Rental Contract in Malta
Rental Contract in MaltaUpdated on Tuesday 02nd July 2019
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Situated in the Southern Europe, Malta is small country with beautiful landscapes, rich history and a great touristic potential. Malta does not attract tourists only, but also individuals who come for temporary jobs here, which is why the rental market has developed quite a lot in the last few years. Malta is also one of the European countries to have specific rules when it comes to rental agreements.
Below, our Maltese lawyers explain the legal requirements under which a rental contract can be signed.
If you want to stay in Malta for a longer period of time- for touristic or business purposes, our Maltese lawyers can offer you support when signing a rental contract.
Laws and regulations on rental contracts in Malta
The Housing Authority in Malta is the main institution handling all rental issues. In 2018, the authority has even issued a new law which provides for several amendments to the Housing Law providing for rental agreements.
The main laws which need to be respected when entering a rental contract in Malta are comprised in the Civil Code and are made of:
- Chapter 116 which provides for the rental restrictions which can be imposed when renting a house or land in Malta;
- Chapter 125 which is also known as the Housing Act of Malta and which provides for the fair treatment of persons living in Malta and their right to proper accommodation;
- Chapter 261 which is also known as the Housing Authority Act and which provides for the attributions of the Housing Authority;
- Chapter 360 which represents an amendment of the Housing Law and provides for several updates to the primary law on the right of dwelling;
- Chapter 496 which provides for the fact that landlords and tenants have the right to ask for information with the authorities;
- The Continuation of Tenancies Regulations of 2018 which provides specifically for matters related to renting properties in Malta.
Apart from this set of laws which provide for specific housing matters, those entering Maltese rental agreements must also comply with the provisions of the Contract Law.
General information on the rental contract in Malta
In Malta, signing a rental contract represents a simple procedure, which is usually performed through a real estate agency. You should know that rental contracts written in English are legally binding and, in case the contract is breached by any part involved, the document will be recognized by the Maltese Court. Our attorneys in Malta can provide further information on the topic, if needed.
According to the Maltese law, a rental agreement can be signed between any two parties who have the legal capacity for such an action. It is forbidden to enter a lease agreement in the following situations:
- • he or she has been interdicted,
- • he or she is incapacitated,
- • he or she is not minimum 18 years old.
The new regulations on rental contracts in Malta
The real estate market in Malta was liberalized a long time ago, however, in terms of rentals, there were various restrictions imposed to landlords leasing various types of properties. The new Continuation of Tenancies Regulations (LN 260) which was issued in 2018 has brought some corrections to the existing legislation.
Under LN 260/2018, landlords have obtained the right of altering the rent payable upon the automatic extension of a rental or lease contract. However, the same law also provides for the protection of tenants, which is why the value of the rent cannot increase by more than 5% per year.
The law also specifies that in order to help the parties in the contract to benefit from a fair treatment, both the landlord and tenant have the right to free legal counsel.
If you have any questions related to the new legislation, you can ask our attorneys in Malta.
Specifications of the rental contract in Malta
The rental contract in Malta should provide the following information:
- • the payment of the rent, which, according to the Maltese law, can be established freely by the parties implied,
- • the duration of the contract,
- • the deposit sum (usually, the equivalent of one month of rent payment) that the lessor is withholding from the lessee for the situation in which, throughout the duration of the contract, the lessee may damage the assets of the place he or she rented,
- • the use of premises, where it is stipulated that the object of the rental agreement should be used following certain rules clearly expressed in the contract,
- • the payment of the fees, such as electricity, water, internet, that have to be paid by the lessee,
- • the right to sub-lease is generally not allowed, but some contracts may offer this option. In case you have any questions about the provisions of the rental agreement, our law firm in Malta can provide you further information.
The Maltese government applies a tax of 15% on rental income, that is valid for residential contracts only. The tax, introduced in January 2014, is paid by the lessor.
Obligations of the landlord in a rental agreement
The new Rental Law provides for new obligations but also benefits for the landlord, among which:
- - the obligation of registering the rental agreement with the Housing Authority in Malta;
- - if the landlord fails to register the contract, he or she will be subject to penalties under the form of fines;
- - long-term rentals can bring various incentives to the landlord (the rental agreement must have a 2 or 3-year validity period);
- - for one-bedroom studios rentals, the incentive is of 200 euros for a 2-year rental contract and 300 euros for a 3-year contract;
- - for two-bedroom apartments, the incentive is of 300 euros of 2 years and 400 euros for 3-year contracts;
- - for three-bedroom apartments or houses, the incentive is 400 euros for 2-year contracts and 500 euros for 3-year contracts.
The new law is expected to enter into effect starting with 2020. Until then, you can rely on our Maltese lawyers for entering rental contracts under the current legislation.
Why rent a property in Malta?
Those who want to move to Malta, renting a property upon arrival is the most at-hand option because of the cheap prices. However, under the Citizenship by Investment Scheme, one can also rent a property and obtain citizenship in accordance with the conditions imposed by the government. The minimum value of the rental agreement under this program is 16,000 euros per year.
In numbers, the Maltese real estate market looks like this:
- - in 2018, the value of rents in Malta increased by 16,9%;
- - around 80% of the Maltese inhabitants have their own properties;
- - in 2018, the earnings of landlords resulted from rentals increased by 5%;
- - in the future, the real estate market in Malta is expected to appreciate by up to 17%.
If you need to sign a rental contract, our law firm in Malta can offer you consultation on the matter. Please contact our Maltese lawyers if you need legal representation for your contracts signed in Malta. We can also help foreign investors who want to purchase properties in Malta.