Residential And Commercial Pre-1995 Leases In Malta May Now Be Subject To Scrutiny

9th May 2019

The applicants argued that the situation gave rise to ‘an enormous discrepancy’ between what they were earning by way of rent and the potential income their property could generate on the free market.

A landmark ruling in a constitutional case on Wednesday declared that the current legal regime concerning leases breaches landlords’ fundamental rights.

The Times of Malta reported how owners of a requisitioned property in Sliema initiated the proceedings against a man who had lived there with the previous tenant, his grandmother, and continued to do so after her death in 1986.

The house had been the current tenant’s home against an annual rent of €203, subject to an increase in line with the Inflation Index, last adjusted in January 2019.

In terms of the current legal regime, landlords whose property had been rented out before 1st June 1995 had no right to refuse renewal of the lease at these disproportionate rates.

The applicants argued that the situation gave rise to ‘an enormous discrepancy’ between what they were earning by way of rent and the potential income their property could generate on the free market.

They also said that had “no real hope of gaining effective possession of the premises nor real income”, since the tenants’ children held a right to succeed him in the lease.

The First Hall, Civil Court, presided over by Mr Justice Lawrence Mintoff, ruled that the situation breached the applicants’ constitutional rights, awarding them €20,000 by way of damages payable by the Attorney General, together with all costs of the case.

Court also ordered the tenants to no longer rely on the law, which was thus declared unconstitutional, to retain their hold on the premises.

This effectively means that leases issued before 1st June 1995, whether residential or commercial, are up for scrutiny. If the rent is much lower than market forces demand, then tenants may no longer be able to claim protection for automatic renewal.


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