Bonnici seeks ‘three-way balance’ on outdated 1979 rent law

Justice Minister Owen Bonnici will be presenting legislative amendments to rent laws that were ruled unconstitutional by a court.

The changes follow a decision by the Constitutional Court of Appeal, which confirmed that the Maltese government must change rent laws and allow property owners to take just compensation on pre-1979 rental agreements: namely, that the law that transforms temporary leases contracted before 1979 into permanent rental agreements, is contrary to the right to enjoy property as laid down in the European Convention of Human Rights.

“Following the judgments delivered by the Constitutional Court, an analysis of the judgment was effected and amendments drafted. The amendments are being discussed and will be proposed in the upcoming parliamentary session. A definite timeframe cannot be indicated at this stage,” a spokesperson for Bonnici said.

The spokesperson said that the amendments seek a “necessary” balance between the opposing rights involved: on the one hand the rights of the owners and on the other hand the rights of the tenants.

“Ideally such a balance would provide a fairer deal for the owners while removing the uncertainty affecting the tenants and at the same time take into consideration the social impact. Finding this three-way balance is not at all easy but the government is committing its efforts to seek the best solution possible in the circumstances,” the spokesperson added.

Specifically, it was Article 12(2) of the Housing Decontrol Ordinance – which allows a temporary emphyteusis to be converted into a permanent rental agreement – that was found to be “inconsistent” with the European Convention of Human Rights.

Although the Civil Code gives landlords the right to reclaim their property upon termination of a lease, in 1979 the government passed a law to protect tenants so that – under the Housing Decontrol Ordinance – any lease of up to 30 years contracted before June 21, 1979, can be turned into a rental agreement.

The decision confirmed the first court’s ruling that tenant Carmel Camilleri could not keep availing himself of this law to rent a property at just Lm90 (€225) a year, after the lease terminated in 1991.

Originally, Bartolomeo and Giuseppa Bezzina had leased out their Gharghur property to Camilleri in 1974, for a period of 17 years. In 1991, Camilleri availed himself of the right accorded by the Housing Decontrol Ordinance, to keep renting the house he leased, with a marginal increase in the annual rent.

The court said that the liberalisation of the rental market in 1995 was “a recognition that the country’s social wellbeing did not require more protection – yet no revision was provided for landlords who were denied the use of their property.”

The first court found that under present laws, the maximum rent that could be asked for the property in question was just €837 a year, when in reality its rental value was as much as €7,800 a year, or €650 a month.

Although the decision does not mean that landlords can evict tenants indiscriminately, the court ordered the Attorney General to liquidate €10,000 in damages to the landlords, for loss of earnings over the years.

But the appeals court said that simply liquidating damages to the landlords was not enough: “this court would be effectively allowing the prolongation of a state of anti-constitutionality, that would require the applicants to periodically file for just compensation from one sentence to the other”.