Is the freeze on rent fair and justified
27 February, 2021, 9:25 pm
At the outset it is imperative to state that the key objectives of the Commerce Commission Act as stipulated under Section 2 (1) (d) inter alia includes: (a) to promote the interests of the consumers and (b) to ensure equitable returns for businesses with fair and reasonable prices charged to consumers.
This is further amplified in FCCC’s mission statement: “Fostering a competitive, efficient, fair and informed market place to enhance the welfare of all Fijians.”
It clearly implies that the interests of both parties should be accorded equal consideration and treatment.
However, with the stroke of a pen the freeze on rental of residential dwellings was extended for the thirteenth consecutive year.
It is most unfortunate that due diligence was not carried out to evaluate the far reaching ramifications of the decision on the service providers i.e. the landlords.
Justification for freeze
While announcing the prohibition FCCC CEO said, “many Fijians are currently struggling financially, with the COVID-19 pandemic having had an enormous impact on the economy, not just locally, but globally. Our assessment took this into account, in addition to other relevant factors”.
He further stated that the rent freeze has been extended to maintain a certain level of control to ensure fair treatment of tenants.
“Traditionally, the objective of imposing rent controls was to counter inflation.
“However, rent controls in Fiji now serve broader functions, such as consumer protection and ensuring affordability of residential rental properties.” (Source: FCCC press release issued on January 1, 2021).
Therefore, it is obvious that the extension was granted to protect the interest of tenants only.
What about the landlords whose livelihood is dependent on the rental income?
Don’t they also deserve to be given a fair treatment as well given the fact that the moratorium has been in place since 2007.
Has the pandemic only impacted the tenants and not the property owners, if I may ask?
Escalating cost of repairs and maintenance
Often it has been observed that a lot of empathy is shown towards the tenants whenever they are evicted by the landlords whereby the latter are portrayed as unscrupulous and heartless people.
So much so that it has created the perception that the tenants are always right and the landlords are always at fault.
That presumption seems to stem from the fallacy that all landlords are wealthy and have the affordability to absorb the increase in cost.
Nobody seems to care that most of them have invested their retirement funds and life savings into the properties and depend on the income from the rental for their livelihood and also have mortgages to pay.
For if they did then they would have realised that the cost of building materials, construction, renovation and refurbishment have increased three-fold since the freeze was first imposed.
The land lease rental goes up every five years.
This is further compounded by the 16 per cent increase in town rates for Lautoka ratepayers this year.
Needless to mention the additional burden attributing to damages caused by termites.
The latitude allowed for first time landlords to fix the rate for the first letting creates a disparity in the rents charged for old and new properties.
In other words, the new landlords will be able to align the tenancy rate to the current rental market whereas the existing ones are required to maintain the same rent that was first charged when letting out the flat or house 13 years ago.
Will this not promote unfair competition?
On the other hand the owners of commercial properties continue to enjoy exemption from this restriction.
When import duty was removed from a range of commodities in the last budget was any measure put in place to ensure the benefit was passed over to the consumers.
Therefore, I firmly believe the restriction is discriminatory towards one group of property owners.
Let us not forget the Commission is there to protect the interests of both parties. And not one at the expense of the other.
This was also acknowledged by the Consumer Council of Fiji in its press release issued on 24/11/2008 where it maintained that the rental freeze was a short-term solution while stressing on the need for the review of the laws governing the residential tenancy to ensure protection to both tenants and landlords.
Deregulation of the rental market
It is to be noted that section 26 of the Bill of Rights provision of the 2013 Constitution clearly articulates that every person is equal before the law and has the right to equal protection, treatment and benefit of the law.
Nor should he be unfairly discriminated against, directly or indirectly on the grounds of his or her economic or social or health status.
That the rent freeze order issued by the minister is unchallengeable in a court of law disenfranchises the constitutional rights of the landlords to seek redress against the unfair treatment.
Like every other business they too deserve a fair return from their investment.
It’s high time the rental market was deregulated to put them on the same footing as other businesses who have been given tax reliefs and other concessions post COVID-19.
For 13 years is unreasonably and unjustifiably far too long.
- The writer is a regular correspondent to The Fiji Times. The views and opinions expressed in this article are his and are not necessarily shared by this newspaper