Amendments to the Law of Leases by Act XX of 2024

Act XX of 2024 dated 18th June 2024, entitled Various Laws relating to Private Residential Leases (Amendment) Act, amends various articles of the Civil Code and the Private Residential Leases Act. This article shall highlight the various amendments which lessors and lessees should be aware of.

Private residential leases which had commenced prior to the coming into force of this new Act shall continue to be regulated by the provisions of the Private Residential Leases Act (Chapter 604 of the Laws of Malta). However, such leases which would still be in force on 31st August 2025 must comply with the laws or regulations which stipulate the number of residents who may occupy the tenement subject to the lease at the same time.

Article 1555A (2) of the Civil Code dealing with pre-1995 leases and specifically the non-use of pre-1995 leased property has been amended to provide for a gray area where a tenant is admitted to an old people’s home which still referred to article 1531F which was deleted by previous amendments. This article previously provided for the continuation of the lease in favour of relatives specifically recognised in article 1531F in the case the tenant is recovering in hospital or in an old people’s home and the tenant is permanently dependent on such institution. This relatives included:

– children of the tenant who had lived with the tenant for at least four out of the last five years on 1st June 2008 and have continued to live with the tenant thereafter; and

– brothers and sisters of the tenant, who are at least forty-five years of age and have lived with the tenant for four out of the last five years before 1st June 2008, and have continued to live the the tenant thereafter.

Act XX of 2024 has removed the reference to Article 1531F and replaced Article 1555A (2) with the following:

When the lessee of a lease which started before the 1st June, 1995 is recovering in hospital or in an old people’s home, and where such institution certifies or where it conclusively results that the same tenant is permanently dependent on the institution, for the purposes of the continuation of a lease according to the Reletting of Urban Property (Regulation) Ordinance and the Housing (Decontrol) Ordinance, the said permanent dependence shall have the same effects as the death of the lessee.

It has now been clarified that upon the admission of the tenant to a healthcare facility, the lease may continue in favour of the spouse who has lived in the tenement for at least four years of the five years prior June 1, 2008, and continued to live with the tenant until the admission into the healthcare facility. The lease may also continue in favour of siblings of the tenants who have lived with the tenant for at least four years of the five years prior to June 1, 2008 and have continued to live with the tenant until the admission into the healthcare facility.

However, other individuals who are not recognised as tenants in accordance with the definition of “tenants” under the Reletting of Urban Property (Regulation), but who had lived in the house for four years out of the five years prior to June 1, 2008 and up until the tenant’s admission into the healthcare facility, shall continue to occupy the house for a period of five (5) years from the date of the tenant’s permanent admission to the healthcare facility.

It is important to note as well that in terms of the Reletting of Urban Property (Regulations), the means testing criteria is also applicable vis-a-vis relatives who continue occupying the property following the admission of the tenant into a healthcare facility. Should such criteria not be satisfied, then the tenant may be required to vacate the property within two-years, by judgement of the Rent Regulation Board.

Article 1573 deals with the dissolution of a contract of lease by the lessor in the case the house let is required for his own habitation. This article provides for varying notice periods depending on the remaining period of lease.

In order to harmonise the rent laws, a new proviso has been added by Act XX of 2024 to provide for the same notice period of three (3) months for the non-renewal/termination of a residential lease. The new proviso reads as follows:

Provided that in the case of private residential leases in accordance with the Private Residential Leases Act, the lessor shall be bound to give notice to the lessee at least three (3) months before by registered letter.

The same amendment has been made to article 1575 dealing with urban tenements.

Act XX of 2024 has added new definitions to Chapter 604 of the Laws of Malta:

– building or premises have now been defined as a hour or other building, pr part thereof, which is used or may be used for residential purposes in accordance with the provisions of the relevant laws.

– dwelling house has now been defined as a building or part of a building separately let, which includes any land or garden forming an integral part, or enclosed within the precincts of such dwelling house, but does not include any movable structure, vessel or vehicle.

It has also been clarified that even sub-leases are considered as a lease in terms of this Act, i.e. the Private Residential Leases Act. Moreover, the definition of resident has been included and specified to mean a lessee as defined under this article, including any other occupant.

Furthermore, a new proviso has been added to the definition of residence which provides for when companies lease a tenement for the purpose of accommodating their employees, and the occupant is paying some form of compensation or consideration to the company for such occupation, that lease should be deemed as a sublease.

Article 4 of the Private Residential Leases Act provides for the registration requirements of any private residential lease contracts entered into post January 1, 2020.

With the amendments introduced by Act XX of 2024, the registration period provided in article 4(2) has been extended from ten (10) days to thirty (30) days, with the retrospective application of the registration to the date of commencement of the lease remaining applicable.

However, and most importantly, the amendments have introduced harsher obligations on the lessors by specifically replacing the word “duty” of lessor to register with “obligation” of lessor to register. Moreover, a proviso has been added providing that the obligation on the lessor to register the contract comes into being immediately upon the commencement of the contract of lease. This means that even though the law provides for a thirty (30) day period for registration, such thirty (30) day period would be irrelevant in the event of any enforcement or criminal proceedings, and is therefore simply an administrative period.

