Rent Laws Act X of 2009 - A step in the right direction? (Part 2)
Today's focus is on residential rents and clubs. With regard to residential property leased prior to the 1st June 1995, the legislator has imposed a minimum ceiling whereby no lease can be of less than €185 per year, unless the parties agree otherwise. The new law also provides for an automatic increase in the value of the rent every three years by a proportion equal to the increase in the index of inflation.
Furthermore, the legislator has kept "security of tenure" for the tenant, however under stricter and better regulated provisions whereby, a tenant can pass on the rent over a residential property, on his/her demise only if -
i) A person has been living with the tenant on June 1, 2008;
ii) Tenants' spouse shall be entitled to security of tenure as long as he/she is not legally separated;
iii) The person is the natural or legal child of the tenant and has lived with the tenant for four out of the last five years, and after June 1, 2008 has continued to live with the tenant until his death. If there is more than one child, the children have lived with the tenant for four out of the last five years prior to his demise, and have lived with the tenant on June 1, 2008 and onwards. Subject, however, that the children are 45 years of age or more. If this is the situation then the children will continue the lease in solidum;
iv) The person is the natural or legal ascendant of the tenant who is 45 years of age or older and has lived with the tenant for a period of four years out of the last five years before June 1, 2008, and has continued living with the tenant until his death.
In addition to the above, who qualifies as a tenant after the demise of the tenant himself is also dependent upon a means test - which must still be put forward by the Minister responsible for accommodation.
The law itself also, in a rather messy fashion, provides a three / five year extension to the lease for all those who were residing with the tenant on his demise, who do not fall within the criteria established by law but who nonetheless must still be recognised by the landlord as tenant.
This provision invites abuse, protecting persons who were not protected under the old rental laws to acquire possession of a tenement when they should have no such protection. It may also give elderly tenants' the opportunity to negotiate their lease with family members or other third parties, allowing a person to live with them in their final years and potentially allowing tenants to enter into profit-making schemes to the detriment of the property owner.
Thankfully, this has been capped to a period of not longer than five years from the demise of the last tenant. The 2009 rent law on residential properties seems to have given little importance to those contracts of temporary emphyteusis of 30 years and less, whether entered prior to 1979 or after such year, but before June 1, 1995.
In such cases, Chapter 158 of the Laws of Malta envisages that such temporary emphyteusis deeds shall be converted upon their expiration into a lease. With reference to those contracts of emphyteusis which have already expired and are considered rented properties, and to those temporary emphyteusis which are about to expire, the terms and conditions as to the increase in the rent are different under Chapter 158 to those as stipulated in the new Act X of 2009.
So what law should apply? Chapter 158 or the transitory provision that was introduced into the Civil Code by way of Act X, which stipulates that these provisions are applicable to such temporary emphyteusis deeds that have been converted to leases?
The difficulty that arises is purely legal - can the Courts ignore the special law under Chapter 158 and adhere to the amendment in question introduced into the general civil law by Act X of 2009? It is quite apparent that the legislator's intention was to incorporate also such leases under the reviewed legal framework.
However, it would be far simpler if the legislator were to introduce amendments to Chapter 158 in order to bring such rented properties in line with the legislators' intention under Act X.
Problems also arise as to the definition of tenant with regard to the emphyteutical deeds of under 30 years and which have now already been converted into leasehold titles, or which are about to be converted into leasehold titles.
The definition given by Chapter 158 is far wider than that under the Civil Code and thereby leaves property owners without any realistic hope of re-acquiring possession to their properties, in the not so distant future.
With regard to clubs whether of a political, social, sport, musical, and/or philanthropic entity (the list is not exhaustive) the legislator has conveniently left such provision virtually untouched whereby clubs maintain security of tenure, and where the landowner has no chance of ever getting back his property in the not so distant future.
The only amendment that has been added to these rents is that the Minister may from time to time issue regulations, regarding such type of leaseholds. It is also the government's intention to raise the minimum rental value of such properties to not less than €300 per year. This situation will clearly lead to constitutional issues being raised both locally and with the European Court of Human Rights.
The third and final part of this article on rent reform will appear next week.
Dr Attard Montalto specialises in civil law at Fenech & Fenech Advocates