Legal study on compliance in the Maltese private residential rental sector released by the Housing Authority
The Private Residential Leases Act (PRLA) was introduced back in 2020 with the goal of ensuring, among other elements, that this sector is rendered more secure and transparent. Four years on, this legal study delves deep into the compliance aspect of the private residential rental sector.
This analysis bridges two different aspects – first by examining the enforcement action conducted by the Housing Authority to ascertain compliance with the lessor's duty to register the agreement, and then by evaluating how lessors and lessees have been fulfilling their duties towards each other, in an exercise that can be considered a continuation of the analysis contained in the Housing Authority's 2022 Residential Rental Study. This also includes the Adjudicating Panel function carried out by the Housing Authority since 2020.
The key highlights of the Legal Study include the following:
• As of September 2023, there
were 886 notifications issued to non-compliant landlords, 78 of which led to a criminal complaint to the Police.
• There were 22 decisions delivered by the Court of Magistrates (Criminal Judicature), with 3 decisions appealed before the Court of Appeal (Inferior Jurisdiction) over this period.
• Although the fine established in the Private Residential Leases Act can range from €2,500 to €10,000, in 12 out of the 15 cases in which the accused was found guilty, the Court imposed the minimum fine permissible by law.
• The analysis of the Adjudicating Panel decisions in 2022 and 2023 highlights the importance of the inventory in attesting to the true state of the property.
• The decisions by the Adjudicating Panel indicate that claims to damages following the termination of the lease, or overcharging of utilities, need to be backed by adequate proof, consisting not only of photographic evidence but also of documents, such as quotes or invoices, capable of quantifying such damage. The same applies to tenants claiming overcharging of utility bills.
• In general, the study indicates that there is a strong case for the competence of the Panel to be extended to, at least, cases of rent and utility arrears and expenses related to the common parts.
The investigation illustrates how while the legislator’s goal of increasing transparency, legal certainty and contractual fairness have been reached, the implementation of the Private Residential Leases Act has also been tested by certain challenges. Further legislative action would appear to be necessary in ensuring greater compliance within the sector.
Until September 2023, 22 criminal cases in front of the Court of Magistrates
(Criminal Judicature) have been filed by the Police, with three of them appealed in front of the Court of Criminal Appeal (two by the AG and one by the accused) have been concluded. The police and the AG have acted upon the instructions of the Housing Authority, against landlords, or their representatives, who had allegedly failed to abide by the obligation to register a lease agreement in terms of Chapter 604 of the Laws of Malta. On
the two occasions that the Attorney General appealed the judgements delivered by the Court of Magistrates, it was unable to overturn the decision taken against the prosecution, whilst the same applies to the landlord who instituted an appeal against his conviction. The general sentiment of the Courts of Justice deduced by an analysis of the cases handed down so far is that the offence of non-registration of a lease agreement is not considered as a grievous crime, so much so that the court generally has, in the cases examined, always given the minimum fine permissible by law and, in very few cases, even ventured outside the realm of the criminal court by declaring a contract null in order to decree the impossibility of the crime. In the vast majority of cases where the prosecution was successful in proving the guilt of defendant, the minimum fine available at law was imposed, also hinting towards the general sentiment described above. In the Bill submitted to the House of Representatives by the Minister 26 responsible for Housing in December of 2023,91 the legislator is seeking to address some of the substantive and procedural deficiencies that have been highlighted by these judgements. The bill would, for instance, eliminate the possibility of landlords being acquitted by making the argument that their draft agreements lacked certain constitutive elements while extending the right to appeal to the Attorney General.
From a private law perspective, the increased accountability of the sector is
also requiring parties to pay better attention to details which may have previously been overlooked, both at the start as well as the end of the lease.
Lessors and lessees entering private residential lease agreements must make sure to draft a proper inventory which attests to the true state of the property upon entry. The contents of the inventory are likely to be decisive in determining a claim that could arise following the termination of the lease. Any such claim would have to be backed by adequate proof, consisting of not mere photographic evidence but also of documents, such as quotes or invoices, capable of quantifying such damage. The same applies for tenants claiming overcharging of utility bills. Finally, there also seems to be a strong case for the competence of the Panel to be extended to, at least, cases of rent and utility arrears and expenses related to the common parts.
This legal study was carried out by Dr Kurt Xerri, resident academic within the Department of Civil Law at the Faculty of Laws of the University of Malta; Dr Bryony Balzia Bartolo, manager of the Legal Office of the Housing Authority; and Dr Stefan Cutjar, an associate at Camilleri Preziosi Advocates and former Policy Consultant to the Ministry for Social and Affordable Accommodation.