A NEW law passed last night aims to slash residential and industrial rents for a period of one year, in a bid to ease the pressure on tenants and shopkeepers amid the financial squeeze.
Residential rents up to €300 will see a reduction of 15 per cent (up to €45). From €300 and above, a reduction of 20 per cent applies, with a maximum reduction in absolute terms of €120.
Commercial rents up to €600 will be slashed by 15 per cent (€90). For rents in the €600 to €2,000 bracket, there will be a 20 per cent decrease, but with a reduction cap of €250, including the €90 in the first bracket. Rents over €2,000 will see a reduction of 20 per cent with a cap of €400.
Any rent fluctuations agreed between the tenant and landlord during the period up to 24 months prior to the enforcement of the new law will be offset against the new arrangements. For instance, if a landlord has recently decreased your rent (initially set at €300) by 10 per cent, they must now cut it by a further 5 per cent only.
Moreover, in the event a landlord had the right under an initial contract with the tenant to raise the rent after a certain period of time (usually two years) but did not exercise this right, this will also be taken into consideration.
The law has force starting from November 1 this year and ending October 2014. It applies to all contracts (rents and leases) concluded prior to October 2012.
Any tenant or leaseholder with more than two rents in arrears must first settle the amount outstanding before being eligible for any of these reductions.
Lawmakers however have omitted to provide for a mechanism to resolve disputes, for example in the event a landlord refuses to comply with the provisions of the new law.
The legislation – voting on which was postponed several times – was authored by AKEL, despite opposition from business groups arguing that the market should be left to regulate itself.
Also yesterday, parliament fast-tracked an item of legislation that extends the discount period for Immovable Property Tax. Wednesday midnight was the deadline for a 10 per cent discount on IPT, but the law passed yesterday extends this period to November 5. To date the Inland Revenue Department has collected around €85m in IPT. The payment deadline is November 15, after which property owners must pay an additional ten per cent penalty plus a pro-rata 4.75 per cent annual interest rate.