The Current Rent Laws

A solution to abolishing the state imposed lease termination – GRTU, this week held a Press Conference
to discuss the current situation regarding Rent Law of commercial tenants.
Members that are suffering from this current situations were invited  to voice their opinion.

GRTU states that the Rent Law as they
are, are unjust for commercial tenants. The last Parliament has not given due
consideration to the pleas of commercial tenants made by GRTU on their behalf.
The Rent Laws  have completely disregarded the
investment made by thousands of small enterprises who over many years have
provided service to the community, generated employment and economic growth and
were successful without any state aid whatsoever.

The GRTU now recommends that the new
Administration  after the March 9th elections, appoints
an Independent Commercial Rent Law Review Commission Chaired by a retired Judge
or Magistrate with one member of the Commission nominated by GRTU representing
commercial tenants. This Commission will establish what negative impacts exist
for commercial tenants and make recommendations to Government to mitigate the
identified negative impacts. The new Administration will appoint the Commission
within one month of the formation of the new Cabinet of Ministers and the
Review Commission will submit its Report within two months of appointment.
Government will implement the proposed amendments and solutions with three
months of the Commission's Report.

The amendments to the Civil Code
introduced in 2009 included provisions that shocked the commercial community.
Commercial premises leased prior to 1995 and which fell foul to a few other
conditions, were arbitrarily short lived by the legislator when an imposition
came in vigore that constituted an ultimatum of 20 years for leased properties
and of 10 years for sublet properties.

Lease of
Commercial Properties: Article 1531I

A lease of commercial premises made
before the 1st June, 1995 shall in any case terminate within twenty years which
start running from the 1st June, 2008 unless a contract of lease has been made
stipulating a specific period. A contract made prior to the 1st June, 1995 and
which is to be renewed automatically or at the sole discretion of the tenant,
shall be deemed as if it is not a contract made for a specific period and shall
as such terminate within twenty years which start running from the 1st June,
2008. 

Sublease of
Commercial Properties: Article 1613

In the case of the sub-letting of
commercial tenements before the 1st June,1995, these shall be terminated on the
31st May, 2018 unless done by agreement with the less or, in which case such
sublettings shall be regulated by such agreement: Provided further that the
lease shall be established according to that laid down in article1513D.

Almost 4 years after the introduction
of this draconian measure – that is threatening the very existence of a
substantial percentage of the Maltese small to medium enterprises – Government
refuses to take any action to rectify this discriminatory measure that curtails
business' civil rights of enjoyment of property, as provided in our
Constitution and which are regulated by the Civil Code.

Government's raison d'être behind the
introduction of these deadlines was the creation of equity, an equilibrium that
Government argued was required between safeguarding the landlord's rights
without prejudicing the commercial tenant's rights.

The GRTU from the very outset was at
loggerheads with Government on this issue, claiming that this was not a balance
at all but a blatant injustice against Maltese businesses. The GRTU repeatedly
described those enterprises caught out by these unjust ultimatums as melting
blocks of ice.

Nonetheless the amendments to the Civil
Code that are collectively referred to as the Rent Laws, contain a remedy that
the State has not yet chosen to implement and which would constitute an
equitable solution in lieu of these discriminatory ultimatums. Article 1531D
(2) of the Civil Code provides for the introduction of a Property Market Value
Index. This Index, when introduced, would provide both Tenants and Landlords
with a formula to obtaining a fair rent figure, thus bringing both sides closer
to the payment of a fair rent, which is the main criteria for Government's
introduction of the aforesaid ultimatums.

Article 1531D
(2)

The rent as from the first payment of
rent due after the 1st January 2014, is to be established by agreement between
the parties. In the event that such agreement is not reached, the Property
Market Value Index shall be considered as a guide to the rent as may be
established by regulations made by the Minister responsible for accommodation
and in the absence of such regulations, the rent shall from the first payment
of rent due after the 1st January, 2014, increase by five per cent per year
until the coming into force of the said regulations.

The GRTU opines that the introduction
of the Property Market Value Index, together with the introduction of
provisions relating to sensitive enterprises such as cottage industry establishments
situated in village cores, as have been adopted by other Member States in order
to protect their cultural and traditional heritage, would constitute a fair
remedy of safeguarding Landlords whilst safeguarding and not prejudicing
Tenants.

France for instance introduced a
ten-year moratorium precluding lease termination by Landlords for micro and
small enterprises situated in leased commercial premises.

Moreover in addition to the Rent
Regulation Board, the GRTU proposes the introduction of a Commercial Rent
Committee that will have a pre-trial mediatory role in establishing the
divergences.