Private Residential Leases Act – Malta

An overview of how the ‘Long Lets’ market will change as a result of the Private Residential Leases Act 

The private rental sector has been the most dynamic of the Maltese property market over the past couple of decades. This market has grown from strength to strength both numerically and proportionately. Despite this exceptional growth in the market, the private rental market has occupied a relatively marginal position in local legislation to date. After years of buoyant activity, this market has finally attracted increased political, policy and regulatory attention. As from 1st January 2020 the Private Residential Leases Act will come into force. The primary purpose of this article is to provide an overview of this important development and to highlight the salient points of how the legal and regulatory framework will change from this year, with a particular focus on long private residential leases.

Note: ‘Long Lets’ applies to rentals with a minimum period of 6 months

Applicability of the new legislation:

The law shall apply to residential letting agreements entered into or renewed after 1st January 2020 and residential letting agreements entered into after 1st June 1995 and still in effect after 1st January 2021.

Registration:

All leases must be registered with the Housing Authority. Such registration is subject to an administrative fee and a declaration must be made stating any deposit collected and retained by the landlord. A full inventory of furnishing to be included and the lease agreement must be registered within 10 days from the commencement date. Should the lessor fail to register the lease agreement, the lessee may proceed to register the lease at the lessor’s expense

General Rules:

Rent shall be freely negotiated between the parties however rent increases may only take place once a year and such increase may not exceed the previous rent by more than 5%. The amount of rent cannot be revised during the term of the lease unless there is express agreement in the lease. The duration cannot be less than 1 year and any agreement stipulating a shorter period shall be deemed to have been agreed for at least a 1 year period.

Minimum Contractual Requirements:

Lease agreements must be made in writing and must include: A description of the property; The agreed use of the property; Period for which the property shall be let; Possibility of lease extension and manner; Rent payable and methodology of payment; Amount of security deposit; Full Inventory

Termination:

On the expiration of its term, the lessor must give a minimum of 3 months’ notice by registered letter of his intention to terminate, otherwise an automatic renewal for a further period of one year shall be triggered.

Withdrawl by Lessee:

Lessee is prohibited from withdrawing from a long term lease before the lapse of:

6 months where the lease is for a period of less than 2 years (+1 month notice); 9 months where the lease is for a period of 2 years or more but less than 3 years (+2 months’ notice); 12 months if the lease is for a period of 3 years and over (+3 months’ notice)

Upon the lapse of these periods the Lessee may withdraw at any time by giving notice in terms of article 11 (2) of the Act.

Adjudicating Panel & Monitoring:

An adjudicating panel shall have exclusive jurisdiction to decide disputes not exceeding €5,000. The claim must be filed within 2 months from the expiration of the lease and the counterparty would then have ten working days to reply to the said claim. The adjudicating panel shall deliver judgment not later than 5 working days from the date of the last submission by the parties. An appeal may be lodged in front of the inferior courts within 20 days from the judgment date. The Housing Authority has the right to inspect the property to ensure compliance on both the part of the lessor and lessee, nonetheless a warrant approved and signed off by a magistrate has to be acquired in order for such access to be provided.

Written by Robert Spiteri Paris  – Managing Director of Perry Estate Agents

Tel: +356 2131 0800 / Email: rsp@perry.com.mt

The Government have published a website with extensive details about the new rent registration process which you can see here >> https://rentregistration.mt/

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