Pre-June 1995 residential leases

Pre-June 1995 residential leases

Act No. XXVII of 2018 entitled the ‘Housing (Decontrol) Ordinance (Amendment) Act, 2018’, was brought into full effect on August 1 by means of Legal Notice 259 of 2018.

The said Act stipulates that where a person is in occupation of a dwelling house under a title of lease created by virtue of a previous title of emphyteusis or sub-emphyteusis which commenced before June 1, 1995 through the application of Articles 5, 12, or 12A of the Ordinance, the  owner of the property shall be entitled to file an application before the Rent Regulation Board demanding that the rent be revised to an amount not exceeding two per cent per annum of the open market freehold value of the property on January 1 of the year during which the application is filed and that new conditions be established.

At the initial stage of the proceedings, the Board shall conduct a means test of the tenant which shall be based on the means test provided for in the Continuation of Tenancies (Means Testing Criteria) Regulations issued under articles 1531F and 1622A of the Civil Code, which means test shall be based on the income of the tenant between January 1 and December 31 of the year preceding the year when the proceedings are commenced and the capital of the tenant on December 31 of the said year.

If the tenant does not meet the income and capital criteria of the means test the Board shall, after hearing any evidence and submissions produced by the parties, give judgement allowing the tenant a period of five years to vacate the premises. The compensation for occupation of the premises payable to the owner during the said period shall amount to double the rent which would have been payable in terms of the Ordinance.

At the initial stage, a means test is conducted

On the other hand, if the tenant meets the income and capital criteria the Board shall proceed with establishing the amount of rent payable and in doing so shall give due account to the means and age of the tenant and to any disproportionate burden particular to the landlord and it may also determine that any increase in rent shall be gradual. The increase is in no case to exceed two per cent of the market value of the property as previously explained. The Board, after briefly hearing the parties and examining any evidence which it considers relevant, may also order that an increased amount of rent be paid pendente lite.

Once an amount of rent is established as indicated above, that rent shall apply in respect of the lease, unless the lease is previously terminated, for a period of six years, after which it shall be subject to being revised by filing a fresh application before the Board, unless an agreement is reached between the parties.

Furthermore, on the happening of any material change in circumstances during the continuance of a lease established in respect of a tenant who would have met the means test criteria, the owner shall be entitled to file an application before the Board demanding that the conditions of the lease be revised on account of their causing a disproportionate burden upon him. Moreover, the owner may also demand the dissolution of the lease if he can prove through unequivocal evidence that the tenant is not a person in need of social protection.

Another significant feature of Act XXVII is that following its introduction, any person (excluding the widow or widower of a tenant) who has a right to be recognised as a tenant through the application of articles 5, 12 or 12A of the Ordinance, shall only acquire the right to occupy the dwelling house in question for a period of five years, upon the expiration of which he shall vacate the said dwelling house.

The compensation for occupation of the dwelling house payable to the owner during the said period shall, unless the occupier meets the income and capital criteria of the means test referred to above, amount to double the rent which would have otherwise been payable according to law.

Finally, Act XXVII states that the provisions of the Act shall also be applicable to all those cases where any emphyteusis, sub-emphyteusis or tenancy in respect of a dwelling house regulated under articles 5, 12, or 12A of the Ordinance has lapsed due to a court judgment based on the lack of proportionality between the value of the property and the amount receivable by the landlord and the person who was the emphyteuta or the sub-emphyteuta or the tenant still occupies the house as his ordinary residence on April 10, 2018.

The Act states that in such cases it shall not be lawful for the owner to proceed with a request for the eviction of the occupier without first availing himself of the provisions of the Act.

Karl Micallef is a Junior Associate at Fenech & Fenech Advocates specialising in property law and litigation.

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