Authors: Dr Madeleine Gauci | Dr Sarah Anne Borg
Published: 22nd July 2024
Real Estate & Construction Unit
Act No. XX of 2024 (the “Amending Act”) introduces significant changes to the Private Residential Leases Act, Chapter 604 of the laws of Malta (the “Act”). The amendments aim to streamline the legal framework, enhance transparency and ensure fairness for both landlords and tenants when registering their lease agreements with the Housing Authority (the “Authority”). The Amending Act is not yet in force, however the Minister responsible for Housing (the “Minister”) shall establish such date by notice in the Gazette.
The scope of this article is to provide a brief overview of the key amendments and introductions to the Act.
Amendments to the Act
New Definitions
The Amending Act introduces several new definitions, most notably – the term “Lease” which includes subleases to the definition, and “dwelling house” which is 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. Additionally, a revision of the term “residence” has also been introduced to include company-leased properties used to accommodate employees as sublessees.
Online Registration and amended period of registration of the Lease with the Housing Authority
The amendments introduced by the Amending Act extends the duration of the obligation to register a private residential lease agreement from ten (10) days to thirty (30) days1Article 4(2) of the PRL Act, such process being completed exclusively online2Article 4(9) of the PRL Act.
Number of tenants living in a leased tenement
The lessor must specify the number of residents allowed to reside in the dwelling house3Article 4(7) of the PRL Act. This disclosure was not mandated as an obligation on the lessor prior to the introduction of the Amending Act. In practice, the Authority had already imposed such an obligation on their online portal. The key amendment is that the Minister is empowered to make regulations under the Act providing for minimum standards of habitability for a dwelling house which is offered for letting and a limitation on the number of residents who may occupy the dwelling house at the same time. To date, such minimum standards and occupancy limitations remain to be introduced.
Contents of the Lease Agreement
The amendments introduced by the Amending Act have done away with the requirement to include the amount of security deposit paid by the tenant and the requirement to register an inventory with the lease agreement4Article 5(4) of the PRL Act. The inventory must still be drawn up, but the Amending Act has clarified the scope of the inventory, in that it must attest to the condition of the property and any furnishings. To provide a clear and accurate visual record of the condition and contents of the property at the time the inventory is created, inventories may now be in the form of photographs. The requirement to draw up an inventory is also necessary when the tenement is rented unfurnished5Article 6 of the PRL Act.
The amendments also clarify that when any of the essential requisites are missing, such as inter alia the term of the lease; whether the lease may be extended and the amount of rent, the lease agreement will be null and void. To assist parties to ensure that all the essential requirements set out by the law are being adhered to and, to avoid having lease agreements being declared null and void, the Authority is empowered to publish a template lease agreement on its portal. which may be found readily available on the portal. The Amending Act has introduced a “standards form” containing the requisite clauses and which may be made compulsory for any person entering into a lease agreement which is not in accordance with the template agreement provided6Article 6(3) of the PRL Act.
New Provisions under the Act – Renewal of a Lease, Substitution and/or Addition of a Lessee and Registration of a new lease in the case of consensual termination of the lease or abandonment of the property
In addition to the above mentioned amendments, the Amending Act introduced multiple new provisions governing inter alia – the express renewal of a lease7Article 9A of the PRL Act, situations of substitution of the lessee8Article 9B of the PRL Act and/or the addition of a lessee9Article 9C of the PRL Act as well as instances where the lease is terminated consensually or abandoned by the lessee10Article 9D of the PRL Act.
Notably, the new Article 9A governing the express renewal of a lease, prohibits the lessor from making any changes to the original lease terms upon renewal, unless it is a permissible increase allowed under the Act. Moreover, the renewal period cannot be of less than one (1) year. In the event that despite the landlord having given notice of termination, a tenant is allowed by the landlord to stay beyond the contractual date of termination, while the landlord requests rent, but has not registered a renewed agreement or revoked the notice of termination11Article 9A(6) of the PRL Act, a written notice in terms of Article 20 of the Act shall be issued by the Authority. Such notice shall describe the offence, the remedies and the administrative penalty of up to €2,329.37, that the landlord may incur if found guilty.
Article 9B of the Act on the other hand governs situations where any party of the lease agreement can request a lessee substitution. Any substitutions must be made with the express consent of the lessor, the outgoing lessee, and any other lessees appearing on the lease agreement. Substitutions are only allowed insofar as the total number of lessees in the agreement remains the same. The effect of a substitution will not create a new lease agreement or effect the existing lease periods. The substituted lessee enjoys all the rights of the original lessee including visibility of the original lease agreement and relevant registration details.
The new Article 9C of the Act also provides for situations wherein new lessees are added to an existing lease agreement. Similarly to substitutions, additions of new lessees require the consent of the lessor and existing lessees and likewise, the addition of a lessee to an existing lease agreement does not create a new lease, nor does it interrupt the existing lease period.
Finally, new Article 9D of the Act was introduced under the Amending Act to cater for instances where a lease is mutually terminated by the parties prior to the termination date, or a lessee abandons the property without providing notice to the lessor. In such cases, the lessor has a right to request to register a new lease on the same property, although the original lease period is still ongoing. This may be done following notification to the Authority. Subsequently, the Authority will notify the previous lessee about the lessor’s request to deregister the lease. It should be noted that deregistration of a lease does not release the lessor from obligations to the previous lessee if the property is given to someone else in bad faith, nor does it affect any claims the lessor may have against the lessee who abandoned the property.
Transitory Provisions
Leases which commenced prior to the amendments introduced by the Amending Act, shall continue to be governed by the previous Act. Leases still in force on 31st August 2025 must however, comply with any laws or regulations stipulating occupancy limits.
A copy of the Amending Act can be accessed through this link. “Footnotes” referencing the relevant articles to the Act, are not yet in force.
The information provided in this Insight does not, and is not intended to, constitute legal advice. All information, content, and materials available are for general informational purposes only. This Insight may not constitute the most up-to-date legal information and you are advised to seek updated advice.