Social impact assessment on proposed rent law as eviction threat grows

The threat of eviction for tenants in houses whose rental contracts were converted under a 1979 law from what was a temporary emphyteusis, is becoming real.

With a European Court of Human Rights ruling confirming that Malta’s law in 1979, which converted all temporary leases on houses to permanent rental contracts, breaches landlords’ right to property, the Maltese courts are following suit with similar pronouncements.

In a landmark decision clinched by lawyers Michael Camilleri and Cedric Mifsud in October, 2013, the Constitutional Court of Appeal confirmed that tenants could no longer seek the protection of the 1979 amendment to the Housing Decontrol Ordinance, which guaranteed leaseholders permanence under rental contracts. 

In comments to MaltaToday, Cedric Mifsud said that once the highest courts had confirmed that the law was illegal, his clients would be seeking the eviction of the current tenants of their property.

“My clients did not intend filing the constitutional application for compensation, but rather, for the court to declare that their rights have been violated. Now, buoyed the court’s decision, my clients have filed civil proceedings to evict the sitting tenant from their property,” he said.

In its decision, the Court of Constitutional Appeal ruled that Article 12(2) of the Housing Decontrol Ordinance – which allows a temporary emphyteusis to be converted into a permanent rental agreement – is “inconsistent with the European Convention of Human Rights.”

Originally, the law was initially keen on averting homelessness, but it forced landlords’ hands by forbidding them from refusing to renew leases, raise their rent, or impose new conditions on renewal, unless authorised by the Rent Regulation Board. Effectively, all pre-1979 emphyteuta won the right to have their temporary leases converted into permanent rental agreements, with limited increases on their original rent.

However, 30 years down the line, the law has come under increasing fire by both the Maltese courts as well as the European Court of Human Rights in Strasbourg.

“The current situation is prejudicing the landlord because it does not give him the right to enjoy the property. Rather, the sitting tenant is granted more rights than the landlord,” Mifsud explained.

His clients have already won thousands in compensation from the government due to the unfair law.

In addition, Mifsud explained that unless the government changes the rent laws and allows property owners to take just compensation or to take control of their property, granting compensation would become a “recurring theme”.

Justice minister Owen Bonnici told Nationalist MP Jason Azzopardi in a reply to a parliamentary question that the government was conducting a "social impact assessment" on the proposed legal changes.

Speaking to MaltaToday, Justice Minister Owen Bonnici explained that following the judgment, a number of amendments to the law have been drafted with the purpose of bringing the law into line with the Maltese and Strasbourg judgments.

Asked how the government would protect the tenant in the case of the eviction and whether he would agree with such a ruling, a cautious Bonnici argued that the amendments will seek to strike a balance between the social impact and the landlords’ rights.

In the meantime, while tenants face the threat of eviction, political parties retain a classic omnipotence on the rest of society. Political clubs regulated under changes to the Civil Code last year have been allowed to benefit from controlled rents, but must forward part of their commercial proceeds to the landlord.

The 2009 rent law amendments had left the provision regulating clubs virtually untouched in so far as clubs maintain security of tenure, forbidding landowners from reclaiming their property in the near future. All contracts of lease entered into by clubs prior to June 1, 1995 are still subject to the pre-1995 laws. The only amendments to the provisions regulating clubs is that from time to time, the minister may issue regulations regarding the conditions of lease of clubs – one of which is the conditions regulating the leases of Clubs Regulations 2014.

This states that as from January 1, 2014 the rent due shall increase by 10% every year until 2016 and by 5% between 2017 and 2023. However, with respect to eviction there is nothing – only a fixed increase in rent, which would still leave the landlord getting the short end of the stick.