Landlords awarded €10,000 over unconstitutional €286 fixed annual rent

A landlord has been awarded €10,000 in compensation for being forced to lease his property for an indefinite time at a rate far below market value by Malta’s rent laws.

Judge Mark Chetcuti, presiding the First Hall, Civil Court in its constitutional jurisdiction, heard the case which had been filed by the owners of an old, very large tenement in the historic Zejtun village core. The property had been leased to a couple in March 1995 and had since been made their family home.

In terms of Chapter 69 of the Laws of Malta, The Reletting of Urban Property (Regulation) Ordinance, leases signed prior to June 1, 1995 were protected by law, thereby denying landlords the right to revise the rent in line with market prices.

The landlords claimed that the annual rent of just €286 was far below the market value of the property, which was estimated by an architect at €522.50 per month.

The court also heard how the tenants had carried out many repair works and improvements to the property and that they had no alternative accommodation.

The landlords sought the Courts’ protection, suing the Attorney General and the couple leasing the property for a breach of their right to the full enjoyment of their property as safeguarded under the Constitution and the EU Convention. They requested that the court also liquidate adequate compensation.

The Court, presided over by Mr Justice Mark Chetcuti, rejected the respondents’ argument that the applicants had freely entered into the lease agreement well aware of the existing legal regime.

Although the owners had signed the agreement after the entry into force of Chapter 69, this could not be interpreted as a ‘free choice,’ the Court observed, citing European jurisprudence which declared that the landlords could not “reasonably have foreseen the extent of inflation in property prices in the decades that followed.”

Nor could the landlords’ acceptance of the rent, for a one-year period between March 2018 and March 2019, be interpreted as them waiving their litigation rights, which could only be inferred through “clear and unequivocal evidence,” the Court went on.

Recent amendments to local rent laws in 2009 and 2010 were not helping landlords who were forced to accept a rent that could only be revised through to “draconian” restrictions, the Court said.

As it declared that the landlords’ rights had been breached, the Court also noted that the applicants had “no real hope” of regaining effective possession of their house as the tenants now had children who shared the same residence.

After taking a number of issues into account, including improvements made to the property by the tenants, the Court ordered the AG to pay the landlords €10,000 in compensation, as well as declaring that the tenants could no longer claim protection under Chapter 69.

Lawyers David Camilleri and Joseph Gatt assisted the landlords.