Protected Residential Leases in Malta – The 2021 Reforms in Practice

Protected residential leases in Malta, commonly referred to as pre-1995 leases, refer to residential leases that came into force before 1^st June 1995 and which still enjoy statutory protection today. Although frequently grouped together, they fall into two distinct legal categories.

The first category consists of leases that were leases from the very beginning. These fall under Chapter 69 of the Laws of Malta.

The second category relates to those leases regulated by Chapter 158 of the Laws of Malta. This principally regulates properties that were granted by temporary emphyteusis for a specific period (known in Maltese as cens temporanju) which, upon expiry, were converted into leases by operation of law. Following legislative changes introduced in 1979, upon expiry of certain temporary emphyteusis concessions, the occupant had the right to remain in the property under a protected lease. Chapter 158 also regulates leases of decontrolled properties.

The distinction between Chapter 69 and Chapter 158 is not merely academic. The applicable law differs depending on the category, and this can significantly affect the outcome of the court case. 

Despite their different origins, both categories share the same defining characteristic: protected lease. For many years, a landlord could not refuse to renew the lease upon its expiry, and the lease could be inherited. Nor could the landlord increase the rent or impose new conditions at his own will.

In 2021, the legislator introduced amendments under Act XXIV of 2021 to reform protected leases. These amendments introduced remedies and reforms that similarly affected leases under Chapter 69 and those under Chapter 158.

In virtue of these reforms, a landlord may file proceedings before the Rent Regulation Board to either:

-       Request an increase in rent; or

-       Seek termination of the lease

The remedy given by the Board depends on the outcome of the means test applied to the tenant. The means test examines the tenant’s income and capital, and determines whether the tenant exceeds certain financial thresholds established in the law. The financial thresholds vary primarily according to the tenant’s age. The older the tenant, the higher the financial threshold.

If the tenant’s income and capital fall within the legal threshold, the tenant will satisfy the means test. The Rent Regulation Board will then increase the rent up to a maximum of 2% of the property’s free market value as at 1 January of the year in which the application (rikors) is filed. The value of the property is established by two architects appointed by the Board. Typically, the architects are instructed to value the property as it stands without factoring in redevelopment potential, airspace, or speculative building capacity.

If the tenant exceeds the statutory income or capital thresholds, protection will be lifted. Therefore, if the tenant exceeds the income threshold but not the capital threshold he may still be evicted as these are not cumulative. In such cases, the Board will order eviction of the tenant, usually granting a two-year period for the property to be vacated. During this transitional period, the tenant will need to continue paying compensation for this continued occupation, similar to a rent. The Board will set the compensation that will be payable by the tenant. While the law does not bind the Board to the 2% limit in these situations, judgements to date are often given in this sense when determining the payable compensation for the said period.

In rent increase cases before the Rent Regulation Board, the Housing Authority has the right to participate in the case. The reason is that the Housing Authority currently has a scheme to subsidise a portion of rent exceeding the original protected rent, up to the capped amount of EUR 10,000. By way of an example: if a protected tenant was paying 280 euro annually and the Board increases the rent to 8,000 euro per year, the tenant remains responsible for the payment of the original rent (subject to statutory increases under the previous law), while the Housing Authority would subsidise the difference, provided that the tenant qualifies for the subsidy.

Another significant reform introduced in Act XXIV of 2021 regards the continuation of the lease following the death of the tenant. Prior to the amendments of 2021, in general the lease could be inherited by family members who qualified according to the law, who would then continue to enjoy a protected lease for their own lifetime. The law no longer grants this protection and right of succession in the lease. The new law provides that upon the death of the tenant, if a person qualifies according to law and does not exceed the means test, then they will only be entitled to occupy the property for a further five years, and they will not be entitled to continue to lease the property for their lifetime.

If you are a landlord considering filing an application before the Rent Regulation Board, or a tenant faced with a rent increase or eviction proceedings, you may contact us for clear and tailored advice to your situation.

Dr Samira Briffa

samirabriffa@amaadvocates.com

Opening Windows: When is it Legal?

