NOTES FOR THE HON. VINCENT PEET
AMENDMENT TO THE RENT CONTROL ACT.

HOUSE OF ASSEMBLY
NASSAU
9TH FEBRUARY 2005

In proposing and supporting this amendment, the government does not propose to do anything that can be considered revolutionary.  It will not do anything that will disturb the economy.  It is simply an attempt at the continuing process of reforming our laws to ensure that they are up to date, current and relevant to the times.

I rise to second this modest amendment which will increase the ceiling for the value of dwelling places that will now be the subject of the regime of the principal act, the Rent Control Tribunal.

Mister Speaker, the principal act first came into force in the year 1982.  It has had some slight amendments since then but the Ministry of Trade and Industry and its predecessor Ministries, one of which I had the honour of heading as Minister, have always felt that something ought to be done to increase the value of the dwelling places that are subject to the jurisdiction of the act.

This is because people come to the Ministry to complain that they live in poor rental housing, and they have no redress against the landlords.  Right now the Ministry is using moral suasion to assist where they can, but this will now put the Ministry in a position where it can have the force of law behind them.

I said earlier that the regime is not revolutionary. It is also not unique. There are many other examples of this in our law.  This is what economists often call a market intervention strategy.  In other words, Mr. Speaker, the government seeks on behalf of the people of the country to intervene in the free market, to regulate and add a bit of social conscience to the market, where there are extremes or distortions in the market.

Both Governments have seen this as sound public policy. Other examples of this type of legislation or market intervention are the Public Utilities Commission Legislation (PUC); the Price Control Legislation which regulates gasoline prices and breadbasket items, the minimum wage law, the laws which regulate taxi fares and bus fares.  The legislation for the PUC and the Minimum wage laws were both enacted by the FNM administration and the PLP enacted the others.  There can therefore be no logical partisan differences on this matter.

I donít think that we can expect the free marketers amongst our community to be silent.  We would expect them to argue against this.  However, it is interesting that many of these same free market advocates have come to the Government to assist them in ensuring that the Stock Market, which was supposed to be private sector driven and owned is supported by public funds in order to survive.

It is clear that the Rent Control Act or any price control legislation is not a perfect instrument.  It is a blunt instrument, in the sense that as with all public policy instruments there will be some downsides.  The free marketers will tell you that this legislation will cause landlords and investors not to go into the rental housing market.  The experience in other countries does not quite bear this out.

In fact, despite some evidence in this country that there will be some of that, this goes in a cycle.  There may be a short term shift but in the long term, affordable rental housing is a lucrative market, and there will be investors to fill the market.  The Government will also be expected to do its part and will do so.

The regime of the Act is two fold.  There is the Rent Control Tribunal, which decides whether or not the value of the property in which the tenant is living is what it is declared to be by the landlord.  The tenant can challenge the assessment, and can withhold rent until that assessment is complete.  By this method, it tends to force landlords to improve their properties and bring them up to scratch.  The Rent Control Tribunal, if it finds that the declared value is not correct can set the correct value and therefore the proper rent.  It is an offence to expel the tenant for seeking redress against the Landlord.

The Act says that for all properties that are under 25,000 dollars in value, you can only charge a maximum of 15 per cent per annum in rent charges and 20 per cent if you include furniture.  Anything charged in excess can constitute offence under the act.

Some argue that there should be a more direct way to getting at forcing landlords to set a fair rent, and more importantly to keep the dwelling house in tenantable repair.  I mention that phrase tenantable repair because that is the term used in the principal act to describe the conditions that are required for a rental accommodation.   We must look to the common law, not statute to find out what this means.  But in practice, it must mean that there must be running water, electricity, and a water closet or flush toilet as a minimum in each household.  The value of $25,000 applies both to the land upon which the dwelling place sits and the building itself.  The dwelling places is severable, in other words, if there are multiple dwelling places, or parts of a house or apartments, each rental property must have a value assigned to it under the principal act.

The difficulty is that in the passage of time, inflation has taken away the significance of the 25,000 dollar level.  There is virtually no housing today that will fall in that category.  The result is that the Ministry of Trade, responsible for the policing of the act has been unable to properly assist persons to cause their properties to be up to scratch, and to ensure that fair rents are set.  Thus we are arguing in favour of the $75,000 ceiling and we are asking the House to agree and pass this legislation to make that change.  Some would say that this is not high enough, given that in other Caricom countries, there is no ceiling at all, but we in The Bahamas want to be cautious.  We are ever conscious that we do not want this act to be a disincentive to entrepreneurs to enter the affordable rental housing market.  The Ministry of Trade is convinced that we have set it at the right level.

Mister Speaker, as I said no public policy instrument is perfect.  These are matters that must be under constant review.  The Government is committed to that.  It is committed also to ensuring that the second regime in the principal act is reviewed as well.  That regime calls for the dwelling place to be in tenantable repair, and it lays out the penalties for not following the procedures and strictures of the act.

I believe that the Minister is dedicated to a full review of this matter, and I see this as a first step in a long process.  In my mind, I think it must include protections for landlords who have unscrupulous tenants who destroy the places that they rent, who refuse to pay rent.  The procedures for obtaining vacant possession should be streamlined, and the enforcement measures against those who would damage a landlordís property all need to be examined.  But this is an important first step in the protection of the underprivileged, bringing them meaningfully into the safety net, which the policy of the legislation first envisaged when it came into force in 1982.

I wish to congratulate the Minister on his work in bringing this bill forward.  He has had a tough fight, and I am sure the House will support him even as it points out what more needs to be done.  I therefore take great pleasure and it is my privilege to second this Bill for an act to amend the rent control act.

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