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Can government control skyrocketing rents?
07|03|2006 |
Ibrahim Hameed |Evening Weekly
It was last year that pickup truck- and lorry- drivers in Male
went on a strike when the government objected to a demand by
them to raise the charges for a one-way trip from 20 Rufiyaa to
25 Rufiyaa. The drivers had complained that in the face of
staggering gasoline prices, they had no choice but to raise the
charges. But the government insisted against this move,
expressing concerns for the general population.
For several days, this drama went on. The drivers said that it
was unfair since the local flight operators were given
permission for fuel surcharge, but not for them. After several
days, the government in the end gave in and allowed the charge
to be raised as demanded by the drivers.
Apparently, it is not just services by pickup trucks, lorries or
cabs that come under government regulations. Ferry services
between the capital and the international airport at Hulhule
island, and the private ferry boats run between Male and other
islands are also subject to government regulations. All these,
according to the government, are done out of concern for the
general public.
But in this congested capital, where an estimated half of the
population live as tenants, there has never been any particular
regulation on tenancy. Unlike in many other countries, the
government hasn’t been able to launch a public housing program,
leading to many people in Male to live in rented private homes.
In outer islands, every family gets a free land plot to build
their home. In Male, too, this was the case, until it became
overpopulated with people coming from other islands -- seeking
better social and economic opportunities, and also because the
population multiplied among the original Male residents.
Now, a large part of the people living in Male lives in rented
apartments and flats. Among them, some are born and bred Male
people, but the majority are those who have come from other
islands hoping for a better living. For any Maldivian seeking
better social and economic benefits, Male is the land of milk
and honey in the country. But with so much people, shortage of
housing in Male is terribly felt. And the demand for rented
homes have been far exceeding than the supply.
But the biggest concern is that despite the obvious impact on so
many people’s life at every given hour from this very issue,
there hasn’t been any formulated regulation governing renting
homes and other private property in Male. Anyone who has a
property, can rent it at will and at any prices he or she
chooses.
Depending on the demand, the property owner could set any price.
There is no legal binding whatsoever even to sign a contract
before a property is rented. Albeit many people now would sign a
contract before the property is being rented, the terms are
always dictated by the property owner. As such, a property owner
may demand from the tenant several months of rent in advance.
Among the tenants, there has always been a lot of resentment
over this. They think that they are being simply extorted by
land owners in Male, while the government finds it only
important to regulate the fees of taxis, pickup trucks, lorries
and ferry-boats. Tenancy in Male, they argue, is a far more
pressing issue given its effect on the much wider population,
yet the government hasn’t even given a consideration.
Unlike in various other businesses, property owners in Male (or
any where in the country) are not obliged by any tax. Apparently
taking full advantage of this leniency, there are now those who
invest to develop properties across Male only to rent them out.
Among these, not everyone is the original land owner from Male.
There are even those who would lease a land from the original
land owner, for several years, and then develop it, because it
makes good business.
Apparently, not everyone is developing a property purely for
business. Given the scarcity of the land in Male, the only
choice for many families in Male now is to construct a high-rise
building. But this requires hefty sums, amounting to several
million Rufiyaa. An average family in Male is not that rich, so
they have to seek a loan, requiring several years to completely
repaying.
According to Ahmed Shaiyam, who heads a private construction
firm in Male, to complete an unfurnished five-storey building,
housing two-room apartments on each floor, on a 600-square feet
land plot, would require an estimated 1.3 million Rufiyaa.
Obviously, that is a hefty amount for an average family in Male.
Ahmed, a resident of Male, says that he is currently spending
three million Rufiyaa on a three-story apartment building,
constructed on the 1,200 square feet land plot that his family
inherited in Male. Ahmed is only a civil servant, and 80 percent
of the money for construction comes by way of a loan, requiring
several years for him to repay. He says that although the
building was originally intended for his family, he hopes to
rent out most of the apartments, until he is able to complete
repaying the loan.
“It would take some 15 years for me to complete repaying the
loan, so I cannot afford to rent out the apartments at a cheaper
rate. Ten years from now, the building would be old and people
would be reluctant to pay the same original rent,” said Ahmed.
Adopting a policy on tenancy at the state level in Male,
nevertheless, is not a bad idea. A ferry-boat, similar to a one
seen in, say, southern atolls, would requite a lot of money to
be completed, yet the owners cannot elevate even the passage fee
without the approval from state bureaucracy. And if the state
could interfere and regulate the fees of lorries, pickup trucks
or cabs, there is no reason why a similar policy cannot be
adopted in the case of tenancy in Male.
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