The Important Laws and Regulations All Landlords Must Know About
Renting out your property should be a rewarding experience, knowing that your investment is making a good return. As a landlord, being in the know is one way of maintaining that positive experience, and that includes being aware of laws affecting owners directly.
In fact, a new law has recently come into effect governing the leasing of properties in Malta, including both short and long-term rentals. As a landlord, it is important that you familiarise yourself with it so that you understand what your rights and obligations are. Here you can find a quick summary of what it entails. If you need further details or are unsure about anything, you can speak to one of our letting specialists at QuickLets who will gladly clarify any doubts.
Which contracts are affected?
The new law applies to all private residential lease contracts (PRL) affecting new contracts made after 1st January 2020 and to leases renewed after this date. There are three kinds of leases that are provided for by this law (scroll down for a description of each):
- long private residential leases (“LPRL”);
- short private residential leases (“SPRL”); and
- the letting of shared residential spaces (“LSRS”).
What is the procedure?
Lessors are bound by law to register new contracts and renewals, against a fee, on the Housing Authority portal at portal.rentregistration.mt, within 10 days of the commencement of the tenancy (and NOT from the date of signing of the contract). If the lessor fails to do that, the tenant, or lessee, may register the contract themselves. However, the expenses will still need to be borne by the lessor. It is, therefore, in the best interest of both landlord and tenant to have the PRL registered. Failure to do so will annul the contract.
The PRL should be made in writing and needs to include all of the following:
- the property which is being leased;
- how the property will be used;
- the lease period;
- how, and whether, the lease can be renewed;
- the amount of rent to be paid and how this should be paid;
- any amount of money deposited by the lessee by way of security, for the performance of their obligations; and
- a description of the condition of the premises, as well as inventory of furniture and domestic appliances, and a description of the state in which they were left in the property for use by the tenant.
Are there any clauses that the law prohibits from including in the PRL?
A PRL naturally protects both the lessor and the lessee. However, there are a number of conditions that the law stipulates CANNOT be included in a PRL, such as:
clauses that permit an early termination of the contract. This is not to say that the landlords’ rights are not protected as tenants are still duty-bound to fulfil their obligations; and a clause indicating whether a PRL is renewable or not can still be included;
- clauses permitting the reduction of benefits mentioned in the contract;
- clauses permitting a landlord not to honour responsibilities they are bound by law to honour;
- clauses imposing other dues other than rent, deposit, insurance and what is owed for the maintenance of the common parts (condominium) as agreed in advance;
- clauses which impose fixed fees for utilities not based on actual consumption; and
- clauses which prohibit the use of certain areas within the property being leased, such as a room, in a way that it makes it inaccessible for the tenant.
The amount of rent to be charged, and when it is to be paid, is to be agreed between the lessor and the lessee. Landlords may only request the payment of one month’s rent in advance unless the lessee wishes otherwise.
The increase in rent is protected by law. Landlords may only put the rent up once a year and currently by not more than 5 per cent over the previous rent, as documented in the Property Price Index published by the National Statistics Office.
What are the conditions for Long Private Residential Leases?
For a lease to be considered a long lease it needs to be at least for 12 months. In the case where renewals are made, they are presumed to be for a further 12 months. LPRLs are renewed automatically at the end of the twelve-month period unless the lessor decides otherwise. In that case, the landlord needs to send a notice of termination by registered post to the lessee, at least three months in advance.
The lessee, on the other hand, is bound by law not to terminate a long-term lease before:
- six months if the lease is for less than two years and they have to give the landlord notice at least one month before;
- nine months if the lease is for two years or more but less than three years and they need to give the landlord notice at least two months before; or
- twelve months if the lease is for three years or more and they need to give the landlord notice at least three months before.
If the lessee fails to honour the above regulations, the landlord reserves the right to retain one month’s rent from the amount initially deposited.
What are the conditions for Short Private Residential Leases?
An SPRL is a contract for a maximum of six months for:
- people coming to Malta to work for six months or less;
- people coming to Malta to study for six months or less;
- people residing in Malta and who need another primary residence for six months or less;
- people coming to Malta for six months or less but who do not intend to become residents in Malta.
It is requested by law that the landlord identifies which category their tenant falls under and indicates it in the SPLR. Documents supporting this must also be presented. If the landlord or tenant fail to provide the above the contract will automatically be considered as an LPRL. Also, any SPLR exceeding the term of six months will be automatically regarded as an LPRL.
The tenant may not terminate an SPRL before the first one month is over. They need to inform the landlord at least one week before through registered post. No form of compensation can be sought by the landlord for a lawful early termination of an SPRL.
What are the conditions for the Letting of a Shared Residential Space?
LSRS are contracts for the renting of specific areas or rooms in a single apartment unit or building, having shared amenities, such as kitchen and bathroom and having a duration of six months or less. A tenant may terminate the contract at any time, provided they give one week's written notice to the landlord by registered post. Once again, the landlord may not seek compensation for a lawful early termination of an LSRS.
An LSRS is not eligible for renewal once the lease period is over, and no further actions need to be taken by the landlord or the tenant to end the contract once the term is over.
Other information worth knowing
Landlords must be aware that the authorities have the right to check up on their tenants and to enter the property to ensure that all is in accordance with the law. There are harsh penalties for those who are found to be negligent, so it is in the landlord’s best interest to make sure that the paperwork is done properly and registered in a timely manner.
These laws are there to protect both the landlord and the tenant and, when you get to grips with them, you will find that they actually eliminate any grey areas of misunderstanding there might be and smoothen the process out considerably. To make things easier for yourself, focus on the private residential lease contract that applies to you and speak to a QuickLets specialist who will guide you further.