controversial rental bill back to the House of Assembly.

The Rent Increases (Domestic Premises) Control Amendment Act 1999 was moved by Sen. Calvin Smith (PLP).

But Opposition Sen. Kim Swan proposed an amendment, which succeeded on a vote of six to five, to reinstate the exemption in the principal Act that permits properties completed after June 30, 1983 to be exempt from rent control.

The other part of the new Act increases the ARV from $9,900 to $16,200. All properties with an ARV below that amount will be rent-controlled.

Sen. Smith said the new law was necessary to stay in line with the increase in ARVs recently enacted by The Land Valuation and Tax Amendment Act 1999.

He said there was already a shortage of low rent housing on the Island and he claimed that rent control was not a disincentive to landlords or those considering building properties to rent out.

Sen. Smith added that rent control was intended to be in place only for the short term, as it was anticipated that eventually market forces would create balance in the rental market.

Opposition Leader in the Senate Maxwell Burgess (UBP) said the new law would hurt black middle class Bermudians whose only "equity in Bermuda'' consisted of real estate which was rented out.

He said the proposed law was controlling the amount of return on their investment.

Sen. Burgess said rent control dissuaded builders from constructing new homes which was what Bermuda desperately needed to address the housing shortage.

He also claimed the law did not help the tenant with limited resources as it was believed.

Ultimately rent control leads to increased rents, he claimed. And he said the way to help tenants was to use the $7 million just raised from increased land tax to subsidise their rents.

Instead the landlord was getting it at both ends by having to pay more land tax and by limiting the rent he or she could charge, Sen. Burgess said.

Sen. Walwyn Hughes (Ind) said the bill was restricting the market place and that this concerned him.

He said the increases both in land tax and rent control should be done over a period of time to level out the shocks in the market.

He suggested that Government hold the existing position on rent control until the next ARV review.

Sen. Michael Scott (PLP) said with regard to loss of investment income for the middle class, in the current buoyant economy, there were an ever-increasing number of investment opportunities.

Sen. Jeanette Cannonier (Ind) said when increased land taxes were proposed, she asked: "What is to stop landlords from increasing rents?'' and she had received no answer to that question.

She said she was not convinced that the proposed bill was the right way to address the problem.

Sen. Cannonier claimed that there were already too many people struggling to pay their rent and asked, "Where is the help?'' She said she believed that most new units being constructed would charge rents above the $700-$800 range and disagreed that the rent control provisions would impact builders.

Sen. Swan wondered what the Government was hoping to achieve with the bill.

He said the Government was no closer to increasing the supply of rental units and that the bill affected a small percentage of people.

He urged the Government to find incentives for people to invest in housing instead of "regulating the common man''.

Senate President Alf Oughton said he was not an advocate of rent control, but could understand why it was needed.

He said the reality was that there would always be the possibility of private arrangement between landlord and tenants which would nullify the effect of legislation.

He noted that Minister of Health and Family Services Nelson Bascome had said this was a temporary measure until a real solution was found, but he wondered when rent control would be rescinded.

The Senate then went into committee and Sen. Smith added to his comments, noting that since 1990 there had been a decrease in the number of units coming onto the market.

He said the Act was designed to prevent rent-gouging and to protect people from eviction.

Sen. Swan then proposed the amendment, eliminating the inclusion in the Act of properties built after 1983.

The vote was taken and the amendment was carried. The bill will now be returned to the House of Assembly who are not scheduled to meet until November.

Calvin Smith