Real estate

On 27th August, Legal Notice 216 of 2019 was published, which grants any person who holds a property of the Government or of the Lands Authority, under a title of revisable perpetual emphyteusis, the right to request the Authority to redeem that property at any time. An emphyteusis is a juridical relationship created between the dominus (owner of the property) and the emphyteuta (tenant of the property). A unique characteristic of emphyteutical contracts is that, amongst other conditions, the emphyteuta is bound to pay a ground rent to the dominus. Furthermore, in the case of a perpetual emphyteutical grant, the emphyteusis may be redeemed by the emphyteuta by paying 20 times the amount of the ground-rent to the dominus. Revisable ground rent means that the ground-rent will increase at periodic intervals as agreed between the dominus and the emphyteuta. By default, in the case of perpetual emphyteusis subject to revisable ground-rent, the emphyteuta does not have the right to redeem the land at any time he wants to, but only within a one-year period starting from every revision, with the value of the redemption being calculated on the increased ground rent. Therefore, while the rule prior to Legal Notice 216 of 2019 was that property belonging to the Government or the Lands Authority and held under a title of revisable perpetual emphyteusis could only be redeemed within the one-year period in which the revision is made, the introduction of the Legal Notice has given individuals possessing property under such title the right to redeem the property at any time, thus creating an exemption to the general rule. In order to benefit from the above-mentioned exemption, and therefore to redeem the land at any time, the applicant must satisfy three conditions: the applicant must be a citizen of the European Union the applicant must be recognized by the Authority as an emphyteuta of the building or have applied to be recognized as such. The application process cannot start prior to recognition of the applicant by the Authority; and the applicant must prove that there are no arrears due to the Authority of ground rent payment on the property Eligible applicants are to submit, together with the application for redemption of ground rent, the following documents to the Authority: a copy of the latest receipt of payment of ground rent made in the case of an applicant who has not yet been recognized as emphyteuta of the property, a copy of all contracts made since the last emphyteuta recognized by the Authority a detailed plan on a scale of 1:100 showing the interior of the property at every level and distance from the nearest street corner. This is to be submitted in accordance with the Authority’s template and must also be accompanied by a scanned plan, duly certified by an architect a copy of the property or site plan issued by the Land Registry, duly certified by an architect a survey showing the property and the existing road alignment a copy of the identity card of the applicant photographs bearing the date and time showing the present condition of the building or site a sworn statement declaring that the content of the application is truthful and complete A number of restrictions have been imposed by the Legal Notice. Any contractual agreement between the dominus and the emphyteuta restricting the manner in which revisable perpetual emphyteusis may be redeemed shall prevail over the Legal Notice. Furthermore, all redemptions made in accordance with the Legal Notice shall be made through a public contract. The Authority reserves the right to refuse and reject applications, however this must be done in writing, including detailed reasons for its decision. The Authority also reserves the right to terminate the process of an application made to redeem the ground rent if it is of the opinion that such property is located at a site of national importance. An amount of €500 or otherwise, as stated by the Authority in the Government Gazette shall be paid with each application, and the Authority shall also ensure that all costs involved in effecting the redemption of the perpetual revisable ground rent are borne by the applicant. Where no method for the redemption of ground rent is stated in the emphyteutical contract, the ground rent  to be paid for the redemption shall be equal to the sum of the ground rent revised according to the index of inflation taken from the year preceding the submission of the application, and the rate of ground rent from the year prior to the creation of the contract capitalized at the rate of 5%. For further information about how GVZH Advocates can help you with your real estate query, email us on  [email protected].

