As from 1 January 2020 the Private Residential Leases Act was implemented. The Housing Authority became responsible for document registration (rentregistration.mt) and the enforcement of lease agreements. Read this for a quick recap. For the purposes of this article we will be focusing on Private Residential Lease Contracts.
The legislation was formulated at a time when the economy was booming and the rental rates were rising exponentially on a year to year basis. Though due to the economic conditions created by COVID-19, circumstances have switched whereby there has been an exodus of tenants from the Maltese islands, and with the lessees now enjoy a wider choice of available properties, at significantly reduced pricing.
The legislation’s main intention was to create structure in the long-let market. The Government would then be able to oversee the happenings of the market, whilst instilling a number of safeguards for the tenants.
Casa Rooms, as one of the largest property management companies in Malta, has gained extensive experience with the newly implemented procedures. Through the passing of the new legislation, it became obligatory that all lease agreements that were entered into post 1 June 1995, and would still be in force post 1 January 2021, would need to be registered with the Housing Authority.
From Casa Rooms’ current experience one of the noted issues with the new legislation has been the length of time the additional administration is requiring, such that one needs to submit the; Standard Form (since we are using our Casa Rooms contract), lease agreement, and inventory list, to the Housing Authority (all the documentation needs to be signed by all parties). In addition, further data also needs to be entered in the rentregistration.mt website.
The new legislation has also allowed tenants to move out every six months, subject to giving one month’s notice with a registered letter, even though the lease agreement may be for one year or greater. It has been noted that many agents are now actively pushing the tenants to switch property after six months, to generate another brokerage fee. In addition, some tenants are also signing a one-year agreement, with the intention of moving out after less than one year. Whilst this is legally allowed, it is creating further expenses for the landlord, such that the property will remain vacant until a new tenant is identified, time is wasted undertaking viewings with prospective tenants, a new broker fee will need to be settled, and the administration with the Housing Authority will need to be undertaken once again.
The legislation allows the Housing Authority to begin imposing an administration fee. Although this has not occurred yet, it could be implemented in the near future.
Although agreeing that an inventory list should be submitted with the Housing Authority. A written inventory list is often not sufficient for the disputes that may arise with tenants. Thus, I would also recommend a video of the property and its furnishing on the day of entry.
On a practical level, we have received mixed messages from the Housing Authority in relation to certain situations, such as, a tenant not interested in renewing for one year but a shorter period. The current legislation is insistent on renewals only being for one year, as a six-month agreement is only allowed in particular situations. A further issue we have encountered is when the property is rented to two tenants or more but one of them departs the property, and the agreement needing to be updated. As is to be expected with every new legislation, it will take time for the concerned authority to clarify certain procedures.
Casa Rooms is a Malta based property management company specialised in long-let and short-let (Airbnb) rentals.