In an effort to curb the number of tenants residing in a house, the amendments have now introduced a requirement on the lessor to specify the number of residents that shall reside in the dwelling house.

Moreover, the amendments of article 4(8) provide for further assurance of proper standards of habitability to be imposed including the power of the Minister to impose a limit on the number of residents who may occupy the dwelling house at the same time. In fact, it also provides that should any new registration of a lease exceed the maximum number of residents permitted in a dwelling house, the Housing Authority will not accept such registration. However, should the Housing Authority proceed to register a lease contract, such registration shall not be considered as a certification of the habitability of the house.

Article 6(1)(g) of the Private Residential Leases Act (Cap. 604) has been revised to provide further details on the inventory requirement.

All private residential lease contracts made after January 2020 must be made in writing and shall now also include an inventory, to be signed by all parties, which inventory shall be made up of photographs with short descriptions, attesting the state of any furniture and domestic appliance which are being supplied by the lessor. Such photographs should be clear and capable of attesting the state of the tenement itself as well as the state of the furniture and domestic appliances.

It is important to note that even in cases where the tenement is being leased in an unfurnished state, an inventory is still required, to attest the state of the tenement at the time of lease.

Article 9 of the Private Residential Leases Act provides for the tacit renewal of the lease in the absence of a notice of termination to be provided to the lessee at least three (3) months prior to the termination.

Act XX of 2024 has introduced the concept of express renewal which allows for a lease agreement to be renewed by virtue of another agreement. However, through such renewal agreements, no changes are permitted to the original agreement except for rent increases in accordance with the law. Such rent increases cannot exceed 5%. Moreover, parties are not allowed to renew the agreement for a period which is shorter than the minimum prescribed by law, that is of one year. The renewal agreement may also be used to revoke a termination notice which had been issued in terms of article 9 of the Act.

Act XX of 2024 has also introduced restrictions for termination of the agreement by the lessee in the case where the agreement is renewed. If the agreement is renewed tacitly in terms of article 9(2), that is where no notice of termination is provided by the lessor at least three (3) months prior to the termination date and the lease is renewed for a further period of one (1) year, the lessee cannot withdraw from the agreement before the lapse of three (3) months from the start of the renewal period. Thereafter, the lessee may terminate by providing notice as follows:

– at least one (1) month’s notice where the lease is for a period of less than two (2) years;

– at least two (2) months’ notice where the lease is for a period of more than two (2) years but less than three (3) years;

– at least three (3) months’ notice where the lease is for a period exceeding three (3) years.

In the case where the renewal takes place by means of a renewal agreement, the lessee may not terminate/withdraw before the lapse of:

– three (3) months in the case where the lease is for a period of less than two (2) years;

– four and a half (4 and 1/2) months in the case where the lease is for more than two (2) years but less than three (3) years; or

– six (6) months in the case where the lease is for more than three (3) years.

The revised Act now also provides for the possibility of the lessor to register a new lease whilst the period of a previous lease is still on-going in the case where all parties to the lease agreement had agreed to the termination of the lease prior to the lapse of the period set for such lease or where the lessee abandons the property without notice. The lessor must give notice of such termination or abandonment to the Authority and the Authority will notify the lessor of the request for de-registration of the lease.

This termination by mutual consent or abandonment is applicable also in the case where the lease is entered into with more than one lessee and termination or abandonment takes place with regards to one lessee only. However, in such a case, for the lessor to be able to remove that one lessee, the consent of the other lessees included in the original lease agreement would be required.

Act XX of 2024 has also introduced the possibility of substitution of lessees that is where the current lessee is substituted by a new lessee subject to the same terms and conditions already applicable to the other lessee. For such substitution to take place, the lessor, the outgoing lessee and the incoming lessee must provide their express consent. It is also important that the lease agreement existing between the outgoing lessee and the lessor, is made available to the incoming lessee, since the incoming lessee will be taking on the same obligations.

The substitution will not in any way affect the term of the previous lease agreement, so the terms provided in the original agreement will subsist vis-a-vis the incoming lessee.

The new Article 9C also provides the possibility for the addition of a new lessee, which addition may be requested by any party to the lease agreement (both lessor and lessee). This is subject to the express consent of the lessor and lessees of the existing lease. Such addition shall not effect the continuation of the original lease agreement. Most importantly, the new lessee will also assume responsibility for any debts which would have been incurred before his addition to the lease. This means, that if the other lessee or lessees had any pending payments due to the lessor, he will assume responsibility for those payments in solidum with the other lessees.

The amendments have also introduced an administrative penalty amounting to a maximum of €2,329.37 where there is a dwelling house which is being occupied by a lessee, which lease is not registered with the Authority, where more occupants than the number allowed by law are occupying the property, and in the case of false declarations, etc.

The offences set out in Article 22 of the Act remain applicable but the possibility for the mitigation of the penalty has been removed.