When the Civil Laws of Malta were initially drafted in a codified form by Sir Adrian Dingli in 1868, no real protection was provided for the sitting tenant. Such promulgation featured the basic principle that upon termination of the agreed period of the contract of lease, provided that the lessor gave adequate notice in advance, the said contract was deemed to be terminated. This implied that upon expiration of the contract, the lessor regained possession of his property, and the lessee had no option but to move out of the leased tenement.
In 1931, the Reletting of Urban Property (Regulation) Ordinance, now Chapter 69 of the Laws of Malta, was enacted and thus marked the beginning of a series of special rent laws in the scenario of letting under Maltese law. With specific reference to Article 3 of the Ordinance, this provided that:
“It shall not be lawful for the lessor of any premises, at the expiration of the period of tenancy … to refuse the renewal of the lease or to raise the rent or impose new conditions for the renewal of the lease without the permission of the Board”
In other words, this connoted that unless the Rent Regulation Board granted permission, the lessor could not refuse to renew the contract of lease which has just expired, creating a situation where the landlord had the obligation to renew the said contract based on the same conditions!
Thus, the provisional protection of the lessee, one of the twofold implications of the above-mentioned Ordinance, becomes immediately clear; once a property had been rented, provided that the lessee respected the conditions of the lease, the landlord had very limited grounds to resume possession of the property which he owned.
Confoundedly, coming to the second implication, the Ordinance featured that all rents payable, were to be determined indefinitely and could not be increased under any reason unless by permission granted by the Rent Regulation Board.
Unsurprisingly whilst questioning how not foreseen at the time, the 1931 enactment had far-reaching consequences, eventually bringing about an indefinite rental freeze which had a considerable devastating impact on the rent market for a long time.
Adding to the problem, the Housing Act of 1949 allowed the then Housing Secretary to requisition private property and lease it out to third parties for accommodation. This was not a case of expropriation, as the ownership of the tenement was still vested with the landlord however it worsened the matter, bringing about a historical situation in the 1950s, whereby it was impossible to lease as the rent laws were so much considered to be in favour of the tenant.
The Housing (Decontrol) Ordinance of 1959 was therefore enacted to provide landlords with an incentive to lease their tenements. This Ordinance created a special class of dwelling houses, referred to as decontrolled dwelling houses, in respect of which the special Rent Laws did not apply. This implied that the landlords could charge rent at market prices and were not bound to renew on the termination of the lease. Moreover, combating another issue, the leased tenement was made immune to requisition.
In 1979 due to the financial problems that many Maltese citizens were facing, more specifically, worried about the fact that citizens may end up living without a home, Parliament decided to intervene and amended The Housing (Decontrol) Ordinance by Act XXIII of 1979. The situation, with regards to the lease to Maltese citizens, confusingly, was reverted back to the position existing prior to the enactment of The Housing (Decontrol) Ordinance. However, despite it catering for the then current situation, in the future such move proved to be unwise.
The historical moment came in 1995 when all leases created after the 1st July 1995 were no longer subject to the previous rent laws in vigore and the market was completely liberalised creating a complete commercial and contractual situation. Id est, in 1995 the situation went back full circle to when the Civil Code regulated the contract of lease exclusively and there were no further legal imposition of restrictions; no protection of the sitting tenant and no other form of protection whatsoever. This eventually helped to revive the rental market.
In June 2008 a rent reform White Paper was launched by The Department of Social Policy proposing that Malta’s pre-1995 rent laws are to be gradually phased out under a proposed reform based on protecting the tenure of current residents, ensuring that rents are fair and enabling landlords to eventually repossess their properties.
The White Paper held that as from 01st January the 2009, the minimum rent for pre-1995 rented property will be set at €185 per annum and will be adjusted every three years according to the rate of inflation. Furthermore, it incorporated that as from the same date, landlords will be able to raise rents to 10% of the costs which they might be burdened with, the maintenance obligation of landlord’s is to be restricted to structural works and roof repairs, and rents can, subject to specific conditions, only be inherited once by children living with the tenants.
Thus, the Maltese law today focuses on establishing a balance between the rights and obligations of both the lessor and lessee, leaving it in the hands of the parties to negotiate whilst providing general provisions should specific matter not be dealt with in the respective contract. It provides for new contracts of leases entered into post 1995, whilst also seeks to phase out, contracts of lease governed by different statues. One has to keep in mind that the 1995 amendments were made to apply only to leases created post 1995 and thus leases created before or existing prior to 1995, old special rent laws remain applicable. Nonetheless, the 2008 White paper proposals cater for bringing such pre-1995 contracts of lease to this fair balance, granting the possibility for owners, at the end of the day and most importantly, to regain possession of their property.
Michele Cardinali
Bachelor of Laws LLB(III)