A White Paper has been published proposing the setting up of a new regulator to consolidate the building and construction industry. This article was written by Dorita Cardona and Joshua Chircop The Ministry for Transport, Infrastructure and Capital Projects has published a White Paper proposing the setting up of a Building and Construction Regulator ("the Regulator"), as part of a reorganisation project of the building industry. The Regulator It is proposed that the Regulator will be responsible for harmonising and consolidating current work practices, standards, procedures, regulations and laws currently governing the industry under a single piece of legislation, which will consequently be brought before Parliament as a Bill. The Minister responsible for Infrastructure, under whose authority the Regulator shall lie, has appointed a Chief Executive Officer to draw up an operational plan for the Regulator.  The New Legislation The White Paper proposes the elimination of outdated sections of the law, addresses conflicting provisions and updates current legislation in line with contemporary technical and legal exigencies. As part of the project, the following laws currently in force will be harmonised: Building Regulations Act (Cap. 513); Parts of the Police Code (Cap. 10); Parts of the Civil Code (Cap. 16); Development Planning Act (Cap. 552); Avoidance of Damage to Third Party Property Regulations, 2013 (L.N. 72 of 2013); Environmental Management Construction Site Regulations, 2007 (L.N. 295 of 2007); Energy Performance of Buildings Regulations, 2018 (L.N. 47 of 2018); and OHSA's Code of Practice for the Construction Industry. The Authority The proposed legislation will formally establish a Building and Construction Authority ("the Authority"), which will take over from the Regulator once the bill is promulgated into law. The Authority will act as the sole port of call for all building and construction related matters. Aims of the Authority The White Paper is further proposing that the Authority will take over the statutory responsibilities currently entrusted to various scattered entities responsible for regulation at post-permit stage. To this end, the following entities will be consolidated into the structures of the Authority: Building Industry Consultative Council; Building Regulation Office; Building Regulation Board; and Masons Board. The Authority is expected to become the principal consultant for building and construction matters within the Planning Authority, thus taking over the roles in this industry currently carried out by the: Civil Protection Department; Commission for the Rights of Persons with Disability; Department of Environmental Health; and Occupational Health and Safety Authority. Objectives of the Authority It is also proposed that the Authority will have the following objectives: Acting as an advisor to the Government of Malta on policies related to the industry; Servicing the building industry; Conducting training to enhance skills and trades related to the industry; Becoming the national focal point for the industry, both in terms of operations and research; Bringing together industry stakeholders; Consulting industry stakeholders and the general public; Establishing quality assurance frameworks; Raising industry-related standards; Providing a regulatory framework for the industry in which to operate; Providing accountability through a disciplinary process that is independent, transparent and effective; Providing categorisation for the different providers in the industry; Conducting research in the industry for innovation; and Spearheading any changes to other legislation which could impact the industry. Structure of the Authority The White Paper proposes the following operational set-up for the Authority: Board of Directors headed by a non-Executive Chairman; CEO; Directorates and Units which will include: Corporate Services Directorate; Administration and Processing of Applications; Enforcement and Compliance; Regulations and Policies; Research, Consultancy and Innovation; and Education, Training and Skills Development; Committees and forums for policy generation, research and innovation. Consultation period The Ministry for Transport, Infrastructure and Capital Projects has opened a public consultation period to all stakeholders until the 15th October, 2018. Submission may be made here.

The passing of a tower crane over third party airspace is an invasion of such party’s airspace but it is not necessarily prohibited. The passing of a tower crane over airspace owned by a third party is an invasion of such party's airspace. Ownership of the airspace over one's property is a basic legal concept, and the law protects against an invasion of property that is not permitted by law. The law does permit third party use of a person's property in certain situations. These are 'easements' or servitudes. They can be created by special laws (such as the rights given to aircraft), and by the Civil Code (such as the necessary right of way). The special laws that refer to construction and cranes do not specifically or even impliedly allow cranes to pass over other persons' property without the other person's consent (nor do they prohibit it). The Civil Code does not seem to contain any easement that allows this. There is Article 446, which grants the right of access to and passage over tenements for the carrying out of works, but it is doubtful whether this article is intended to apply to the situation of a tower crane. There is, therefore, apparently