The opening of new windows in a party-wall (‘hajt diviżorju’) is a frequent cause of neighbourly disputes, particularly when it comes to the redevelopment of overlying properties. Under Maltese law, a person cannot open a window in the party-wall, being the wall that separates two adjoining properties, unless he enjoys a right over the neighbouring property (which is known as a servitude / servitù). In the absence of such a servitude, the opening must be receded to a distance of not less than seventy-six centimetres (76 cm) from the party-wall and this in accordance to Article 443 of the Maltese Civil Code (Chapter 16 of the Laws of Malta).

What classifies as a ‘window’ under Maltese law?

The law does not define what constitutes a window, yet court decisions have shed some light on this. Fixed apertures, for instance, have been classified as windows even when placed above eye level. In contrast, small openings designed solely for ventilation, commonly referred to as air vents or “rewwieha,” are not classified as windows and do not create a servitude. In determining the nature of an opening, courts assess its purpose, size and position.

Where and When the Distance Applies

Unless one enjoys a servitude, the 76 cm legal distance must be respected at all times, regardless of the level of the tenements or whether they are side by side or overlying each other such as maisonettes. Even parapet walls are treated as extensions of dividing walls. Maltese case law is clear that Article 443 of Chapter 16 applies equally to maisonettes, apartments and traditional dwellings.

Courts have also confirmed that this distance applies independently of whether actual overlooking occurs. Although some judgements have allowed apertures at a smaller distance where there was no overlooking, more recent decisions of the Court of Appeal have reverted to a strict interpretation.

Exceptions

Exceptions to the 76 cm distance in the absence of a servitude do exist, but they are limited and must be clearly established. These include obtaining your neighbour’s consent or else prescription. Consent to open windows within the 76 cm legal distance must be granted through a public deed signed between the owners of the neighbouring tenements. To acquire the servitude through prescription, the window has to have existed openly, peacefully and uninterruptedly for thirty (30) years.

The concept of good neighbourliness, commonly known as buon vicinato does not amount to a renunciation of rights or consent. Even decades of tolerance do not necessarily extinguish a neighbour’s right to challenge an unlawfully opened window.

Redevelopment and Existing Servitudes

Where a window legally exists and the property is demolished and rebuilt, the servitude remains intact, but the new window must remain in the same position and of the same size. Opening additional windows would generally be considered an aggravation of the servitude already enjoyed and would therefore be unlawful unless authorised by contract.

Planning Permits and Third-Party Rights

It is important to keep in mind that a planning permit issued by the planning authority does not override this 76 cm rule. Even if a permit is issued to open windows in the party-wall or within 76 cm of the party-wall, this does not automatically mean that those windows comply with civil law. This means that a property owner may hold a valid planning permit to open new windows, and still face legal action from neighbours seeking to protect their rights by opposing the opening of those new windows.

Therefore, it is of utmost importance to understand one’s obligations under Article 443 of Chapter 16 and to act promptly if the required legal distance of 76 cm is not respected.

Dr Samira Briffa

Understanding the Condominium Act

The Condominium Act (Chapter 398 of the Laws of Malta) is the primary law that regulates how condominiums are administered.

What is a Condominium?

The law defines a condominium as a building or group of buildings where two or more people jointly own, use, or enjoy certain shared areas, called “common parts,” while each person separately owns their individual unit within the same building or complex.

In practical terms, the most common form of a condominium is a block of apartments, where each unit (flat) is individually owned, yet the common parts are co-owned by all the individual owners (collectively referred to as the condomini) in undivided shares.

The undivided shares in the common parts are presumed to be equally distributed among the condomini. For instance, in a block comprising five apartments, each apartment owner is presumed to hold a one-fifth (1/5) share in the common parts, unless otherwise stated in the contracts of sale.

Which are the “Common Parts”?

