Updated 12.48pm

Plans to rewrite rental laws to force tenants to stay in their properties for the duration of their contract or face a penalty have been scrapped.

Yanika Saliba Vidal, a lawyer at the housing ministry, said the controversial proposal would not be introduced. 

"After hearing stakeholders and looking at data and numbers, we understood this proposal should not be introduced because stakeholders said it would not have a good effect," she told ONE TV's breakfast show. 

Tenants unions and a group of 17 NGOs had challenged the proposal saying it would reward abusive landlords and punish tenants. 

The proposed changes would have effectively extended what is known as the di fermo period - the minimum period that a tenant must stay in a property - to cover the whole contract.

In practice, this currently means that if a tenant has signed a one-year lease, they are obliged to pay at least six months rent but can choose to end the lease from the seventh month onwards.

The proposed change would have meant tenants would have to pay a penalty to exit their contract at any time.

Matthew Attard, president of tenants union Solidarjeta, welcomed the decision saying the “government has heard the voice of tenants”.  

“If someone has to leave a tenancy after a year in a three-year contract, the landlord would have been able to take him to court for payment for the rest of the contract. That would be worth thousands”, he said. 

Attard said he understood the government had proposed the amendment as a way to promote stability and longer contracts but that there are other ways to achieve that goal. 

Earlier this month, housing minister Roderick Galdes said the legislation aims to stabilise prices by increasing the time that tenants stay in a property.

“The more tenants break their rental contracts, the more changes there will be to rental prices,” Roderick Galdes had said.

The Malta Development Association, however, said it was disappointed by the decision. 

"The reversal of this decision, in our view, extends a cycle of frequent tenant turnover, thereby escalating the associated costs of renting which ultimately leads to further increases in rent prices," it said.

"This move incentivizes tenants to transition from one property to another to the detriment of the landlord, undermining the principle of freedom of contract."

It said the turnaround had failed to establish balance in the industry. 

Overcrowding proposals remain 

While the government will no longer change di fermo rules, it will carry on with its other proposals, including limiting how many tenants can live in an apartment to two in each room. 

Saliba Vidal said that under the proposed changes a rented property can have a maximum of five rooms. 

She said the landlord is obliged to declare the number of rooms in an apartment and the number of tenants. 

"We will, therefore, be able to control how many people live in an apartment". 

Saliba Vidal said the Housing Authority will also have the power to enforce the new law through spot checks if there are reports of overcrowding. 

Landlords face a penalty of €2,300 if their apartments are overcrowded, she said. 

Should they take no action after the Housing Authority fine, landlords can be charged in criminal court and would face a fine of up to €10,000, Saliba Vidal said. 

The new law will also allow tenants and landlords to register their rental contracts with the authority. It will also extend the period they must register from 10 days to 30 days.