Malta’s New Regulations
Malta’s New Regulations: Covering Property Rentals as of January 2020
The New Year brings new rules and regulations regarding Malta’s rental market. This new law particularly applies to rental contracts.
As from January 1st, 2020, the new regulation system covering rental property will be taking place to regulate stability by adding security, flexibility and efficiency to the rental sector.
These measures include; both a minimum and maximum rental period for long let and short let properties, as well as compulsory registration for all private rental properties.
Rental reform does not apply to the following contracts:
Council properties owned by the Maltese government or properties let to seasonal tourists, properties which are under contracts of Emphyteusis, those that are let by landlords for long lets and are structurally improved by the tenant. This law does not apply to properties that were rented before June 1, 1995.
The rental reform applies to the following contracts:
Covers private residential properties with leases signed or set to be renewed after January 1, 2020 and those still in force as of January 1, 2021. This includes all rental contracts signed after June 1, 1995.
Private Residential Leases – Rental Contracts
For a contract to be valid, it must be registered at a fee and must include the following details:
- Rental period
- The rental fee and method of payment
- Deposit amount
- Whether the lease can be extended and in what matter
- All the inventory of the property
The contract will be stated as null and void should any of these requirements are not included. Rental contracts which are renewed after 1st January 2021 also need to be registered.
A contract of a private residential lease must be registered by the landlord within 30 days of initiation of the lease agreement, with a separate registration for each new private residential lease. In the event that this is not completed, the tenant has the option to register the contract himself and keep part of the rent to compensate for the administration fee.
Short lets
Short-term contracts must be for a duration of 6 months whilst long-term contracts should have a duration of one year or more. Short lets must satisfy the needs of the following:
- Non-resident students who have registered for courses lasting less than six months
- Non-resident working individuals who are employed for less than six months
- Non-residents who do not seek to establish residence in Malta but need to rent a property for less than six months
- Residents who need to rent an alternative main residence for less than six months
For a short let contract to be valid, it must specify which of the above categories are being applied for together with documentation, otherwise, the contract would be considered a private residential lease that has a minimum period of one year. Short leases may not be extended.
Rent Prices and Increases
The rental price is left in the hands of the contracting parties where the landlord is obliged to provide the tenant with a receipt of payment. Rent must be paid on a monthly basis (unless otherwise stated). The landlord is not allowed to request early payment of more than one month’s rent. Rent may only be increased if stipulated in the lease agreement, and can only be increased once a year. Rent cannot exceed the previous rent by more than 5% per annum and may not exceed the annual variants in the property price index by NSO.
Rights for Tenants
In the case of rental agreements covering private residences, the new rules state that it is a criminal offence for a landlord to expel the tenant from a property which is occupied as his primary form of residence. Landlords will be subject to fines between €1,500 and €4,000 if found guilty. This extends to interruption of water and electricity services and removal of personal belongings or furniture from the property. This does not apply in the case of room renting.
Forbidden Clauses
Clauses, which if included in the contract, would be considered invalid include:
- Articles which provide the automatic termination of a contract
- Articles which authorize the landlord to reduce benefits without a reduction in price
- Clauses which limit the uses which one can make of the residence
- Clauses which include additions other than the deposit, rent, insurance or maintenance of common parts
- Clauses which specify a payment on fixed amounts of water consumption, electricity and other bills if these do not reflect the actual consumption
Room Rental
The new regulations allow landlords to lease a room or part of his residence to a tenant (provided that this is fit for habitation) where both the landlord and the tenant reside in the same property.
Any room rental shall have a duration of 6 months where the tenant may withdraw at any time after 1 month period, provided he gives a 1-week notice.
Such lease contracts must be registered in the same manner as private residential leases and cannot be renewed. The lease contract finishes on expiration of its term, without the need of a notification.
Terminations and notice periods
Tenants have to give a strict notice period before they can withdraw from a long-term contract. For a private residential lease, the rental contract cannot be terminated at any time. In the event of a contract termination, the landlord must give the tenant a notice of at least 3 months through a registered letter. If a notice of termination is not given within this time period, the private residential lease will be renewed for one year.
As for short lets, the contract would be terminated on the date that is agreed between the landlord and tenant. This means that neither the landlord nor the tenant would need to give notice.
- 1 Year contract: Following the obligatory six months, the tenant may be released from the contract by giving at least one month notice to the landlord
- 2 Years contract: Following the obligatory nine months, the tenant may be released from the contract by giving at least two months’ notice to the landlord
- 3 Years or more contract: Following the obligatory twelve months, the tenant may be released from the contract by giving at least three months’ notice to the landlord
If the tenant cancels the lease agreement before these periods the landlord is allowed to keep an amount from the deposit left as security which must not exceed one month’s rent. The tenant must withdraw from such agreements by means of a registered letter.
Accordingly to the new law, tenants are required to pay the landlord for the extra days that they stay in the property – paid as an equivalent rent to the number of days.
Fines
Tenants who remain in occupation of a leased property beyond the agreed duration or who fail to satisfy the rental agreement regulations, including missing monthly payments, cannot be evicted by their landlord. In such instance the latter must raise the matter to the Rent Regulation Board.
The tenant will be bound to pay the landlord an amount equivalent to rent until he evicts the property. This demand for compensation may be made with the demand for termination of the lease or for the expulsion of the tenant from the rented property.
The head of the Housing Authority or anyone in charge has the right to enter any leased property at any time to inspect or verify whether they are being occupied by the tenant.
The head of the Housing Authority also has the right to issue an enforcement notice should the landlord not register the lease. If the landlord does not abide by an enforcement notice this will be considered a criminal offence with fines ranging from €2,500 and €10,000.
