Rent control laws under attack by new European Court decision

Maltese national Anthony Aquilina’s successful bid in the European Court for Human Rights has delivered another nail in the coffin for a 1979 law that turns leases on houses into permanent rental contracts at prices that do not reflect property market values.

The ECHR awarded the total of €21,550 in damages for his breach of the right to enjoyment of his property.

Aquilina owns a maisonette apartment which he inherited from his parents and which has been rented to the same tenants since 1970, at €65.22 a year.

In 2005 he brought constitutional redress proceedings, complaining about amendments of 1979 to the Housing Ordinance which prohibit landlords from refusing to renew existing leases or from raising the rent, arguing that it breached his property rights.

His complaint was dismissed. In 2010 he brought new constitutional redress proceedings, complaining that new amendments introduced in 2009 – aimed at gradually eliminating restrictive rental regimes – had not improved his situation and that therefore the 1979 amendments continued to breach his property rights. His complaint was dismissed by a decision eventually upheld in June 2011.

Aquilina complained of a violation his property rights, alleging that the legislation in force denied him a realistic possibility of resuming possession of his property and that he was unable to charge rent at market value.

In 2010, legal amendments to the rental law increase the rent to €185 a year, but Aquilina refused to accept any rent as from 2007 and it was duly deposited in court by the tenants by means of a schedule of deposit.

According to a court-appointed architect’s evaluation made in the context of constitutional proceedings instituted in 2005, the property at that time had a rental value of €2,912 per year. According to an architect’s report commissioned by the government, the rental market value in 2013 was €2,900 per year, and the sale value €58,000.

The Court said that the low rental value, Aquilina’s state of uncertainty as to whether he would ever recover his property, the lack of procedural safeguards in the application of the law and the rise in the standard of living in Malta over the past decades, meant that “a disproportionate and excessive burden was imposed on the applicant who was requested to bear most of the social and financial costs of supplying housing accommodation” to the tenants

“It follows that the Maltese State failed to strike the requisite fair balance between the general interests of the community and the protection of the applicant’s right of property.”

Rental laws

Malta has gone through various legislative regimes in order to regulate its housing situation. The first regime came about in 1931 and protected tenants from the termination of their leases. This was followed by the 1944 Rent Restriction (Dwelling Houses) Ordinance which, apart from regulating termination of the lease of dwelling houses, also controlled rents and the initial conditions of contracts. The Housing Act was then enacted in 1949, with the aim of providing a solution to homelessness caused by the Second World War.

In 1959 the Housing (Decontrol) Ordinance provided incentives to encourage landlords to rent their property, and created a special class of dwelling houses free from rent control.

In 1979 the Maltese parliament enacted an amendment which provided that the rent restrictions set out in the Rent Ordinances would apply where tenants were Maltese citizens and occupied houses as ordinary residences. It further provided that landlords could not refuse to renew leases, raise their rent, or impose new conditions on renewal, except as provided for by law.