Rent Reform 2020

As from January 1st, 2020, Malta sees the introduction of new rules governing the rental market, with particular emphasis on rental contracts.

Aimed at bringing stability to the sector, the new rent regulations include amongst other measures, mandatory registration for all private rental properties, as well as minimum and maximum rental periods for long lets and short lets respectively.

Here follows a brief overview.

The law shall be applicable to:

Rental agreements of residential property entered into or renewed after 1st January 2020
Rental agreements of residential property entered into after 1st June 1995 and still in effect after 1st January 2021

The law shall NOT be applicable to:

Rental agreements entered into with the government
Rental agreements of property rented exclusively for tourism purposes
Rental agreements of property rented as a second residence or as a holiday home
Rental agreements of property entered into prior to 1st June 1995

RENTAL CONTRACTS

Contracts must be registered against a fee of €10 within the first 10 days from the commencement of the lease contract. Late registration fee of

€120 will apply after the lapse of the 10 days. The lease contract needs to be registered online on the website www.rentregistration.gov.mt. Otherwise the tenant can register the contract himself and retain part of the rent for the reimbursement of the administration fee.

A separate registration is required for every new private residential lease.

Contract needs to include details of:

The property which is being leased
Intended use as agreed
The period covered by the lease contract
Whether and how the lease can be renewed
The lease amount and how this should be paid
The amount required as a deposit
An inventory of the property in question

If any of these requirements are missing the contract cannot be registered and should be declared null and void.

Renewals of rental contracts taking place after 1st January 2021 also need to be registered.

SHORT LETS

Short let duration must be of 6 months and apply only for:

Temporary foreign workers who are employed for six months or less;
Students pursuing short courses of less than six months’ duration;
Foreign lessees who would not be seeking to establish ordinary residency in Malta;
Maltese lessees who need to lease an ordinary residency for a short period of less than six months.

Any period over 6 months will be deemed to be a private residential lease of a minimum period of 1 year. Short leases cannot be renewed.

CONTRACT CANCELLATIONS AND NOTICE PERIODS

Leases cannot have a duration of less than one year. Any agreement stipulating a shorter term is to be deemed to have been agreed for a period of one year except for short lets.

The lease shall cease to have effect upon the expiration of the stamp, as long as the landlord gives notice to the tenant of at least three months through a registered letter.

If the landlord does not give the tenant a notice of termination within this time period, the private residential lease will be renewed for a period of one year. This does not apply to short lets or shared space.

For one-year contracts, the tenant has the right to cancel the contract after 2 months with a notice period of 1 month. For contracts of 2 years and over, the notice period is doubled.

The tenant may not withdraw before the lapse of:

6 months if the lease is for a period of less than 2 years
9 months if the lease is for a period of two to three years
12 months if the lease is for a period of more than 3 years

RENT PRICES AND INCREASES

The new rent regulations do not impose a set price for rent but is left in the hands of the contracting parties. Unless otherwise agreed, rent will be paid on a monthly basis and under no circumstances may the landlord require the advance payment of more than one month’s rent. The landlord is also obliged to provide the tenant with a receipt of payment.

Rent may only be increased if there is an express provision in the lease agreement, and if so, it may only be increased once a year.

The increase may not exceed the annual variations recorded in the property price index as published by NSO and cannot exceed the previous rent by more than 5% per annum.

FORBIDDEN CLAUSES

Clauses which if inserted in the contract, would be deemed to have no effect, include:

Clauses for which provide for the automatic termination of a contract
Clauses which authorise the lessor to reduce any benefits without a reduction in rental
Clauses which impose the payment of additional considerations other than the rent, deposit, insurance on contents or maintenance of common parts limited to the duties of the lessee.
Clauses which impose payments for the use of movables
Clauses which stipulate the payment of the fixed amount of consumption for water, electricity and other utilities if such amount does not reflect the actual consumption
Clauses which limit the uses which one is expected to make of a residence

ROOM SHARING

‘Room Rental’ or ‘Room Sharing’ refers to the leasing of a room or specific part of a residence.

The new regulations make it possible for the landlord to lease a room or part of his flat or building to a tenant, meaning both the landlord and the tenant can reside in the same property.

The law does not define what constitutes a “part of” a building, but merely stipulates that any property or part of it leased must be fit for habitation.

Any room rental shall have a duration of 6 months. The tenant may withdraw at any time after the lapse of 1 month, provided he gives a 1-week prior notice.

The lease contract ceases on expiration of its term, without the need of a notification.

Such lease contracts cannot be renewed and must also be registered in the same manner as private residential leases.

APPLICATION OF FINES

Tenants who fail to fulfil the rental agreement regulations, including missing monthly rent payments, cannot be forcefully evicted by their landlord. The same applies in the case of tenants that remain in occupation of his leased home beyond the lapse of the agreed duration.

In such instance the landlord must bring the matter before the appropriate Rent Regulation Board.

The tenant will nonetheless be bound to pay the landlord an amount equivalent to rent until he evicts the property. A demand for such compensation may be made simultaneously with the demand for termination of the lease and/or for the eviction of the tenant from the rented residence.

The Chairperson of the Housing Authority, or any of his officers, will have the right to enter any leased homes at all reasonable times to inspect such rented properties, or verify whether they are being occupied by the tenant.

The Chairperson also has the authority to issue an enforcement notice if the landlord does not register the lease, giving him the opportunity to conform with the law. If the landlord fails to abide by an enforcement notice, or makes a false declaration, this will constitute a criminal offence, leading to fines ranging from €2,500 and €10,000.

For further information on how to register a contract, details and sample of contracts one can visit the website www.rentregistration.mt.