Anyone caught renting property to more than 10 people will face a fine of up to €10,000, according to a new legal notice.
The new law comes amid reports of overcrowding in properties, with foreign workers paying cheap rent to sleep in rooms crammed with bunkbeds.
In the legal notice, the number of occupants allowed in an apartment is based on the number of bedrooms and bathrooms it has.
A maximum of two tenants can occupy a single-bedroom apartment, a maximum of four can reside in a two-bedroom residence and six people can share a three-bedroom dwelling.
Four-bedroom and five-bedroom accommodations must have two bathrooms to house eight and 10 residents, respectively.
The law, which does not apply to families, will take effect within two months, at the end of October.
Those in violation of the law are subject to a fine ranging from €2,500 to €10,000 and can also be prosecuted in court.
It comes after Housing Minister Roderick Galdes announced plans for new rental regulations in March.
Existing planning regulations already limit occupancy to six people per dwelling but these regulations carry no penalties.
Overcrowded apartments have been a recurring issue in Malta’s rental market.
On Tuesday, Times of Malta reported that a policeman was renting out a cockroach-infested three-bedroom house in Sliema to 16 tenants, each paying €250 a month.
A former tenant described how he was attracted to the property by its low rent and “no deposit policy” but soon found the conditions at the house “really difficult”.
“I did my best to keep the place clean but there were 16 people... I should have been able to come home and relax but I was sad,” he said.
Last year, Times of Malta also revealed how a Sliema apartment was housing 40 tenants, with up to nine people sleeping in a single room.
Most are foreign workers, who struggle to find affordable housing and are often discriminated against.
Last month, a housing agent advertised a property with the warning “no Pakis, Indians, Arabs and Philippines” after accidentally publishing a landlord’s “restrictions” for prospective tenants.