Introduction
Maltese rent laws have been the topic of controversy for several years. This is confirmed by the numerous case law involving constitutional and human rights revolving around the right to property. Some of these cases have been decided by the Maltese Consitutional Court as well as the European Court of Human Rights (ECHR).
The issue centred around the argument that too much protection was being granted to the tenants to the detriment of the property owners. In a way, this made it harder for the owners to get their own property back. This resulted from a number of laws which had been enacted throughout the years basically grantining a very high level of security to the tenants while controlling the rental value and keeping it frozen at pre-second world war levels.
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Bill 42 of 2018 proposes that owners of properties being rented out under old rent laws have the option of filing an application before the Rental Board for the tenants to be means tested. If the test results show that the tenants do not have the appropriate or the sufficient means to search for alternative accommodation, they will be allowed to retain their stay in the property, on condition that the rental payment to the owners is increased up to two percent of the property’s market price at the 1st January of the year in which the application is made, including any other terms which the Rental Board may stipulate.
On the other hand, if the means test determines that the tenant has the adequate means to find an alternative accommodation, the tenants would have to pay double the rent and vacate the premises within 5 years time.
The way in which the means test shall be determined is stipulated in Article 12B(3)(iii) of the Bill which states that the means test shall be based on the income of the tenant between the 1st January and the 31st December of the year preceding the year when the proceedings are commenced and the capital of the tenant on the 1st December of the said year.
This procedure also applies to cases involving lease, sub-lease, or expired home rental contract due to a court decision on the basis of a lack of compensation proportionality. This means that the amendments should also be exercised by tenants sentenced by the court to vacate a property but who failed to do so.
Extension for Sub-Leases Post-2018
Prior to Act VIII of 2018, article 1613 of the Civil Code stated that where there is sub-letting of commercial premises before the 1st June 1995, the lease should terminate on the 31st May 2018. Seeing that this provision was about to come into force, the Maltese Parliament introduced a new regulation which ultimately permits for an extension of the rental period, to the sub-tenants’ advantage.
Sub-lessees who were sub-letting commercial tenements for a minimum of one year prior to the 31st of March 2018, have now been granted the right to ask for a 10-year extension. The Act gave the opportunity to interested clients to benefit from this extension since the sub-lessee was given until the 31st May 2018 – to present an application to the Rent Regulation Board asking for permission to continue making use of the property for a period that does not go over the period of lease or for 10 years – depending on which is shorter.
Owners of tenements subject to a sub-lease who have earned less rent than the tenant has received from the sub-lessee and who were waiting for the 31st May 2018 to reclaim their property, may now have to wait another 10 years before they can repossess it.
