which the tenant will have to find an alternative residence and eventually hand over the property to its lawful owners.
As a form of subsidy, Government will be paying part of the rent, as established by the Board, of those tenants who are pensioners or on social benefits, i.e. up to €10,000 per year. On the other hand, tenants employed on a full-time basis will only pay up to 25% of their income in rent as eventually revised, with the rest of the rent subsidised by Government. The amount of subsidy in this scenario is also capped at the amount of €10, 000 per year.
The suggested reforms will not change the laws regulating eviction, in that landlords wishing to evict their tenants, in order to regain possession of their own immovable property after being deprived of it for so many years, will still have to resort to the Constitutional Courts and subsequently before the Rent Regulation Board in the absence of an agreement between the parties.
It is also being proposed that tenants living in an immovable property valued by the Rent Regulation Board for more than half a million euro and unable to pay the amount of rent as revised, will be granted alternative residence.
This will ultimately see owners of property that is valued by the Rent Regulation Board for more than half a million euro regain full control over their property after so many years of being deprived of its possession.
The reform to the rent laws has been welcomed since the Government’s subsidy attempts to strike a balance between the rights of the landlords to receive a fair compensation for the use of their property with the right of the tenants not to end up homeless after so many years of calling a property their home.
Dr Annalise Seguna is a lawyer at Lex Group Legal