The Unconstitutionality Of The Pre-1995 Rent Laws In Malta

Posted on: 03 Jul 2019

Category: Articles, News

The laws regulating the letting of property in Malta have over the years witnessed a number of amendments which in most cases attempt to balance out the position of the lessor and the lessee.

The Rent laws were originally regulated by the Civil Code provided that, with a view to accommodate social needs at a time when the situation in Malta was dire, the Government intervened and regulated the rental market in 1931 through the enactment of the Reletting of Urban Property (Regulation) Chapter 69 of the Laws of Malta. The said laws significantly favoured the lessees vis-à-vis the lessor at a point in Malta’s history when such a position was certainly justified.

Over the years the said social justification lost most of if not all of its strength and in 1995 the government enacted provisions which ensured that any leases entered into after a specific date would be, once again, regulated by the Civil Code, whereas leases which had already been entered into would keep on being regulated by means of the old rent laws.

This de-liberalisation of the rental market led to a discrimination between those dwellings which were being rented under the old laws, which were subject to the ‘fair rent’ established in terms of Chapter 69 of the Laws of Malta, and those dwellings being rented out on the free market, with no control on the conditions of rent.

Under the old regime the owners hardly had any control over the amount of rent or the conditions of the rental agreement as these where all set out by law. In addition, the terms of Chapter 69 precluded lessors from refusing an extension of the lease or from requesting an increase in rent. This led to a situation whereby a number of properties where and still are being leased out for what is technically an indefinite period of time, against a negligible annual rent.

Over and above the possession of rented dwellings could be inherited by the tenant’s family so long as they were living in the same household at the time of death of the original tenant under the same conditions of rent that pertained to the original tenant.

Further amendments in the laws in 2008 attempted to regulate this position. The government attempted to strike a balance between the injustice being made against the lessors with a view to protecting their right to the enjoyment of their property against the general interest of the community.

Therefore, the Government deemed the 1st of June 2008 to be the cut-off point whereby such rental agreements could no longer be extendable towards the grandchildren of the original tenant. This however created a discrimination towards those owners whose property had already passed into the possession of the said grandchildren prior to the 1st of June 2008, leading to a situation by which a number owners could reasonably predict that during their lifetime they will never have a right to the enjoyment of their property; a right granted under both Article 37 of the Constitution of Malta and also Article 1 of Protocol Number 1 of the European Convention.

The old rent laws in Malta have been subject to a number of landmark Constitutional and European Human Rights cases. The most recent   one being the case in the names Anthony Debono & Simone Debono vs Attorney General and Stefan and Michelle Mifsud.

In this case the First Hall of the Civil Court in its Constitutional jurisdiction, as presided over by Hon. Judge Lawrence Mintoff, heard how the applicants had obtained title over the property through inheritance and had found themselves deprived from the right of enjoyment of their property due to the defendants having detention of the property in accordance with Chapter 69 of the Laws of Malta. The applicants argued that the laws relating to the rents pre-1995 in Malta, where to be deemed unconstitutional.

The Constitutional Court making reference to various preceding judgements of both the local Constitutional Court and the European Court of Human Rights, delved into detail on the matters pertaining to the unconstitutionality of the Laws mentioned above.

Article 37 of the Constitution of Malta

The Court gave an interpretation of Article 37 of the Constitution of Malta, which article provides that no individual should have his property taken away from his possession in an obligatory manner and without fair compensation. The Court confirmed that this article of the Laws of Malta is not limited to the issue of expropriation as the general understanding of the Article would suggest but is extendable to circumstances such as those being dealt with in this case as well. In addition, the court referred to the First Article Protocol Number One of the European Convention.

First Article of Protocol Number One of the European Convention

 “Every Natural and Legal person is entitled to the peaceful enjoyment of his possession. No one should be deprived from his possession unless it is in the public interest and in accordance with the general principles of International Law.”

This legal point was discussed in depth during the case in question where the Attorney General argued that the rent law relating to the leases pre-1995 was enacted in the best interest of the general public and therefore was not in breach of the European Convention. The Constitutional Court on the other hand made reference to a wide range of jurisprudence regarding this issue whereby it determined that  while on the one hand the Government, through the introduction Chapter 69 of the Laws of Malta, ensured and safeguarded the rights of the tenants and therefore facilitated the social needs at a precarious time in Malta’s history, it prejudiced the rights of the owners since the laws in question give no consideration to the fact that the lessors carried a social weight for a long period of time without any compensation or help from the State in doing so.

The Court strongly urged that it should never be the private individuals who are requested to carry alone the weight of social measures aimed to protect other citizens, unless they are compensated in fair manner. These pronunciations where made also by the European Court of Human Rights in the case of Amato Gauci Vs Malta.

Damage Awarded and final declarations by the Constitutional Court

The Court determined that the applicants should be compensated for by the state and liquidated the damages in the amount of €20,000 for the unfair imbalance between the amount they received in rent for a number of years and the actual rent that they could have been receiving on the open market. The Court went on to declare that the lease agreement entered into by the ancestors of the parties to be null and directed the defendants not to rely on Chapter 69 of the laws of Malta as a right to the reside in the property as this was deemed unconstitutional.

The Government following several constitutional cases of the same nature has been trying to address the rental market issue in relation to pre-1995 lease agreements. In 2018 a new amendment to the law was made whereby we saw the introduction of Article 12B in the Housing (Decontrol) Ordinance of 1959, Chapter 158 of the Laws of Malta.  This article aims to grant further rights to the lessors of dwellings that are currently being rented out under the old rent laws. This article of the Laws of Malta is however limited to those rental agreements which stem from an emphyteusis contract, further aiding lessors to take repossession of their own properties. Article 12B, Chapter 158 of the Laws of Malta, allows for the Lessors to be able to make an application in front of the Rent Regulation Board, “demanding that the rent be revised to an amount not exceeding two percent per annum of the open market”. This is subject to the board’s approval based on a means testing of the lessees as introduced by the same law. This means testing will consider whether the lessee based on his income and financial statements can afford such rent and, in the lack, thereof the Board shall “give judgment allowing the tenant a period of five years to vacate the premises”. Therefore, this law provides a remedy for the lessees to either be fairly compensated for their property or otherwise regain physical possession of the said property. This is a further step in ensuring that the Laws of Malta are not in breach of any constitutional and/or human rights.