SMM Overview: Private Residential Leases Act 2020

2020-08-26T15:22:02+02:00August 26th, 2020|Publications|

The Private Residential Leases Act has come into force from the 1st of January 2020, bringing into effect several changes to the rental sector, with the main aim of further strengthening the tenants’ rights and position at law.

These new rental laws are applicable to both long or short lets for residential purposes but exclude tenements belonging to the Government of Malta or those leased for tourism-related purposes.

Registration of Private Residential Lease Contracts

Now all lease agreements need to be registered with the Housing Authority within 10 days from the commencement of the lease.  It is the obligation of the landlord to register the contract of lease, but if he fails to do so, the tenant must register the contract at his expense.

The contract must include:

  • The tenement that is leased;
  • The agreed use of the tenement;
  • The duration of the lease;
  • Whether such lease may be extended and if so, in what manner;
  • The amount of rent which is due and the manner in which it will be paid;
  • The amount of deposit that is to be paid;
  • A detailed inventory exhibiting the condition of the tenement and any furniture and appliances present therein.

If one of the aforementioned clauses is not included, the lease contract would be deemed to be null and void.

Moreover, the following clauses are forbidden and are in no way to be included in the lease contract:

  • Clauses providing for an automatic termination of the lease agreement.
  • Clauses which authorize the lessor to reduce, without equivalent consideration, any benefits included in the contract.
  • Clauses that exempt the lessor from any of the responsibilities to which he is bound by law.
  • Clauses that impose the payment of additional considerations, other than the rent, the deposit, the insurance on the contents of the tenement, and any contributions foreseen in accordance with the Condominium Act, or for the use of movables in the tenement.
  • Clauses that stipulate the payment of a fixed amount, separate from the rent, for the consumption of water, electricity, or other utility services if such amount is not a fair representation.
  • Clauses which limit the tenant’s use of the tenement.

Duration of the Private Residential Lease Contracts

A long private residential lease needs to have a duration of one year or more. Any contract entered into for a duration of less than a year would still be deemed to have a duration of a year. The only exception to this rule is in the case of short private residential leases which must not be negotiated for a duration greater than six months.

Furthermore, a short lease may not be leased out to simply anyone, but the Act provides a list of persons who are allowed to enter into a short lease. This includes:

  • Workers who are non-Maltese residents, who are engaged in employment for a period of six months or less;
  • Non-resident students, who are enrolled in courses for less than six months;
  • Maltese residents who need to rent an alternative primary residence for a period of fewer than 6 months; and
  • Non-residents who require to lease a residence for less than six months and must not be seeking to establish a long term residence in Malta.

Termination of the Private Residential Lease Contracts

As an added protection in favor of the tenant under the private residential leases act, the lease does not automatically terminate upon the completion of its duration. If the lessor does not wish to renew the lease, he must send a registered letter three months prior to the expiration of the lease’s term. If the lessor does not send the registered letter to the correct address within the stipulated time, the lease will be deemed to be renewed for another year.

If the tenant wishes to terminate the lease prior to the agreed duration, the tenant can not terminate the lease:

  • Before the lapse of 6 months for a contract of less than 2 years;
  • Before the lapse of 9 months for a contract between 2 & 3 years;
  • Before the lapse of 12 months for a contract longer than three years.

Nevertheless, if the tenant still wishes to terminate the lease even though such time frames have not yet lapsed, the tenant may still do so, however, the lessor is allowed to keep an amount equivalent to one month’s rent as a means of security.

Rent

The amount of rent to be paid is to be determined freely by the parties when entering into the contract of lease. The landlord may only increase the amount of rent once in a year, and may not do so during the term of the lease unless by means of an express agreement between the parties. Also, any rental increase may never exceed 5% of the amount of the previous rent.

If the tenant fails to pay rent, Article 1570 of the Civil Code would then apply and the lessor must, by means of a judicial letter, demand payment from the lessee. If after 15 days of receiving the judicial letter, the tenant still does not pay the rent which is due, the lessor would be permitted to terminate the lease.

Water and Electricity 

The landlord is bound to ensure that the tenement leased has an adequate supply of water and electricity services. On the other hand, the tenant is bound to pay the landlord the amount due in regard to water and electricity bills when presented with a copy of the bills. If the tenant fails to pay any amount due for water and electricity services this will serve as a default on behalf of the tenant, and the landlord may demand the dissolution of the lease by sending a judicial letter.

Fines 

These amendments also protect tenants against forceful or arbitrary eviction by subjecting the landlord to fines of not less than €1,500 and not more than €4,000. It is now considered a criminal offense in the case of any unpermitted entry into the tenement, removal of furniture, appliances, or personal belongings or suspending electricity or water services.

Adjudicating Panel for Private Residential Leases

This Act establishes the Adjudicating Panel for Private Residential Leases which has an exclusive jurisdiction to decide upon disputes concerning private residential leases insofar as the claim does not exceed the amount of €5000 and does not seek to terminate the lease. Any claims concerning the tenant’s eviction are still to be lodged in front of the Rent Regulation Board. Disputes which this Panel has the jurisdiction to hear include:

  • Claims on retaining or reimbursing the security deposit.
  • Claims of damages by the tenant.
  • Claims dealing with unlawful alterations to the tenement by the tenant.
  • Claim on repairs at the expense of the lessor.

Our team at SMM Advocates will be happy to assist you should you have any quires related to the rental laws of Malta. Kindly send an email to [email protected] or call +356 21237167 for consultation.

Article by Chantal Chetcuti

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