Constitutional court rules in favour of landlords over protected pre-1995 rents

Tenants on disproportionately low protected rents entered into before June 1995 can have their tenancy right challenged after the court declared the law unconstitutional.

The first hall of the civil court in its constitutional jurisdiction made the ruling in a case filed by two siblings who were unable to exercise their full property rights over a three-storey house with a large garden in central Sliema.

The property is currently leased to a tenant who had lived there with the previous tenant, his grandmother before her death in 1986, with an annual rent of €203, subject to an increase in line with inflation.

The lease was regulated by the Re-letting of Urban Property (Regulations) Ordinance, which stipulates that landlords whose property had been rented out prior to 1 June 1995 had no right to refuse renewal of the lease and had to make do with what it established as ‘fair rent’ despite climbing market values.

Lawyers Edward Debono and Karl Micallef for the landlords argued that the situation caused an enormous discrepancy between what they were actually earning in rent and the potential rental income on the free market.

They had also been forced to turn down a €450,000 offer from a potential buyer in 1996 because the tenants had refused to accept alternative accommodation arrangements.

The discrepancy was confirmed by a court-appointed architect who had estimated the house was worth €300,000 and could fetch €1,000 per month in rent.

The owners had “no real hope” of gaining effective possession of, or income from the premises, they told Judge Wenzu Mintoff, in view of the fact that the tenants’ children would inherit the lease.

The judge observed that the rent was low in comparison with the market value and that the chances of the plaintiffs regaining possession of the house were “remote.”

Despite amendments brought into effect in 2009, the State had failed to safeguard the rights of owners, declared the court.

The plaintiffs’ constitutional rights were breached, ruled the court, awarding them €20,000 in damages plus costs payable by the State. The tenants could also not continue to rely on the impugned laws to occupy the premises, it said.