Council of Europe unconvinced by recent legal amendments to Malta’s rent-control regime

Means-test fails to placate Council of Europe

File Photo
File Photo

The Council of Europe’s body responsible to monitor government’s application of human rights laws has shown itself unconvinced by recent legal amendments to Malta’s rent-control regime.

The COE committee, which supervises the execution of judgements by the European Court of Human Rights, decided to closed its examination on property requisitions, but it said the means test for the eviction of rent-controlled property tenants was “seemingly designed to stultify eviction proceedings.”

The committee is seeking details on whether the introduction of a means test for tenants living under the 1979 rental regime, is beneficial to owners or if it introduces new obstacles.

“It seems that they are obliged to use this new venue to request the eviction of the occupier, which is time-consuming,” the committee said.

“Notably, via this new procedure, a tenant who qualifies under the ‘means test’ would continue to reside in the property at a protected rent raised up to only 2% of the market value of the property, and if the tenant did not satisfy the ‘means test’, they would nevertheless be allowed to live in the premises for five years at double the rent currently being paid,” the committee said.

Maltese tenants with pre-1979 leases enjoyed protection when these leases were converted to rents, which could only double in value every 20 years. While the law stays in force, a decision by the European Court of Human Rights ruled the 1979 Ordinance to be contrary to owners’ right to enjoy their property. Malta’s Constitutional Courts followed suit by according damages to plaintiffs, which are payable by the State.

In a bid to seek a balance between owners and tenants, the Maltese government will only facilitate the eviction of tenants who fail a means test, and then only after a number of years elapse from when owners file for action.

But the committee says it is unclear how the interests of the owners are duly considered. “It is not clear whether this mechanism provides realistic possibilities for the owners to recover their properties or whether it ensures a proper balance between the interests of the tenants and those of the owners.”

The committee said the means test protects tenants with no means to pay their rents, but so does it protect other tenants who would continue occupying the premises for five years despite not having qualified under the means test.

“Even where the tenant does not meet the means test, he or she would have five years to vacate the premises, during which time the rent would amount to only double the rent which would have been payable under the Ordinance.

“Overall, such a mechanism appears to be detrimental to the owners because, on the one hand, a gradual increase means that they will continue to bear most of the social and financial costs of providing housing to the individuals, as opposed to the State, and, on the other hand, the establishment of this rent and the capping to 2% of the market value seems rather dependent on the means of the tenant and not on the characteristics of the property or on the burden on the owners.

“In addition, the Maltese authorities failed to submit relevant information on the impact of this mechanism so far, whether it has at least led to a significant reduction of this type of tenancies, as, according to the authorities, there were approximatively 1,600 of those in 2018.”

The Council of Europe committee is also considering that a draft resolution be passed on Malta’s rental regime by the end of 2022.

Role of Constitutional Court

While the Maltese Constitutional Court has recognised that rent-controlled properties in Malta breach owners’ right to private property, the same courts have not ordered the eviction of tenants or higher future rent, and instead only order some form of redress for damages.

In cases where a civil court orders an eviction or establishes a future rent, these are usually revoked by the Constitutional Court on appeal, and even persistently reduced the compensation awarded by the first‑instance courts.

“It is unclear from the Maltese authorities’ submissions how these aspects have been addressed, if at all,” the committee said.

“The few examples provided by the authorities are insufficient to support their submissions that the case-law of the Constitutional Court evolved in a Convention-compliant manner, given the hundreds of persons still affected by these regimes, and they do not disclose a clear positive trend in this respect, nor a long-term sustainable attitude of the judicial authorities towards fairly balancing the competing interests at stake.

“What is more worrying is that... it appears that the new procedure introduced in 2018 aimed at stultifying court pronouncements… as the applicants are obliged to undertake a new procedure before proceeding to evict the tenants and, moreover, this mechanism provides that even where the tenant does not meet the ‘means test’ he/she would have five years to vacate the premises, during which time the rent would amount to only double the rent which would have been previously payable.”

 The committee could urge the authorities to take resolute action in establishing a fair balance between the interests of tenants and owners, with information to be provided by 30 June 2022.

In the absence of tangible progress, the committee could instruct the Council of Europe’s Secretariat to prepare a draft interim resolution on Malta’s property regime by September 2022.