no clear legal justification for a tower crane to pass over another person's property. There does not appear to be much case law on this point. There have been a few cases where a tower crane caused damage to third party property or caused injury, but the fact of moving into third party property was not raised as an issue. A court is likely to be cautious and mindful of the fact that prohibiting such crane use would potentially stop most development in Malta. Italian law (which is similar to Maltese law on this point of ownership of airspace) and Italian case law suggest that the passing of a tower crane over one's property is not in itself prohibited, but if there are reasonable grounds for concern for the safety of persons or damage to property, guarantees may be required, and possibly also the temporary suspension of the use of the crane. One could consider asking the Police to take criminal action on the basis of Article 85 of the Criminal Code on the exercise of a pretended right ("ragion fattasi"), but this is legally, and in practice, not straightforward. One should also refer to the following relevant legislation specific to lifting equipment and aimed at its safe operation: 1). Work Equipment (Minimum Safety and Health Requirements) Regulations. This was originally issued in 2004 but has now been replaced by S.L. 424.35 (L.N. 293 of 2016). The regulator is the Occupational Health and Safety Authority. 2). Avoidance of Damage to Third Party Property Regulations (S.L. 513.02). The regulator is the Building Regulation Office. Broadly speaking, the following must be in place: 1). site manager and project supervisor; 2). initial crane and installation certification; 3). certification by a competent person of the crane's anchorings and supports; 4). valid certificates of the persons allowed to operate the crane; 5). copy of the risk assessment for lifting loads over third parties and appropriate procedures relative thereto; 6). proof of insurance to adequately cover occurrence of death, injury and damages that can be sustained by owners and their property; and 7). a bank guarantee. A White Paper (Proposal to Establish New Building and Construction Regulator) published recently by the Ministry for Transport, Infrastructure and Capital Projects recognises a number of challenges within the construction industry that need to be addressed in future legislation, including outdated legislation. The objectives of this proposal include the creation of a new "super regulator" for the building and construction industry, and the updating and consolidation of the laws and regulations related to the industry. The Ministry has invited comments, suggestions and feedback.

A White Paper has been published proposing a reform of the residential rental market in Malta. This article was written by Dorita Cardona and Joshua Chircop. The Parliamentary Secretariat for Social Accommodation has published a White Paper proposing the setting up of a new regulatory framework (the 'Regulatory Framework') to reform the residential rental market in Malta, referred to as the private rented sector (the 'PRS'). Rationale The White Paper proposes providing both Landlords and Tenants with greater stability, flexibility, security, transparency and predictability in the long-term. There is a clear emphasis on creating a balance between Landlords and Tenants. The White Paper seeks: 1. to protect the fundamental rights of Landlords, especially their rights to property, to contractual freedom and to generate an adequate profit, and to reduce agency fees, vacancy costs and maintenance expenses; and 2. to provide Tenants with adequate and affordable housing, security of tenure and greater well-being in the rental market. Scope The White Paper states that the proposed Regulatory Framework should only be applicable to property leased for the purposes of primary residential use and should not apply to: 1. property leased for the purposes of commercial use, secondary residential use, short lets or tourist lets; 2. Lease Agreements entered into prior to 1995; and 3. luxury properties, to be defined in accordance with a set of published guidelines establishing the necessary criteria. By way of exception, the White Paper proposes that definite short-term agreements for the purposes of residential use should also be allowed in the sole cases of: 1. temporary workers who would be employed for a short period of time or only to perform a specific task; 2. students enrolled in tertiary and vocational education for a period of up to six months; and 3. leases contracted for a temporary residential use, where the residents: A. need to temporarily rent alternative premises, such as, where works would be carried out on their primary residence; and B. where the Tenant is not ordinarily resident in Malta or is seeking to establish ordinary residence therein. Stabilising the rental market The White Paper is proposing a number of stabilising measures for the rental market. 1. The initial rate of the rent should be fixed by the Landlord. 2. Every lease should have a minimum contractual term specified in the agreement. The White Paper recommends prohibiting six-month residential leases. It proposes the following two models, leases with: A. a mandatory minimum contractual duration meaning that the law will mandatorily specify the minimum duration of the lease; or B.  an optional duration with fiscal incentivisation for longer contractual terms meaning that the parties can agree on a minimum duration of the lease and will be rewarded with fiscal incentives if they agree to a long term in the agreement. 