Rent law amendment: Socialist PR but exploitative reality | Matthew Attard

When looking at the government’s advertising on its proposed amendments to the Residential Leases Act, one gets the impression that this is a progressive reform that will stop landlords’ rampant exploitation in the sector. However, once you look at the amendments, the opposite is true.

While the law does introduce minimal standards to combat overcrowding, it does not tackle affordability. It removes all rent-calming measures that were available to tenants, and promotes lazy landlords.

Let us start with affordability. The current law limits rent increases to 5% for the same contract. However, it does not restrict prices in between contracts. Landlords have been abusing this loophole by terminating the contract and drafting a new contract whereby the tenant must pay hundreds of euro more per month in order to not get evicted.

This loophole is clear to everyone in the sector. The Housing Authority’s 2023 Rent Report mentioned that rents have increased by 6.6% on average despite the 5% limit mentioned in the law. Yet the MDA insists that it is tenants that are abusing the law in the sector as some exercise their right by relocating after six months.

The minister, likely after much lobbying from the MDA, has decided to remove all rent-calming measures that were in law.

The most impactful was the extension of the di fermo period for the whole contract. Currently, for a contract of up to two years, tenants are only required to stay in the residence for six months. After the sixth month, they are free to leave if they give one month’s notice to the landlord.

This has allowed tenants to change properties when they find hidden defects to a property, when their landlord promised repairs but never carried them out, or when they find a better and more affordable place to live.

The concept is common around Europe and has also been the law in Malta for a significant number of years. In Spain for example, rental contracts must have a minimum duration of five years, however tenants are still allowed to leave after 6 months if they give 30 days’ notice.

Yet the government has proposed that tenants should never be able to leave a property they rent before the end of the contract. If they do, not only will they lose their deposit but will also become liable for the rest of the rent.

Another rent-calming measure which is going to be amended is the automatic renewal of contracts. Currently, if the landlord does not terminate the contract three months prior to the expiry of the contract, it gets automatically renewed at the same conditions.

In fact, in 2022, almost 20,000 contracts were automatically renewed at the same price. The Housing Authority’s rent report in fact states that “renewals contribute to rent stability”. Yet, the government is amending the law so that if a contract gets renewed, landlords can still increase prices up to 5% for each year since the original contract started.

Finally, the amendments support lazy landlords by extending the registration period from 10 to 30 days. What are the ramifications if landlords still do not register the contract? The Housing Authority will give the landlord an additional 21-day period to register the contract for a measly administration fine of €120.

In the meantime, tenants cannot apply for the housing benefit, might be at risk of getting deported since they do not have a registered contract, and might even deal with an angry landlord if the tenant tries to register the contract themselves.

It is no coincidence that the only lobby groups benefiting from the amendments are the likes of the MDA, which has long dictated government policy in the environmental and construction sector. The results of this have been clear: a total failure of regulation and enforcement in the two industries.

Let us not allow it to extend also to the rental industry.