By Dr Clive Gerada – Senior Associate
Part one (1): Three types of contracts
The Private Residential Leases Act (Chapter 604 of the Laws of Malta) came into force on 1st January 2020. As mentioned in its preamble, first and foremost, this act seeks to promote the development of the private rental sector; secondly it seeks to ensure standards of fairness, clarity and legal certainty and predictability in the contractual relationship between the lessor (owner of the property) and the lessee (person renting the property); thirdly, with this act, the legislator aimed at ensuring adequate accommodation.
It is mandatory that all private residential lease contracts entered into after the entry into force of this Act , including their renewal, whether express or tacit, shall be registered with the Housing authority.
What is a “Private Residential Lease”?
Any long or short private residential lease, including the letting of shared residential space, which is entered into after 1st January, 2020, and any lease for a residential purpose entered into before the 1st January, 2020, which would still be in its original or renewed period on the 1st January, 2021;
Private Residential Lease Contracts: there are Three types of leases
(i) Long private residential Leases
(ii) Short private residential Leases
(iii) Shared Residential Space
(i) What is a “Long private residential Lease” (commonly known as Long-Let) ?
The law defines such a lease as any lease, negotiated for a primary residential purpose in accordance with article 8 and which is not a short private residential lease.
First and foremost, a Long-let, cannot have a duration of less than one (1) year. In the event that a long-private residential lease agreement stipulates a shorter duration shall be deemed to have been agreed for a period of at least one (1) year.
Long let has a mandatory period that should be respected at all costs and the lessee (lessee of the premises, or his spouse, civil union partner, cohabitant or a member of his family up to the second degree, whether direct or collateral) cannot withdraw from such lease during this period. This mandatory period varies depending on the duration of the long-let agreement. In fact, the legislator establishes the following duration categories:
(a) six (6) months in the case where the lease is for a period of less than two (2) years; or
(b) nine (9) months in the case where the lease is for a period of two (2) years or more but less than three (3) years; or
(c) twelve (12) months in the case where the lease is for a period of three (3) years or more;
Following these mandatory periods, the lessee may be released from the contract by giving notice to the lessor (landlord):
(i) In the event of Long-let Contract for a period less than two (2) years, by giving at least one (1) month notice to the lessor by means of a registered letter;
(ii) In the event of a long-let contract for a period of two (2) years or more but less than three (3) years, by giving at least two (2) months’ notice to the lessor by means of a registered letter;
(iii) In the event of a long-let contract for a period of three years or more, by giving at least three (3) months’ notice to the lessor by means of a registered letter;
Lessor may retain one (1) month’s rent
If the lessee withdraws from a long-let contract, before the lapse of the applicable periods mentioned above, the lessor may retain an amount not exceeding one (1) month’s rent from the deposit left by the lessee by way of security and may still proceed against the lessee to collect any other amounts due by him or her.
Automatic Renewal of Lease
In the event that the lessor fails to notify the lessee within the established period, the lease is renewed automatically for a year with the same terms and conditions.
(ii) Short private residential Leases (commonly known as the Short-Let contracts)
A short private residential lease means any lease, negotiated for a duration of six (6) months that seeks to satisfy the needs of a number of categories of lessees. The legislator mentions four categories of lessees that can apply for short-let contracts, these are:
Category one (1): Non-resident workers who are employed either for a period less than six (6) months or only to complete a specific task within a maximum period of six (6) months;
Category two (2): Non-resident students who are enrolled in courses for less than six (6) months;
Category three (3): Residents who need to rent an alternative primary residence for a period of less than six (6) months;
Category four (4): Non-residents who need to rent a tenement for a period of less than six (6) months, provided that they would not be seeking to establish their long residence in Malta.
The first month of the short-let lease is obligatory for the lessee and following the obligatory month, the lessee may be released from the contract but is obliged to give at least one week’s prior notice to the lessor by means of a registered letter. It should be emphasised that such a contract cannot be renewed.
What about Tourists?
It should be emphasised that property leased to any tourist, exclusively for tourism purposes (holiday furnished property) are excluded from the scope of the Private Residential Leases Act, for as long as the person staying in that property falls under the definition of tourist (ny person who is traveling to and staying in places outside his usual environment for not more than one (1) consecutive year for leisure, business or other personal purposes other than by taking up employment or to establish his business in the place visited). In the case of holiday homes tenements, one would have to look at the Malta Travel and Tourism Services Act (Chapter 409 of the Laws of Malta).
On the other hand, if a property is registered as a holiday furnished premises in accordance with the Malta Travel and Tourism Services Act, this does not exclude the applicability of the Private Residential Leases Act if the applicant does not qualify as tourist
(iii) Shared Residential Space
This means the letting of any separate space in an apartment or building, with shared amenities, such as kitchen and bathroom facilities.
Any contract entered into for the lease of a shared residential space shall have a duration of six (6) months. The lessee may withdraw from the lease, at any time, by giving one (1) week prior notice to the lessor by a registered letter. Like in short-let contracts, Shared Residential Space contracts of leases shall not be renewed.
In conclusion to this Part One, all of the abovementioned category of private residential contracts should be registered with the Housing Authority.