MALE: A controversial bill governing rental agreements between tenants and landlords was submitted to parliament on Wednesday. The bill calls for the establishment of a tenancies tribunal and the appointment of a commissioner of tenancies to administer the law under the minister for housing. It also proposes the creation of a tenancy deposit scheme, with deposits made at the start of a tenancy to be held by the government rather than individual landlords. Those deposits would be limited to a maximum of two months' rent, while tenants would also have the right to appeal against 'unfair' rents under the terms of their contract.

Independent MP Mohamed Nasheed, who put forward the bill, said while the bill "is indeed controversial and will have a huge lobby against it," much of it was based on the Residential Tenancies Act (1987) of New South Wales, Australia.

"This is a new area for the country currently and completely unregulated," Nasheed said. "There is currently no legislation that considers tenant's rights, and even if they want to recognise tenancy rights, no party would want to touch this."

The bill is necessary, he argues, because in a congested and overpopulated city such as Male the demand for accommodation dramatically outstrips supply, leaving tenants vulnerable to unscrupulous landlords.

"If someone finds employment and needs to live in Male’, it's absolutely necessary that they find accommodation even if it is 75 per cent of their income. This is where the landlord commands undue influence, and this is where I want to regulate to try and balance it. The rest I leave to the gymnastics of parliament."

Under Nasheed's proposal, tenants would have the right to lodge a complaint with the tenancies tribunal against 'high or unreasonable rent', which would then have the power to determine a 'reasonable' rent for the property and adjust it accordingly.

This is likely to be one of the bills most controversial features, Nasheed admitted, "however there are people who say rents should be controlled, but I've deliberately kept it without a formula. The controversy comes from the basic fact that the concept of 'unfair contract terms' is new [for the Maldives]."

The proposed tenancy deposit protection scheme is also likely to cause heated debate.

Currently a landlord "can ask for two months, six months, even a year's rent as a deposit.

Once given that money is very difficult to get back - the leaser will always find some repairs," Nasheed explained.

"The leaser can take the landlord to court, but they have to pay for a lawyer and the advantage is with the landlord."

The interest generated from the accumulated tenancy bonds would go into the government's treasury, he said.

"I borrowed the same principal from a similar scheme we have for expat staff, who are required to have the price of a return ticket deposited with the government to guarantee their safe return at the end of their contract," Nasheed said.

He accepted that the bill was likely to be criticised for state interference in the rental market, and could trigger a surge in 'black market' landlords. "But compare the two evils: a black market with [the current] totally unregulated, unarbitrated model," he said.

The bill also limits the ability of tenants to sub-lease the property without approval from landlords. "If a tenant sub-leases the property to a third party without approval, the innocent third party is protected," Nasheed explained. "The obligation between the landlord and the [original] lessee will remain until the end of the contract."

Opinion

Nasheed's bill met criticism from the two most dominant political parties. Abdullah Mausoon, secretary general of the main opposition Dhivehi Rayyithunge Party (DRP), said that beyond standards for specifications like fire safety, "rent, like any other business, should be left [by government] where possible to market forces. Market variables will take care of it nicely."

"Male’ is a very dense living situation and a hotspot for rental tenancy business. With a business opportunity like that, a law of contract should be enough," he said, adding that

landlords were also under pressure as many of them had built houses with loans they had secured.

As for a tenancy deposit protection scheme, he said, "I wouldn't agree that any money should go to the government as I don't trust the government to take care of the funds."

MDP MP Hamid Abdulghafoor also expressed reservations about the bill.

"I think people who are [renting out] properties will treat it with a certain reservation, while tenants will like it," he said. "It's a very populist bill, I think. Landlords have to recover loans and playing around with the market rate has to be done in a sensitive manner."

Hamid agreed that there was a power imbalance between landlords and tenants in Male, with "a lot of complaints being made from people renting that landlords hike up the rent whenever they feel like it. Landlords have had a free hand which tenants have not liked; they've only had contract law."

The country's rental market, he said, "has been totally unregulated which has affected a lot of people, but this bill is trying to put a square peg in a round hole. These are untested waters, and the concepts are new. We are trying to figure out what kind of economy me have - a coordinated, centralised economy or a liberal economy with some aspects left to wild capitalism."

Nasheed expressed doubt that the bill would be passed in its current state, "but if they retain 75 per cent of it then I've achieved my objective," he said.

Male's housing crisis

With a growing population of over 100,000, Male is among the most densely populated cities on the planet. Last year, a damning report by the Human Rights Commission of the Maldives (HCRM) found that 68% of families in the capital were living in accommodation that "qualifies as slums by UN definitions".

Furthermore, "survey participants spend a staggering 85 percent of their income on rent and utilities in Male' and Villingili." Landlords in some cases had been found to be increasing rent "at will", and forcibly evicting tenants if they were unable to meet ever-increasing demands.

During his campaign season, President Mohamed Nasheed made affordable housing a priority and proposed decentralisation as a possible solution. "The problem of high rent is that there is a shortage," he said.

MDP pledged decentralisation of education, medical facilities and government services to encourage migrants to return to their home islands, and take some pressure off the capital.