Government adopts defensive tactic over unconstitutional rent laws

Reforming 1979 rent law might not be on the cards

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Matthew Vella
10 November 2017, 8:10am
A generation of elderly tenants in Malta is in court battling off new claims for their eviction from ‘rent-controlled’ housing.

They are the tenants who first took control of their properties in the 1970s, and are today pensioners. Now the low rents once guaranteed by a 1979 law, today deemed unconstitutional by both Maltese and European courts, are being challenged as landlords seek to take back control of their properties.

But the Maltese government does not seem inclined to tweak the rent-control laws, despite promising an action plan to the Council of Europe, which is monitoring the execution of a landmark judgement by the European Court of Human Rights.

Already the government has postponed the action plan some three times, now to January 2018.

But whereas it previously mooted extending the most recent rental reform to the 1979 leases, details remain sketchy at best.

“The Council of Europe understands that we cannot just reform the laws and end up throwing people on the street,” a government source told this newspaper. “Until it is possible for us, we will keep defending the law in court.”

The law in question is the Housing (Decontrol) Ordinance. In 1979, the law was amended so that any temporary leases contracted prior to that year, would, upon expiry, turn into permanent rental contracts, with annual rents doubled only once every 15 years.

The law provided security to thousands of tenants in the 1980s, but a decade later, landlords were reaping meagre rents for their properties, some of them today still as low as €200 a year. Property owners were given some reprieve when they were allowed to take back their properties once the tenant passed away.

Today the landlords have mounted a legal fight-back. Bolstered by the ECHR ruling in the Amato Gauci case, which found that the law breached fundamental rights by forcibly subjecting landlords to a tenant relationship without their consent, property owners are trying to reclaim their properties.

Since then, the Maltese courts have been flooded with claims for damages from the government by property owners. While tenants fear eviction because of the unconstitutionality of the Housing (Decontrol) Ordinance, the law, however, stays in place.

“As things stand, we will keep challenging the claims of property owners in court and, if and when we lose the cases, we will pay out the damages suffered because of the breach of rights,” the government source said, indicating that the government is adopting a wait-and-see approach on the matter.

“The law will however stay in place. And as such, the law protects tenants from being evicted.”

In the meantime, the Maltese government is supposed to have forwarded an action plan to the Council of Europe’s monitoring committee. The committee is responsible for enforcing     rulings by the European Court of Human Rights, and Maltese rent laws are the subject of three separate rulings.

But the proposed amendments have already been delayed by two years, and a next appointment for January 2018 might also be ignored.

A recent assessment by the monitoring committee hinted that the government will address those controlled rents that are way below market value – and that will mean a gradual increase in rents that can be as low as €100 a year… having doubled in value only once since they were ‘frozen’ in 1979.

Justice minister Owen Bonnici has in the past also told parliament that a social impact assessment was being carried out on the proposed legal changes that will be “striking a balance between the social impact [on tenants] and landlords’ rights.”

On its part, the Council of Europe committee has demanded further information as to “what procedural safeguards are envisaged” to provide property owners with a remedy to challenge both the amount of rent fixed and the actual tenancy. “There is a lack of clarity on the content and the scope… of those reforms and how they will benefit property owners, such as the applicants in these cases, whose properties continue to be the subject of imposed tenancies.”

 

Courts order damages for landlords

The Maltese courts have already dished out decisions that reflect the spirit of the Amato Gauci ruling. Significantly it was a constitutional ruling that upheld previous decisions that a tenant, Carmel Camilleri, could not keep availing himself of this law to rent a property at just Lm90 (€225) a year, after the lease terminated in 1991.

Originally, Bartolomeo and Giuseppa Bezzina had leased out their Gharghur property to Camilleri in 1974 for a period of 17 years. In 1991, Camilleri availed himself of the right accorded by the Housing Decontrol Ordinance, to keep renting the house he leased, with a marginal increase in the annual rent.

The court said that the liberalisation of the rental market in 1995 was “a recognition that the country’s social wellbeing did not require more protection – yet no revision was provided for landlords who were denied the use of their property.”

The first court found that under present laws, the maximum rent that could be asked for the property in question was just €837 a year, when in reality its rental value was as much as €7,800 a year, or €650 a month.

Although the decision does not mean that landlords can evict tenants indiscriminately, the court ordered the Attorney General to liquidate €10,000 in damages to the landlords, for loss of earnings over the years.

But the appeals court said that simply liquidating damages to the landlords was not enough: “this court would be effectively allowing the prolongation of a state of anti-constitutionality, that would require the applicants to periodically file for just compensation from one sentence to the other”.

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Matthew Vella is executive editor at MaltaToday.