Landmark Judgement Sheds Light on Unconstitutionality of Pre-1995 Leases
In the landmark case of Anthony Debono et vs L-Avukat General et, delivered on the 8th of May 2019, the Constitutional Court, presided over by Mr Justice Lawrence Mintoff, declared that tenants in properties leased before June 1995 can no longer rely on their tenancy rights since the current legal provisions regulating them, namely the Reletting of Urban Property (Regulation) Ordinance (Chapter 69 of the Laws of Malta as subsequently amended by Act X of 1995) are in breach of the landlords’ fundamental right to property, as enshrined in the European Convention of Human Rights and the Constitution of Malta.
The case concerned the lease of a three-storey house in Sliema, which the plaintiffs’ father had originally rented to the defendant’s grandmother in 1986. The defendant used to live in that property with his grandmother and continued to do so after her death on the basis of the Reletting of Urban Property (Regulations) Ordinance. The current law gives the landlord no right to refuse the renewal of the lease and could not even change the lease conditions, despite the fact that the property was being leased against an annual ‘fair rent’ of €203, a pittance in comparison to the rise in the rental market values in recent years.
The plaintiffs argued that this situation created an unjust imbalance between the general interests of the tenants and the protection of the owners’ right to property, further aggravated by the “enormous discrepancy” between what they were earning by way of rent and the potential income their property could generate on the free market. A court-appointed architect had estimated that the house was worth around €300,000 and could generate a monthly rent of €1,000.
The Constitutional Court observed that there was a clear and unjust imbalance between the rights of the owners and those of the tenants, with the former having to shoulder, for years on end, the social burden induced by the current legislation, and this despite the amendments of Act X of 2009.
This situation was clearly in breach of the applicants’ constitutional rights, and thus the Court awarded them €20,000 by way of damages payable by the Attorney General, who must also bear all costs related to the case. More importantly, the Court also ordered that the tenants can no longer rely on the application of the current law to retain possession of the premises.
What this means, in effect, is that all pre-1995 leases are now under the legal spotlight. If, as is often the case, the rent payable is disproportionate with current market forces, then tenants will no longer enjoy the benefit of automatic renewal of their lease.