Gauci v Malta [2009] ECHR 1280 [Link is to rtf]

Hat-tip to the Garden Court Bulletin for this one.

Mr G owned a property in Malta. It had been let under a 25 year tenancy agreement in 1975. On the expiry of that agreement, the tenants, who owed other property themselves, were able to exercise a right to new lease under under Maltese Act XXIII of 1979 as they were resident.

Under the 1979 Act, the maximum rent that the Rent Review Board could set for the premises was 420 euro per year. The market rent was assessed in 2002 at 280 euro per month. Mr G brought proceedings, complaining that “the lease imposed on him, as owner of the premises, which had been granted in emphyteusis at the time of the introduction of the new law, subject to inadequate compensation, infringed his rights under Article 1 of Protocol No. 1 to the Convention and was discriminatory and contrary to Article 14 of the Convention, since other premises, particularly those rented after 1995, were not subject to the same conditions.” There was no means available to Mr G to terminate the lease and succession rights for the tenants.

The Maltese courts found it was not an issue of deprivation of property but control of use which was legitimate in the the state’s margin of apreciation. In addition the fair rent could be reviewed every 15 years, subject to a two times cap.

The ECtHR held:

a restriction on an applicant’s right to terminate a tenant’s lease constitutes control of the use of property within the meaning of the second paragraph of Article 1. It was pursuant to a legitimate aim, but not proportionate. For an enforced relationship of landlord and tenant, the rent level set by the state was unreasonable as it allowed only a minimal profit.

In the present case, having regard to the low rental value which could be fixed by the Rent Regulation Board, the applicant’s state of uncertainty as to whether he would ever recover his property, which has already been subject to this regime for nine years, the lack of procedural safeguards in the application of the law and the rise in the standard of living in Malta over the past decades, the Court finds that a disproportionate and excessive burden was imposed on the applicant. The latter was requested to bear most of the social and financial costs of supplying housing accommodation.

There was no breach of Art 14 – discrimination.

Damages awarded on an equitable basis being the difference between set and market rent since 2000 and interest.

This was a pretty extreme statutory tenancy and rent control regime, considerably more so than Rent Act tenancies and the associated rent assessment schema, but I wonder if a challenge to the Rent Acts is tip-toeing through anyone’s mind?