Various pronouncements by the European Court of Human Rights in Strasbourg and more recently of the Maltese Constitutional Court have repeatedly found Malta in breach of Human Rights for failing to strike a fair balance between the interests of landlords and tenants as a result of the 1979 amendments that controlled the rent market and granted significant protection to tenants.
A Bill aimed at addressing the injustice and disproportionate burden that landlords were forced to suffer is currently going through the parliamentary process with the objective being that it will soon be joining our statute book. It could be said that this Bill complements Act X of 2009 that was mainly introduced to phase out the old controlled rent regime.
Bill 42 of 2018 proposes to bring about these amendments by the introduction of a new article to the Housing (Decontrol) Ordinance, Chapter 158 of the Laws of Malta. These amendments will apply to dwelling houses that are currently occupied under a title of lease that has been created by virtue of a previous title of emphyteusis. It is important to observe that the Bill as proposed will not apply to those lease contractsentered into before 1st June 1995 which to this day are still being automatically renewed, and were intended by the parties to be lease agreements from the beginning.
By filing an application before the Rent Regulation Board, landlords are entitled to request that the rent be revised to an amount not more than two per cent of the open market freehold value of the dwelling house. In their application,landlords can also request the Board to impose new conditions to the lease.
Provision is made that in case the landlord or the tenant are not in full time employment they can have recourse to these proceedings with the benefit of legal aid. Besides the plaintiff and the defendant taking part in these proceedings, the Housing Authority is also granted the right to participate and make its own observations in relation to the case.
This Bill proposes that when proceedings are instituted in terms of this article, the Board shall conduct a means test of the tenant based on his/her income and capital.
In case the Board finds that the tenant does not qualify within the parameters of the said test, therefore implying that s/he has suitable means and no longer merits the protection of the law, then the Board shall give judgment by allowing the tenant a period of five (5) years to vacate the premises.
In case the tenant meets the means test criteria, the Board shall, after taking note of all the surrounding circumstances, increase the rent which shall not exceed two per cent of the value of the property. Interestingly, the landlord canask the Board to make an interim increase during the pendency of the proceedings. The increased rent set by the Board shall be for a period of six (6) years after which it will be subject to revision.
Additionally, during the continuance of the lease, the landlord will have the right to file an application before the Board in case of a material change in circumstances of the tenant demanding a revision in the conditions of the lease.
The landlord can also subsequently request the eviction of the tenant if s/he manages to unequivocally satisfy the Board that the latter is no longer in need of social protection.
A further important provision that is being proposed concerns an amendment to the definition of ‘tenant’. Followingthe demise of the tenant, any other person not being his or her spouse who would qualify to continue with the lease in terms of the old law would now need to vacate the premises within five (5) years.
Lastly, the Bill under review also proposes the addition of a new article to the Civil Code, Chapter 16 of the Laws of Malta that aims at granting further protection to Band Clubs and this, despite their eviction having been ordered by a final judgement of the Rent Regulation Board or of the Court. The rationale justifying this protection is based on the contribution by these clubs to Maltese culture and social identity.
Joseph Calleja LL.B., LL.D., LL.M. (EU Bus. Law)