Government ordered to pay €35 million compensation to landlords for old rent laws in 2022 and 2023

The Maltese Government has been ordered to pay over €35 million to owners of properties that were denied the enjoyment of their property rights due to archaic rent laws.

In response to a parliamentary question posed by Opposition MP Mario de Marco, Minister for Justice Jonathan Attard revealed that the Government to pay compensation of €14.4 million in 2022 and €21.3 million in 2023.

He however made it clear that the Government has not yet necessarily paid these amounts in full, saying that information about the actual payments made is still being gathered.

Malta’s old rent laws have led to a complex situation involving property owners, tenants, and Government intervention.

These laws heavily favoured tenants by fixing rents at very low rates while limiting property owners’ ability to increase them. Many of these rentals are inherited leases that continue to be passed down within families, often at rates that haven’t changed for decades.

As a result, some property owners receive extremely low rents on valuable properties, sometimes amounting to only a few euros per year.

Over the past decade, the European Court of Human Rights and Malta’s own Constitutional Court ruled in several cases that these rent laws violated property owners’ rights, as protected under the European Convention on Human Rights.

The courts found that the laws denied owners the fair use and economic return of their property, effectively amounting to a form of “forced possession” by tenants.

These rulings often resulted in compensation orders for the owners and called on the Government to reform the laws.

Amendments implemented in 2021 aimed to provide more balance, allowing for some rent increases and revisiting lease conditions in a way that respects both tenant rights and owner entitlements.

Nonetheless, some property owners feel the compensation does not fully address the years of lost income, while tenants worry about the potential loss of affordable housing if reforms push rents up.

The situation is ongoing, as the Government seeks to balance historical tenant protections with property rights, without causing widespread displacement or an abrupt rise in living costs.