By virtue of LN 260 of 2018, the Continuation of Tenancies (Means Testing) Regulations which establish the criteria in the ‘means test’ has been extended towards the old leases regulated by the Housing (Decontrol) Ordinance (Chapter 158).
Prior to the liberalisation of the Maltese rental market in 1995, leases that were negotiated before 1st June 1995 were regulated (and are still being regulated) by the old rental laws. These laws however have been the subject of various European Court of Human Rights decisions wherby the Court consistently found that the old rental provisions were in violation of property owners’ rights as enshrined in the European Convention of Human Rights.
In an attempt to strike a fair balance between landlords’ rights to the enjoyment of their property and the general interest of the community, LN 260 of 2018 gives “decontrolled dwelling-houses” subject to an automatic extension of title by lease, sublease, emphyteusis or subemphyteusis, the possibility of increasing the rent payable. Property owners can now file an application before the Rent Regulation Board (‘the Board’) where the Board will decide whether the case qualifies for this revision using the means test. If the Board finds that the tenant meets the income and capital requirement thresholds (and therefore does not have the necessary means to find alternative accommodation), the Board shall allow the tenant to continue residing in the dwelling house on condition that the rent be increased up-to 2% per annum of the open market freehold value (starting from 1st January of the year during which the request was made). On a case-by-case basis, the Board may also choose to increase the rent at a gradual rate. This rent may then be revised every six years by an application to the same Board or by mutual agreement of the parties.
On the other hand, if the Board finds that the tenant does not meet the financial criteria of the means test (and therefore has the necessary means to find alternative accommodation) even after hearing any evidence and submissions from the parties, it shall order the tenant to vacate the property within five years, in which period the tenant must pay the owner double the amount of rent payable for the occupation of the premises prior to eviction. The means test will also apply to tenants who have been ordered to vacate the dwelling house through a Court judgement, but who have not yet done so.
As these cases deal with old property and rental scanarios, the amendment also anticipates the possibility of financial constrictions when the parties are pensioners and which as a result may be unjustly prejudiced due to a lack of legal counsel. In this respect, the new Regulations provide the benefit of legal aid to both parties throughout these proceedings. In addition, it is worth noting that contextually with this legal notice, LN 261 of 2018 was also adopted with the aim of updating and increasing the financial thresholds of the means test.