A 2% rent cap does not breach a landlord's property right

The Constitutional Court ruled on 4 May 2026 in R.A. vs Avukat Tal-Istat, an owner's second challenge to the protected tenancy of her house. Chief Justice Mark Chetcuti, Mr Justice Anthony Ellul and Mr Justice Robert G. Mangion held that the 2% ceiling on rent in article 12B of the Housing (Decontrol) Ordinance (Chapter 158 of the Laws of Malta) does not breach an owner's property rights. The court allowed her appeal only on compensation, adding €16,000 for a period the first court had left out.

The facts

The applicant's father granted the house in 1963 by temporary sub-emphyteusis, a sub-grant for a fixed term against ground rent, for 21 years. When the grant expired in 1984, Act XXIII of 1979 let the occupiers stay on under a lease by operation of law. On 28 May 2019, in an earlier constitutional case, the First Hall of the Civil Court found a breach of her property rights, awarded €20,000 and declared that the tenant could no longer rely on article 12.

Meanwhile Act XXVII of 2018 had added article 12B, and the applicant used it before the Rent Regulation Board. On 17 February 2021 the Court of Appeal (Inferior Jurisdiction) set the rent at €7,300 a year, rising to €9,000 and then €10,500 over six years. Those figures equal 1.2%, 1.5% and 1.75% of the value.

She sued again, arguing that article 12B stopped her from recovering the house and that anything below 2% breached her rights. On 14 July 2022 the First Hall found that the board's discretion to fix rent below 2% was disproportionate and awarded €17,000, the gap to 2% of a €600,000 valuation. It rejected her fair-hearing and effective-remedy claims and refused to order eviction.

What the court held

The court first rejected the State Advocate's plea of res judicata, a matter already finally decided. The 2019 judgment concerned article 12, not article 12B, and article 12B works for the future without curing past breaches. The court also repeated that it does not sit as a third instance over the rent decisions of the Court of Appeal.

On the ceiling, the court noted that the original application had not attacked the 2% cap itself. Even so, it held that rent under social accommodation measures need not match the free market. It agreed with the first court that “l-limitu (capping) ta' 2% taħt l-Artikolu 12B jistabbilixxi mekkaniżmu li jippermetti lis-sid jirċievi kera xierqa” (the 2% cap under article 12B sets up a mechanism that lets the owner receive adequate rent).

The court then allowed one ground. The first court had found a breach because the rent set on appeal fell below 2%, yet it gave nothing for the period from the board application of 28 December 2019 to the first rent date after the appeal, 23 April 2021. At 2% of €600,000, or €1,000 a month, those 16 months came to €16,000.

It rejected her claim to compensation running until the tenant is evicted, as having no legal basis. It also rejected the argument that article 12B took away a vested right under the 2019 judgment. Article 12B came into force on 31 July 2018, ten months before that judgment, which neither dissolved the lease nor ordered eviction.

Eviction is not the only remedy for a breach, and a court of constitutional jurisdiction does not order it. The fair-hearing complaint was manifestly unfounded, since nothing showed an unfair hearing before the board or the Court of Appeal. The effective-remedy complaint failed because Maltese law offers an aggregate of remedies.

On the State Advocate's incidental appeal, the court preferred the valuation of €600,000 by the board's architects to an earlier estimate of €450,000, and kept the first court's order that the State Advocate pay all first-instance costs. The State Advocate pays three-fifths of the costs of the main appeal and all costs of the incidental appeal, and the applicant pays two-fifths of the main appeal.

Why it matters

An owner arguing that the 2% ceiling itself is too low faces settled case law against the point. Where a board or the Court of Appeal sets rent below 2%, the compensation claim should cover the period from the date of the board application, not only from the next rent date after judgment. A claim that runs until eviction will fail.

Where it sits

The case belongs to the line of rent-law judgments under article 37 of the Constitution and article 1 of the First Protocol, which ask whether a control of use strikes a fair balance. The court followed the European Court of Human Rights (25 March 2021) and its own rulings of 6 October 2020 and 4 May 2022 that a rent near half the market rate is no breach in social accommodation.

It relied on its rulings of 28 February 2020 and 23 November 2020 that article 12B does not cure earlier breaches, of 26 October 2022 and 25 October 2023 that article 12B strikes a fair balance, and of 31 January 2019 on article 13. It also cited Mt Blanc Limited vs L-Avukat tal-Istat (Constitutional Court, 23 June 2025) and the European Court of Human Rights (24 July 2014) on an aggregate of remedies.

Source

Constitutional Court, 304/2021/1, 4 May 2026: 304/2021/1