While most contracts of sale nowadays clearly list which areas of the block are to be considered common, the Condominium Act provides a non-exhaustive list of what is presumed to be a common part, unless otherwise stated in the deed of sale. These include:

• The land upon which the building or complex is constructed

• The foundations and external walls, including any common dividing walls with neighbouring properties

• The roof, airspace, and shafts

• The entrance doors, staircases, stairwells, corridors, and lobbies

• Any courtyards, common gardens, or shared open spaces

• Lifts, wells, cisterns, drainage pipes, all  installations  for  water,  gas,  electricity, heating  and  similar  services  up  to  where  the  said installations branch off exclusively to serve an individual unit

• And generally, any other part of the property that is intended for shared use or enjoyment.

If a contract of sale expressly excludes certain parts from the common parts, or defines the common parts differently, such contractual provisions prevail over the law. It is common, for example, for the roof and airspace to be kept in private ownership and therefore be excluded from the common parts.

When to Appoint an Administrator?

If there are up to three unit owners, they may administer the condominium jointly or appoint an administrator. If there are more than three unit owners, the condomini must appoint an administrator. The administrator must be appointed during a meeting held between the same condomini and such administrator shall hold office for a period of two years unless otherwise agreed.

After appointing an administrator, the condominium must be registered with the Land Registry Agency. The administrator then serves as the legal representative of the condominium, authorised to handle all matters related to the common areas, including taking legal action, for example, to collect unpaid contributions from individual unit owners.

Among the key responsibilities of the administrator are handling the maintenance and repairs of the common parts, maintaining financial records, keeping a register of all condomini, managing the condominium’s funds, holding general meetings, and recording minutes of those meetings.

What is a General Meeting?

A general meeting includes all unit owners, and a quorum is required for this kind of meeting to proceed. This quorum requires the presence of condomini representing at least two-thirds (2/3) of all units.

If a quorum is not reached within thirty minutes of the scheduled start time, the meeting will be adjourned and reconvened either on the same day the following week at the same time and place, or on a different date, time, and location as specified in the notice by the administrator. Should a quorum still not be present within thirty minutes at the reconvened meeting, the present condomini at that meeting will be considered to constitute a valid quorum.

Decisions such as those which alter the aesthetics of the condominium or involve serious alterations to the common parts, require the unanimous consent of all condomini. Others, like carrying out other alterations to common parts, setting or amending condominium rules, require at least a 2/3 vote of units represented at the meeting. Decisions outside these critical categories, such as agreeing upon the cleaning services of the common parts, may be passed by simple majority.

The Crucial Role of General Meetings

During the general meetings, important decisions regarding the common areas may be made. These meetings hold wide-ranging powers, including but not limited to appointing or confirming the administrator and setting their fee, approving the annual expenditure budget and the administrator's accounts, and deciding on extraordinary repairs. Topics such as the installation of a lift, the allocation of its costs, structural façade works, and other related matters may also be discussed and voted upon.

Apportionment of Costs

The law states that the costs for the upkeep and repair of common areas are generally shared amongst the condomini based on the value of each unit, unless otherwise agreed. In practice, it is commonly agreed that costs are shared equally between the units. If certain parts benefit co-owners unequally, expenses are divided according to the extent of use each condominus can make of them. For areas like staircases, courtyards, or roofs that serve only part of the building, maintenance costs are to be borne solely by the benefiting parties.

A condominus may be exempted from contributing to certain expenses particularly if one does not intend to benefit from the alterations and/or innovations that allow for separate use. However, this exemption is not always straightforward or easily applied. The right to opt out is limited to cases where the changes are purely decorative in nature, or where the associated costs are excessively onerous, especially in light of the particular condition and prestige of the condominium.

Given that this exemption is subject to interpretation, it often gives rise to disputes. What qualifies as "excessively onerous" or "decorative" may differ. Additionally, even if a condominus claims no intention of using or benefiting from the innovation, the enhancement may still indirectly improve the overall value or appeal of the building, potentially benefiting all units regardless of direct use.

Therefore, the decision to contribute or not is rarely black and white, and legal guidance may be necessary to resolve disagreements and ensure a more harmonious condominium environment.

Dr Samira Briffa