Overview and scope
The Private Residential Leases Act has been enacted by virtue of Act No. XXVIII of 2019, hereinafter referred to as “the Act”. The object of this Act is to promote the development of the private rented sector by ensuring standards of fairness, clarity and predictability in contractual relations between lessors and lessees, and to safeguard and protect the right to adequate accommodation.
The Act shall apply to private residential leases that are entered into or renewed after the entry into force of the Act. This rests on the proviso that leases which were granted after 1st June 1995 and which are still in force on the day of the entry into force of the Act shall continue to be regulated exclusively by the provisions of the Civil Code, with the exception of private residential leases which were entered into after 1st June 1995 but before the coming into force of the Act, and which would still be in force on 1st January 2021.
Conversely, this Act does not apply to tenements which belong to the Government of Malta, tenements which are let to tourists solely for tourism purposes, tenements which are not let for primary residential purpose, tenements let before 1st June 1995, and to urban tenements where contracts of emphyteusis or sub-emphyteusis have been or are about to be converted into leases by virtue of law.
The definition of the phrase “private residential lease” is divided into two: “long private residential leases” and “short private residential leases”.
Long private residential leases
A long private residential lease is defined as any lease which is negotiated for a primary residential purpose, which is not a short private residential lease, and which may not have a duration of less than one year. When it comes to termination by the lessor, a long private residential lease shall cease to have effect upon the expiration of its term, whether such term is conventional, legal or judicial, provided that the lessor gives notice to the lessee at least three months prior by means of a registered letter. If the lessor does not serve the lessee with a notice of termination within the specified time, the private residential lease shall be deemed to have been renewed for a further period of one year.
The Act also provides for the withdrawal by the lessee from a long private residential lease. It states that a lessee may not withdraw from such a lease before the lapse of:
- six months where such a lease is for a period of less than two years;
- nine months where the lease is for a period of two years or more but less than three years;
- twelve months where the lease is for a period of three years or more.
No penalties may be imposed by the lessor if the lessee adheres to these time periods.
Short private residential leases
Contrastingly, a short private residential lease refers to any lease which is negotiated for a duration of six months, which period may not be extended, and complies with one of the below categories:
- 1.Non-residential workers who are employed for a period of less than six months or who are employed to complete a specific task within a maximum period of six months;
- 2.Non-resident students who are enrolled in courses which are of a term of less than six months;
- 3.Residents who would need to rent an alternative primary residence for a period of less than six months;
- 4.Non-residents who need to rent a tenement for a period of less than six months, and provided that they would not be seeking to establish a long residence within the Maltese islands.
Furthermore, it should be noted that a contract of a short private residential lease is to identify which of these four categories the lessee falls into whilst providing documentation as evidence to attest to this fact. Where these two conditions are not adhered to, the lease would be considered as a long private residential lease.
When it comes to the withdrawal by lessees in the case of short private residential leases, this Act provides that the lessee may not withdraw from such a lease before the lapse of one month and that, provided that the lessee adheres to this period within which he may not withdraw, no penalties may be imposed on him by the lessor.
Duties of lessor
Lessors of all private residential leases are bound to register the lease contracts with the Housing Authority. Such a duty must be adhered to within ten days of the commencement of the lease. Should the lessor fail to carry out this duty, the lessee may register the lease contract himself, at the expense of the lessor. Such registration of a lease is to include the declaration of any amount deposited by the lessee by way of security and the presentation of an inventory. The lessee shall be bound to provide access to the lessor for the purpose of the compilation of such inventory.
This obligation to register the contract of lease also applies to those contracts entered into after 1st June 1995, but before the coming into force of the proposed Act and which would still be in force as of 1st January 2021.
Formalities as to the requisites of the writing of a contract of private residential lease are also catered for in the Act. In fact, the Act adds to the requisites stipulated in the Civil Code which need to be included. Said contracts will now need to also include the amount of the deposit and an inventory attesting the condition of the premises and the state of the furniture and appliances supplied by the lessor. Moreover, forbidden clauses in such a contract are also listed in the Act.
Additionally, the lessor has a duty to ensure an adequate supply of water and electricity, to acknowledge the number of persons residing in the tenement for the purpose of calculating the correct tariff applicable for electricity and water supply, and to grant the lessee access to the account details relative to the leased tenement.
The Act speaks of permissible increases in the rent due. Rent may only be increased once a year, and such yearly increases may not exceed the annual variations which are recorded in the Property Price Index as published by the National Statistics Office. Furthermore, such an increase may not exceed the previous rent by more than five percent.
Shared Residential Space
The Act also regulates the notion of letting of shared residential space. It states that room rentals shall have a duration of six months, with the lessee having the ability to withdraw at any time, provided one week’s notice is given to the lessor through a registered letter. Contracts for room rentals must also be registered as stipulated above.
Monitoring and Enforcement
For the purposes of verifying whether any tenement is occupied for a residential purpose by any person or persons who are not the owners of the tenement and who would be occupying the tenement without a valid title of lease, any duly authorized person shall have the right to enter a private tenement at all reasonable times. This is subject to the prior issue of a warrant signed by a Magistrate. If the property is indeed occupied without title, the Chairperson, or any officer authorised by him, shall issue an enforcement notice to the person or persons granting the enjoyment of the tenement without having formalised their relationship according to law.
Adjudicating Panel for Private Residential Leases
The Act also includes provisions for the setting up and functioning of an Adjudicating Panel for Private Residential Leases. This will have exclusive jurisdiction to decide upon disputes relating to private residential leases. This panel is to consist of a Chairperson, who shall be a person who has practiced as an advocate for at least three years, and two to four other professionals of known integrity and with knowledge and experience in the real estate sector. Such members shall be appointed for a term of five years and upon the lapse of their term, shall not be eligible for re-appointment.
The registry of the Adjudicating Panel is to maintain a register of all the final judgments relating to contractual defaults which are decided by the Adjudicating Panel, Board and the Court of Appeal together with offences relating to arbitrary or forced evictions of occupants of leased properties, including de facto lessees.
The Act provides a list of amendments to other legislations stemming from this Act; namely to the Civil Code, the Criminal Code, the Reletting of Urban Property Ordinance and the Housing Authority Act.
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr Veronica Grixti