The most pro-landlord country in Europe
With the proposed changes to the Private Residential Leases Act, Malta will have the most prolandlord laws in Europe. The amendments fail to tackle affordability, remove rent-calming measures that were available to tenants and promote lazy landlords.
In the meantime, the UK Conservative government has promised to prohibit landlords from evicting tenants if tenants are at no fault. This is something that is occurring repeatedly in Malta.
Tenants who have done nothing wrong are being evicted because their landlord terminates the contract and demands significant increases in rent. In fact, many tenants are afraid to confront their landlord when it comes to repairs or contract registration given the ease of eviction in Malta.
Another country which has seen further tenant protection is Spain, where the Spanish Socialist government imposed that rental contracts must have a minimum duration of five years, with tenants being allowed to leave after six months if they give 30 days’ notice.
In Malta, on the other hand, the government has not extended the minimum duration of a rental contract at only one year. Instead, Housing Minister Roderick Galdes initially proposed prohibiting tenants from leaving the property before the contract ends. If they did, not only would tenants lose their deposit but they will also become liable for the remaining rent. Thankfully, this particular proposal has been scrapped.
In countries where the rental sector is much larger, rental laws have always been more stringent as they recognise the importance of having an affordable and secure sector.
For example, in the Netherlands, rent cannot increase by
more than 1% above the rate of inflation or 1% above the rate of wage increases, whichever is lower.
This means that, in 2022, rents could not increase more than 3.3%. Meanwhile, in Malta, that same year, rents increased by 6.6% on average. This is because of a loophole the government refuses to close.
In short, landlords are not allowed to increase rents by more than the property price index increase, capped at 5%, within the same contract. As a result, landlords are terminating contracts every year and increasing rents as much as they like.
It is not only national governments that recognise the importance of rent regulation. In Paris, the municipal government has set different reference rates by municipality, which sets caps on the maximum rent amounts. This, then, differs by the number of bedrooms, date of construction and whether it is furnished or not.
Yet, rather than following the rest of Europe in strengthening the regulation of the rental sector, the Maltese government is moving in the opposite direction. Instead of looking to promote affordability and stability in the sector,
the government has proposed the removal of rent-calming measures.
Another rent-calming measure, which is going to be amended, is the automatic renewal of contracts. The current law states that if a landlord doesn’t end the rental agreement three months before it expires, it automatically continues with the same conditions.
Data from the Housing Authority shows that 95% of contracts that were renewed kept the same price. This amounted to more than 20,000 contracts.
However, the government is proposing an amendment to this law so that, if an agreement
is renewed, landlords can still increase prices by up to 5% for each year since the original agreement started. This change is on top of the government’s decision not to close the loophole which allows landlords to terminate a contract and raise prices as much as they want.
The introduction of the Private Residential Leases Act in 2020 was a small step forward in regulating a rent market characterised by greed and abuse.
While this legislation introduced very basic rules concerning contracts and their registration, it stopped short of mandating longer-term contracts and prohibiting abusive rent prices.
With these amendments further watering down the few regulations in the sector, Malta is set to become the most pro-landlord country in Europe.
Irrespective of the ideology of the government, nations in Europe have pushed to regulate the rental market. However, the Maltese government has decided it is better to accommodate the rich rather than protect the vulnerable.
The government has decided it is better to accommodate the rich rather than protect the vulnerable*