In a judgement delivered on 25 March 2026, Magistrate Joseph Gatt reaffirmed the principle that a revision of rent must be based on the property’s current market valuation and not its development potential. The court also affirmed that any revision in previously controlled rents should be close to the statutory maximum of 2% unless exceptional circumstances are proven.
The judgement was related to a controlled residential lease governed by Chapter 69 of the Laws of Malta. It concerned the procedure introduced in 2021 that allows landlords to request a revision of rent and the imposition of new lease conditions subject to a means test of the tenant.
The property in question was leased in 1969 at a very low rent, and after the expiration of the original lease in 1985, the tenant remained protected as a result of rent control legislation. The landlords argued the rent remained disproportionately low and violated their property rights.
In an application before the Rent Regulation Board the landlords requested: Confirmation that the respondent was a tenant under Chapter 69; a means test of the tenant; revision of rent up to 2% of the open market value; and payment of the revised rent.
The tenant argued that she had resided in the premises for many years and had succeeded to the tenancy from her father in terms of the provisions regulating protected tenancies under Chapter 69. She maintained that rent had always been paid regularly and the landlords had never previously complained. The tenant further submitted that she satisfied the means test established at law and therefore remained entitled to the protection of the law. She also argued that, if the board were to revise the rent, such revision should only become payable from the date of the decision and not retroactively.
The board explained that Act 24 of 2021 introduced a mechanism for the revision of rent in protected leases, similar to the procedure previously applicable under Chapter 158 of the Laws of Malta. This legislation was enacted following several constitutional judgements in which Maltese courts found that the controlled rent regimes imposed a disproportionate burden on landlords and violated their property rights. The board emphasised that, although it had discretion in determining the percentage of rent to be applied, such percentage should normally be close to the statutory maximum 2% of the market value, unless exceptional circumstances are proven. This approach reflects the constitutional principle of proportionality and the need to maintain a fair balance between the social protection of tenants and the property rights of landlords.
The board concluded that the tenant satisfied the means test requirements and therefore remained entitled to the protection afforded by law. The board then relied on a court-appointed expert valuation which established the open market value of the property at €360,0000. Importantly, the board reiterated the principle established in recent constitutional jurisprudence that the development potential of the property is irrelevant for the purposes of rent revision.
Although the law grants the board discretion to apply a percentage not exceeding 2% of the open market value, it emphasised that such percentage should normally be close to the statutory maximum unless exceptional circumstances are proven. The board reasoned that fixing a low percentage could perpetuate the disproportionate burden previously imposed on landlords under controlled rent legislation and could therefore result in a continuation of the violation of property rights identified in constitutional jurisprudence. Therefore, the board applied the maximum percentage of 2%, resulting in an annual rent of €7,200, equivalent to €600 per month, payable from the date of the judgment.
The overall effect of the judgement was to maintain the protected tenancy while substantially increasing the rent in order to restore proportionality between the parties’ respective rights.
The decision reflects the shift in Maltese rent law towards restoring proportionality between the property rights of landlords and the social protection afforded to tenants.
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