Malta’s rental reform: Fixing violations to "landlords' human rights"

The new policy aims to raise prices for tenants and cover the difference through the state budget, to avoid a blow to pensioners and low-income groups

Recently, the Maltese government has decided to amend rental laws in the country, rectifying a longstanding dispute between renters. Essentially, people who lived in rental properties with long-term contracts signed before 1 June 1995 had the right to refuse renewal agreements.

This means that tenants could enjoy the benefits of paying pre-1995 rents in the year 2022, with landlords having no way of raising rents to reflect the current market. However, at the time, Malta had a very small rental market compared to today, so landlords have repeatedly challenged this policy in the courts.

As the years went on, various judges and courts have ruled in favour of landlords, claiming the policy is a "violation of landlord human rights". Yet, according to a statement by the government, outright abolishing the practice would lead to considerable turmoil in the housing sector, as some 10,000 people, mainly pensioners, are dependent on these contracts.

The government has therefore attempted a balancing act by instituting a benefits scheme to shield tenants from the worst of these effects, creating a sort-of-social rental aid programme.

New rental regulations in Malta

Landlords in Malta are now allowed to claim up to 2% of a property’s market value in rent per year. Determining that value would, however, be left to the Maltese Rent Regulation Board and their expert architect advisors.

While on the one hand, this regulation would lead to an increase in consumers, it would also allow a large degree of transparency in the market and avoid speculation. At the same time, these regulations would not apply to tenancy contracts with the government, properties for tourism purposes, holiday home rentals and short-term agreements with students and temporary workers.

Authorities will also provide rental aid for pensioners and welfare beneficiaries who lived in pre-1995 rental agreements, to cushion the blow from the sharp increase. This includes covering the rental costs in full up to a maximum of 10,000 euros per family per year.

Moreover, tenants in full-time employment will pay no more than 25% of their wages on rent, with the rest being covered by the state, to a maximum of 10,000 euros per year.

On the other hand, people living in properties valued at around 500,000 euros (exceeding the 10,000-euro threshold) will be offered alternative accommodation by the government if they struggle to meet additional rent costs.

Although the government has tried to appease every group in this debate, the end result would be that landlords would start receiving subsidies through a direct line from their tenants.