Although property has always been a lauded investment in Malta, recent years have seen a surge of interest in this market, particularly rentals. In 2020, the Government launched the Private Residential Leases Act, a new law governing how private residential properties are let out and managed.
When did it come into effect?
Having come into effect as of 1st January 2020, the reform covers private residential properties with leases signed or set to be renewed after January 1, 2020 and those still in force as of January 1, 2021. This will also include all rental contracts signed after June 1, 1995.
What is it?
This is a reform of private residential rental leases for properties let out to tenants working or studying in Malta. The new law encourages landlords to register their rental properties with the Housing Authority as well as imposing stricter terms on contracts and the conduct of both the landlords and tenants.
Registration needs to be done not only by students or workers but by all property owners who are renting their property for a primary residential purpose. Short-term contracts need to be 6 months long and cannot be less. Long-term contracts are to be of one year or more.
The reform brings about a number of changes aimed to protect the rights of both the landlords and tenants by maintaining transparency throughout the rental process.
Registration: A landlord is required to register every private rental contract signed with their tenants. These contracts must be registered with the Housing Authority within 10 days of the lease starting or being renewed.
Termination: The rental contract cannot be terminated at any time. The notice must be sent three months before the contract duration expires. If the tenant does not get the letter within the specified time, that means the contract would be renewed for one more year.
As for short term leases, the contract would be terminated on the date that is agreed between the landlord and tenant. This means that neither the landlord nor the tenant would need to give notice.
Rental agreements: The new law now requires that the period of the rental agreement and the amount of rent per room and shared spaces must be specified and put in writing. Landlords must register contracts within 10 working days of signing.
The contract must stipulate the exact amounts for the rental and deposit that is paid by the tenant. If the landlord agrees with the tenant that their room is €310 per month, that amount and the payment method are also registered.
Rental Price: An increase in the rental price can only happen once a year and cannot go over five per cent of the existing rental amount per year. This is in line with the Property Price Index by the National Statistics Office.
Inventory: Landlords must provide an inventory of the contents, such as the appliances and the condition of furniture. If any of these elements of the agreement are not established, the contract is void.
Utilities: In addition to making sure there is an adequate supply of water and electricity, they are also bound to show the correct tariff and bills proportionately shared among the tenants.
What about tenants?
Tenants have to give a strict period of notice before they can withdraw from a long-term contract.
1 year contracts: Following the obligatory six months, the lessee may be released from the contract by giving at least one (1) month notice to the lessor by means of a registered letter;
2 years contracts: Following the obligatory nine months, the lessee may be released from the contract by giving at least two (2) months’ notice to the lessor by means of a registered letter;
3 years or longer contracts: Following the obligatory twelve months, the lessee may be released from the contract by giving at least three (3) months’ notice to the lessor by means of a registered letter;
The new law stipulates that tenants are required to pay the landlord for the extra days that they stay in the property. This would be paid as an equivalent rent to the number of days.
What are the fines?
Anyone found guilty of renting out or occupying property for residential purpose that does not conform with the requirements of the Act would face a fine of between €2,500 and €10,000.
The Act also enforces fines of €1,500 and €4,000 against landlords who attempt to block water and electrical services to the property, or the removal of furniture, appliances or personal belongings.
The Housing Authority would have the power to issue an enforcement order and fine of €5,000 against a person found guilty of living in a property and is not registered under the Act.
How to adapt
This rent reform offers much needed regulation within this area. If you require assistance with your rental registration please get in touch and we’d be happy to help!