3. The Tenant should only be able to withdraw after the minimum contractual term lapses. The White Paper is proposing that a Tenant will not be allowed to withdraw from the Lease Agreement before the lapse of the minimum contractual term. After this period lapses, the Tenant will have a right to withdraw unilaterally from the contract in case of a personal change of circumstance, provided that he or she gives due notice to the Landlord. 4. The Landlord should not be bound to renew the lease. The White Paper is proposing that once the minimum contractual term lapses, the Landlord will not be bound to renew the lease but he or she must give notice of termination to the Tenant by not later than three months prior to the expiry of the said term. If the Landlord fails to give such notice, the Lease Agreement will be prolonged for a further term on the same terms of the original lease. 5. Periodical rent increases should be mandatory during the contractual term, allowing for yearly rent adjustments within the limits imposed by law, which will be clearly specified in the Lease Agreement. The White Paper is proposing that rent increases will be pegged to the Property Price Index (the 'PPI') and that the Government should additionally consider a capping which rents cannot exceed. 6. The Landlord should be allowed to withdraw  from the Lease Agreement in the case of a mandatory term exceeding one year, when the Landlord: A. needs to reside in the property himself or to allocate the property to any relative, up to the second degree, for residential purposes; B. intends to sell the property with vacant possession; or C. intends to demolish or carry out substantial renovations, including the construction of additional floors, and the eviction of the Tenant would become necessary for the execution of these works. The White Paper is proposing that the Landlord should be able to terminate the contract prematurely, provided that adequate notice is given to the Tenant, only beyond a certain period, such as, after the lapse of one year from the date of the Lease Agreement. Deterring fines should be introduced against Landlords who utilise these powers in order to wrongfully obtain the premature eviction of the Tenant. Measures to improve the functioning of the rental market The White Paper is proposing a number of measures that are designed to improve the rental market immediately. 1.The eviction process of Tenants is presently regulated by the Rent Regulation Board ('RRB') which is a Board of specialised competence providing for a summary procedure in cases dealing solely with eviction. The White Paper is proposing the following changes to the RRB: A. clarifying the wording of Article 16A (Cap. 69 of the Laws of Malta) relating to the summary procedure, by allowing the Chairperson to order the eviction despite pending claims relating to rent or utility arrears; B. making allowance for the introduction of a second chamber within the RRB; C. introducing an arbitration panel for minor disputes; and D. expediting the service of judicial acts. 2. Declaration of deposit and presentation of inventory.  The White Paper is proposing establishing a deposit scheme to protect the deposits made by Tenants to Landlords and providing a transparent method for its release or retention. Landlords should be required to declare in the Lease Agreement any amounts requested as a guarantee of future payment from the Tenant. If a deposit is indeed requested, an inventory (presumably of the assets in the property) must be signed by both parties and delivered together with the Lease Agreement. 3. Establishment of a new Agency.  The White Paper is proposing the establishment of a new public Agency within the Housing Authority dealing exclusively with private residential leases. The Agency would be tasked with administration (such as registration) and enforcement duties, research and advising the Government on measures to be taken in this sector. A. Registration. i.The White Paper is proposing that all residential leases in Malta should be registered with the new Agency by the Landlord. If the Landlord fails to register the contract, Tenants should be empowered to do so instead at the Landlord's expense. Penalties should be imposed on Landlords who are caught renting properties without a registered Lease Agreement. ii.Lease Agreements which are not registered with the Agency may be considered null and void. However, at this preliminary stage the White Paper clarifies that the compulsory registration of leases should not be allowed to prejudice the interests of Tenants if Landlords fail to register the Lease Agreements. In such case, the Tenant could request the Court to formalise the de facto lease at a rate that would be in line with a below-market index. iii.The White Paper is further proposing that a template Lease Agreement should be made accessible online. Enforcement. The White Paper is proposing that the new Agency should have the following enforcement powers: i.overseeing compliance with the new Regulatory Framework; ii.ensuring that cases of abuse, by any party to the Lease Agreement, are reported, investigated and addressed; iii.drawing up a black list of unruly Tenants and abusive Landlords from the pool of information at its disposal, namely, its investigations and decisions of the RRB. 4.  Optimisation of the rent subsidy scheme. The White Paper is proposing that Government subsidy schemes be steered towards individualised means-testing mechanisms. Promotion of bank transfers.  