The Private Residential Leases Act came into force on 1st January 2020. The principal purpose of this act is to ensure standards of fairness, clarity and predictability in contractual relations between lessors and lessees, as well as to protect the right to adequate accommodation.
The Private Residential Leases Act shall apply to private residential leases that are entered into after the entry into force of the Act, and it shall also apply to leases which were entered into prior to the enactment of the Act, the latter having been renewed after 1st January 2020.
On the other hand, in terms of the Act, leases entered into between a lessor and a lessee after 1st June 1995 but before 1st January 2020 which are still in force after 1st January 2020 shall fall outside the scope of the Act, and shall be regulated exclusively by the Civil Code, with the exception of leases entered into during the above-mentioned time-period and still in force on 1st January 2021, which will fall within the scope of the Act.
Tenements belonging to the Government of Malta, tenements let to tourists, tenements which are not let for a primary residential purpose and tenements which were let before 1st June 1995 shall however fall outside the scope of the Act.
The Act identifies two types of private residential leases, these being short-term private residential leases and long-term residential leases.
Short-Term Private Residential Leases
A short-term private residential lease is a lease which is negotiated for a duration of less than 6 months and is negotiated to satisfy one of the following categories of lessees:
- non-resident workers who are employed for a period of less than 6 months or are employed to complete a specific task within the same time period
- non-resident students who are enrolled in courses for less than 6 months
- residents who need to rent an alternative primary residence for a period of less than 6 months
- non-residents who need to rent a tenement for a period of less than 6 months, provided that they would not be seeking to establish their long-term residence in Malta
A contract of short lease must clearly specify which of the above categories the lessee falls into, by attaching the necessary documentation to the contract. Furthermore, it is to be noted that a short-term private residential lease may not be extended.
The lessee may not withdraw from a short-term private residential lease before the lapse of one (1) month. Following this time period, the lessee may withdraw at any time from the short-term lease, provided that he gives prior notice to the lessor of at least one (1) week, by registered letter.
Long-Term Private Residential Leases
A long-term private residential lease cannot have a duration of less than one year. In fact, any long-term private residential lease negotiated for a period of less than one year shall be deemed to have been agreed for a period of at least one year.
The Act provides that the lessee may not withdraw from a long private residential lease before the lapse of:
- six (6) months in the case where the lease is for a period of less than two (2) years
- nine (9) months in the case where the lease is for a period of two (2) years or more but less than three (3) years; or
- twelve (12) months in the case where the lease is for a period of three (3) years or more
If the lessee withdraws from a long private residential lease before the above-mentioned periods, the lessor may retain an amount not exceeding one (1) month's rent from the deposit left by the lessee by way of security. This shall be without prejudice to the lessor's right to proceed against the lessee to collect any other amount due by the lessee, and shall also be without prejudice to the lessor's right to terminate the lease for failure of the lessee to comply with one of his obligations.
The Act also establishes a procedure for the withdrawal from long-term private residential leases after the lapse of the above-mentioned periods, which includes shorter notice periods which the lessee is to abide by.
Formalities of Private Residential Lease Contracts
All private residential lease contracts made after the entry into force of the Act are to be made in writing and shall include the following:
- the tenement to be leased
- the agreed use of the tenement let
- the period for which that tenement shall be let
- whether such lease may be extended and in what manner
- the amount of rent that shall be paid and the manner in which such payment shall be made
- any amount deposited by the lessee by way of security for the performance of his obligations; and
- an inventory, in the form of documentary evidence, attesting the condition of the tenement as well as the state of any furniture and domestic appliances supplied by the lessor
In the absence of any one of these requirements, the contract shall not be registerable, and therefore shall be considered null and void.
Registration of Private Residential Lease Contracts
All private residential contracts entered into after the entry into force of the Act, including their renewal, whether express or tacit, are to be registered. Contracts which are not registered shall be null and void. The duty to register the private residential lease contract shall rest with the lessor, who is to register such contract with the Authority within ten (10) days of the commencement of the lease. An application for registration may not relate to more than one private residential lease.
If the lessor fails to register the contract, the lessee may proceed to register the contract himself, at the expense of the lessor.
The rent may be freely stipulated between the parties. Unless otherwise agreed, the payment of the rent shall be deemed to have been calculated for one (1) month. In no case may the lessor require the advance payment of more than one (1) month's rent, unless agreed between the parties.
This is without prejudice to the lessor's right to request an amount by way of security, for the performance of the lessee's obligations.
Rent increases may only take place once every year. Furthermore, in the absence of any express agreement, the rent cannot be revised during the term of the lease. Increases in rent may not exceed the annual variations recorded in the Property Price Index published by the National Statistics Office, and in no circumstances may exceed 5% of the previous rent.
Shared Residential Space
Any contract entered into for the lease of a shared residential space shall have a duration of six (6) months. The lessee may withdraw from the lease at any time, by giving one (1) week prior notice to the lessor by registered letter. Furthermore, no penalty may be imposed on the lessee for exercising his right of withdrawal.
Monitoring and Enforcement
The Chairperson of the Authority shall have the right to enter a private tenement which is being occupied by any person, subject to the prior issue of a warrant by a Magistrate, in order to determine whether a tenement is being occupied by any person/s who do not have a valid title of lease.
If it appears to the Authority that any tenement is occupied for a residential purpose by any person without a valid title of lease, the Chairperson shall issue an enforcement notice to the person or persons granting the enjoyment of the tenement without having formalized their relationship according to law.
Adjudicating Panel for Private Residential Leases
The Act also provides for the setting-up of an Adjudicating Panel, which shall have exclusive jurisdiction to decide disputes relating to private residential leases to which the Act applies, in so far as the claim does not exceed the value of €5,000.
The Adjudicating Panel shall consist of an advocate acting as Chairperson, and between two (2) to four (4) professionals with knowledge and expertise in the real estate sector.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.