Discount buyer of a rent-controlled home gets no damages

The First Hall of the Civil Court, in its constitutional jurisdiction, on 12 February 2026 rejected a claim for compensation by a company that bought a home already let under the old rent laws. Madam Justice Rachel Montebello held that the company had profited from the law it attacked, through the low price it paid. The case is 1011 Holdings Limited vs L-Avukat Tal-Istat.

The facts

On 10 September 2020, 1011 Holdings Limited bought six units in one block for a global price of €650,000. One unit was a dwelling let since the 1970s to two tenants under the Reletting of Urban Property (Regulation) Ordinance (Chapter 69 of the Laws of Malta). The contract stated that all but one of the units were let under leases from before 1995.

The rent for the dwelling was €210 a year. A court-appointed architect put its free market value at €180,664 in 2020 and €185,000 in 2021, and its rental value at €5,420 and €5,550 a year.

The company filed its application on 23 July 2021. It claimed breaches of articles 37, 39 and 45 of the Constitution, and of articles 6, 13 and 14 of the European Convention on Human Rights and article 1 of its First Protocol. The State Advocate and the tenants opposed the claim.

What the court held

The court rejected the plea that the case was premature. The company could have used article 4A of Chapter 69, in force since 1 June 2021, but that is not a condition for bringing a constitutional case.

The court also held that buying a property known to be subject to a protected lease does not waive a fundamental right. The maxims volenti non fit injuria and pacta sunt servanda, pleaded by the State Advocate, did not apply.

The article 37 claim failed. The court found that the automatic renewal of leases is a control of use, not a taking, though an owner's right to physical possession is an interest that article 37 protects. But article 47(9) of the Constitution shields laws in force before 3 March 1962, and Chapter 69 dates from 1931. Its later amendments did not have any of the effects that would remove that shield.

Under article 1 of the First Protocol, the court held that the regime before Act XXIV of 2021 imposed a disproportionate burden on owners in general. From 1 June 2021, article 4A lets an owner ask the Rent Regulation Board to raise the rent to up to 2% of the free market value, and to recover the home if the tenant fails the means test.

For this dwelling, that formula gives €3,700 a year, against a market rent of €5,550. The court held that this rate strikes a fair balance, and that an owner has no right to a market rent.

That left the nine months from the purchase to 31 May 2021, when the dwelling could have earned about €4,110 but the rent due was €157.50. The court found that the dwelling had reasonably been valued at under €100,000 in the purchase, far below its free value, because of the protected lease.

The court held: "Il-Qorti ma tista’ qatt taqbel, f’ċirkostanzi bħal dawn, illi s-soċjeta’ rikorrenti, li diġa’ ħadet vantaġġ ekonomiku sostanzjali bis-saħħa tal-liġi impunjata minnha, ġarrbet leżjoni tal-jedd fondamentali tagħha" (the court can never agree, in these circumstances, that the applicant company, which already took a substantial economic advantage from the law it attacks, suffered a breach of its fundamental right).

The fair-hearing claim failed because the company had never brought any case about the lease before a court or tribunal. The discrimination claim failed because the company named no owner in the same position who was treated differently, and a cut-off date of 1 June 1995 falls within the State's margin of appreciation.

The article 13 claim failed because article 4A gives an effective remedy before the ordinary courts. The court rejected every claim, with costs against the company.

Why it matters

An investor who buys tenanted property at a price that reflects a protected lease should not expect compensation for the months or years before article 4A applied. The price paid, and what the contract says about the leases, are evidence the State Advocate can use against the claim. Owners in that position should apply to the Rent Regulation Board under article 4A.

Where it sits

Rent control is a control of the use of property under the second paragraph of article 1 of the First Protocol. The interference must be lawful, pursue a legitimate aim and strike a fair balance, and the test is whether the owner bears an excessive burden. This judgment treats the price the owner paid as part of that balance.

On article 37 and article 47(9), the court followed the Constitutional Court (6 October 2020), the Constitutional Court (23 November 2020) and the Constitutional Court (22 January 2024).

On the profit made from the law, it applied the Constitutional Court (20 January 2025), which called a similar claim an abuse of process. It also cited D. Peak Limited vs Avukat tal-Istat (12 July 2023) and Danel Co. Ltd. vs L-Avukat tal-Istat (31 January 2023).

On article 4A, it cited the Constitutional Court (26 October 2022), which found that article compatible with the First Protocol. On article 14, it relied on the European Court of Human Rights (30 January 2018).

Source

First Hall of the Civil Court (Constitutional Jurisdiction), 1011 Holdings Limited vs L-Avukat Tal-Istat, 488/2021, 12 February 2026: 488/2021