The White Paper is proposing the promotion of bank transfers as a form of payment rather than payments in cash. 5. Tenants should be guaranteed access to water and electricity services. The White Paper proposes that upon registration of Lease Agreements, the Landlord and Tenant should present the following Automated Revenue Management Services' ('ARMS') forms duly signed by both parties: A. Form H: this serves as a change in the declaration of the number of persons residing in the property; and B. Form N: this authorises the Tenant to verify pending dues for the leased property upon request by e-mail. The White Paper is proposing that under this system, Landlords should not be able to perform 'soft evictions' by terminating water and electricity supplies, because any request for termination of supply by the Landlord will entail an investigation by ARMS, which will demand the consent of the Tenant to effect the termination of supply. More affordable housing The White Paper is proposing the following measures to make housing more affordable: 1. schemes to promote the rehabilitation of vacant dwellings (these have recently been brought into effect); and 2. using non-profit or limited-profit entities, like social purpose foundations and real estate investment trusts, which may or may not form part of public-private partnerships, to construct affordable housing as an alternative to public and commercial supply of housing. Other long-term measures The White Paper is proposing the following long-term measures to ensure better standards in the Maltese rental market: 1. minimum habitability standards 2. regulation of houses in multiple occupation ('HMOs'); and 3. regulation of estate agents by means of a comparative study of various European laws and a proper assessment of what professional standards estate agents are expected to meet. Consultation period The Parliamentary Secretariat for Social Accommodation has opened a public consultation period to all stakeholders until the 30th November, 2018. 

Malta has long gained a reputation for a high standard of living with a Mediterranean flair. With the introduction of various programmes related to the attainment of citizenship or residency, many foreign investors have eyed the island as an ideal European solution for immigration purposes with vast potential for stable investment in real estate. In this article Dr Maria Chetcuti Cauchi presents an analysis of the real estate market and laws through 2015 and 2016, with a view of giving an exposition of the process for property acquisition and resale. Malta offers a unique style of living. The island offers a fusion of various interesting elements including a stable political environment, a multilingual workforce, English as an official language, a unique relaxed lifestyle, reputable financial services, strong corporate & business solutions, a temperate climate, a Mediterranean cuisine, an intricate past laced with noteworthy historical happenings, local character and an attractive fiscal framework. All this has resulted in elevated foreign interest in the island, most noteworthy in the property market. 1. Facts During the global financial crisis that hit most countries in the last decade, many investors have sought safer ways to protect their income and investments. With an increasing number of investors strategically planning ahead and looking into alternative solutions, the worldwide trend was to invest in property. Yet 2010 heralded a realty hit in most countries, yet it was interesting to note that, at a time when even most European property markets experienced a downturn, the Maltese realty market earned itself a coveted reputation for being relatively steady, constant and with a first-rate return on investment. Even though 2008 signalled a relative fall in the Maltese real estate market, mainly due to the global financial downfall and even though late 2012 did witness a short slump in property prices, yet this nosedive was very temporary for Malta. In fact during the year to end-Q1 2013, Maltese property prices fell by just 0.6% (-2.42% inflation-adjusted).[1]  On a quarterly basis, property prices rose by 1.54% (3.28% inflation-adjusted) in Q1 2013. 2014 then witnessed a substantial increase, which increase was partially attributable to the very successful Malta Individual Investor Programme (MIIP), introduced by the government in November 2013, which programme targeted high net worth individuals seeking to obtain citizenship by investment in a European jurisdiction. Having said that, the MIIP was not the only reason for this success. In general, Maltese property holds its value very well and has experienced exponential growth for decades. This, in addition to the stamp duty exemption for first-time buyers on the first €150,000 of their new property’s value (which had been extended till 30 June 2015) as well as the property tax exemption for sellers who have owned and occupied the property as their own residence for a period of at least three consecutive years, have all contributed to this growth. In the last year or so, most property types in Malta have experienced price hikes: apartments had a 7.17% price increase during the year to Q3 2014. Prices actually went up by 6.44%, when adjusted to inflation; terraced houses rose by 5.89% (5.18% inflation-adjusted) y-o-y in Q3 2014; maisonettes, on the other hand, had a slight price drop of 0.42% (-1.09% inflation-adjusted) y-o-y in Q3 2014; other properties consisting of townhouses, houses of character and villas, experienced the highest price increase of 16.17% (15.38% inflation-adjusted) during the year to Q3 2014.