In his letter entitled “Lacuna in our rent laws” (TMIS, 3 November), George Farrugia makes specific reference to commercial rents.
Article 1531D of the Civil Code deals with the rent of a commercial tenement and provides that:
“1531D. 1) The rent of a commercial tenement, unless otherwise agreed upon after 1 January 2010 or agreed upon in writing prior to 1 June 1995 with regard to a lease which would still be in its original period on 1 January 2010, shall as from the date of the first payment of rent due after 1 January 2010 be increased by a fixed rate of 15 per cent over the actual rent and shall continue to increase as from the date of the first payment of rent due after 1 January of each year by 15 per cent over the last rent between the 1 January 2010 and 31 December 2013.
2) The rent as from the first payment of rent due after 1 January 2014 is to be established by agreement between the parties. In the event that such agreement is not reached, the Property Market Value Index shall be considered as a guide to the rent as may be established by regulations made by the Minister responsible for accommodation and in the absence of such regulations, the rent shall from the first payment of rent due after the 1 January 2014, increase by five per cent per year until the coming into force of the said regulations.
3) In the case of a commercial tenement, if there was an agreement between the parties for periodic rent increases, then such agreement shall continue to apply without the increases contemplated in this article:
Provided that except in such cases where the increase in rent has been effected following an agreement, where the increase as proposed here before for commercial tenements is applied, the tenant may by means of a judicial letter served on the lessor or on one of the lessors, terminate the lease by giving him advance notice of three months and this shall also apply if the lease is for a definite period.”
Mr Farrugia is alleging that a “lacuna” exists in rent laws given that to date the legal notice establishing the Property Market Value Index has not been published.
The reform that overhauled the rent regime (which regime had been in place for decades) aimed to respect that delicate balance involving two conflicting rights: on the one hand the rights of the lessor and on the other hand the rights of the lessee.
As far as commercial rents are concerned, the rent laws have established a means whereby the rent of commercial property is revised in order to reflect, as much as possible, the market rental values of the commercial property involved. The reform catered for the various existing scenarios for a holistic approach.
The assertion made by Mr Farrugia regarding “lacuna” in the rent laws is not correct. The rent laws applicable to commercial tenements are exhaustive and provide for all existing and new leases. The next increase in rents is envisaged to apply to rents due after 1 January 2014. In those cases where the lessor and the lessee do not agree on the rent payable after the said date, the law establishes that the revision can be made by applying the Property Market Value Index as a guide. The Government is currently in the process of establishing the Property Market Value Index which will be published in time – before 1 January 2014.
Gertrude Borg Marks
Communications Officer
Parliamentary Secretariat for Justice