[2] 2. The Process Purchasing property in Malta is a process that is marked with certainty. Any transfer or change of title in relation to immovable property, being a title emanating from a real right, must be undertaken through a public deed, which is a contract signed in the presence of a notary public, and registered in the Public Registry. Searches for the verification of title are also undertaken therein and lease hold titles and usufructs are also registered in a similar manner.  Practice is such that, searches in the title of the property are undertaken before the actual transfer of ownership is done, thus ensuring that the seller is entitled to sell and that there are no encumbrances or claims on the property. These searches are usually undertaken and vetted by the notary and the legal representatives of the purchaser. On the searches being undertaken, a purchaser may choose to obtain a title report from the notary guaranteeing title for five years. The guarantee is not given by the State, but by the notary himself who carries the status of a public officer in Malta. In addition to the above, the Malta Civil Code provides for the implied warranty of peaceful possession afforded by the seller to the purchaser.  It is custom that in the final deed of sale, whilst warranting peaceful possession and good title to the property, the seller, by way of guarantee of such, constitutes a general hypothec on his/her property present and future, in favour of the purchaser. The process comprising searches, root of title guarantees, registration and enrolment in a public registry, grant any local and foreign buyer a level of certainty and transparency that is obviously paramount when investing in real estate on the island. Specially Designated Areas We would like to end by placing particular focus on Malta’s Special Designated Areas (SDAs). These are prime residency areas where the conditions of acquisition are the same for Maltese and foreign residents, with the intention of providing top-end facilities and amenities to buyers within the same location.SDAs provide an exception to the rules on residency permits in Malta, in that non-Maltese purchasers may buy property with the same rights as Maltese citizens, thus not requiring a special permit from the Maltese government. Essentially this means that purchasers, whatever their nationality, are exempt from the requirement of obtaining an Acquisition of Immovable Property (AIP) permit. Once such property is acquired, it may be leased out without any restrictions. This has obviously resulted in a very effective and profitable product for foreigners who want to invest, speculate and lease out a diverse property portfolio without suffering any restrictions that would normally be imposed on property located out of the SDAs. Malta is a pro-investment and pro-business jurisdiction. All stakeholders, including banks and various administrations, have all sought to provide solutions and products that encourage and attract FDI into the country. The success of the property market is evidence of this approach. The country seeks to reach a balance between ensuring propriety whilst at the same time cutting down on bureaucracy and red-tape. Yet this is done without forfeiting important elements such as financial reputability, proper due diligence on investors, soundness of borrowers, certainty of root of title and more. A mix of all the above elements has resulted in a relatively affordable andbuoyant property market. All this, coupled to the other advantages the island can offer the new expat, including a vibrant network, safe environment and now even the possibility of Maltese citizenship, have labelled the island as the best, current European personal living solution. This article is intended to be of a general nature and is not intended to address the specific circumstances Dr Maria Chetcuti Cauchi Co-founding partner, Maria is the partner in charge of the Corporate law & Regulated Business Units of the Firm. On a day to day basis, Maria’s team advises an array of clients on regulatory issues, compliance matters, commercial and finance transactions and corporate governance issues in general. Maria has vast experience of start-ups, corporate restructurings, takeovers, mergers, privatisations, and equity and debt financing structures. Maria’s team regularly handholds banks and financial services companies on the procedure to set up in Malta, the compliance and regulatory aspects of their business including client intake and due diligence, ongoing compliance procedures, reporting and general regulatory observance matters. Maria’s pet subject centres around the application of traditional notions of Intellectual Property Financial Services Law to the online world, as well as the conversion of brick and mortar notions to cyberspace. These mostly include projects with a fusion of technology law and investment/finance law, such as payment gateways, gaming operations, e-money institutions and ICT online operators. For more information about investing in Malta and property in Malta, please read: Investing in Malta – Why Malta Who can buy property in Malta? Buying Property in Malta Malta Sale of Property Malta Property Development [1]Figures released by the Central Bank of Malta (CBM) [2]House Prices in Malta continue to Rise, Global Property Guide, 23 January 2015.