Rent of refurbished shop

A family owned what was a dilapidated old house. The ground-floor for many years was and still is rented out as a shop from year to year for a paltry sum.

Since the house had to be demolished, it was decided to erect a block of flats instead. It was agreed with the ground-floor tenant that, while he was to continue in the same lease, the shop was to be refurbished at the family's expense and, following completion of the works, the rent was to remain unaltered. It subsequently transpired that the refurbishment of this shop ran into thousands of liri and it now dawned upon the family that they did not strike a good deal at all.

In view of the amendments in the rent laws, are the owners entitled to evict the tenant and resume possession of the shop? If not, are they entitled to raise the rent?

The Housing Laws Amendment Act, 1995 renders the Reletting of Urban Property (Regulation) Ordinance, in virtue of which the tenant of such property was granted certain security of tenure even after the lapse of the period agreed upon, inapplicable to the lease of any premises entered into on or after June 1, 1995.

From the above, it seems that one could hardly argue that we are here dealing with a new lease entered into on or after June 1, 1995 and therefore, it appears that the Ordinance still applies in this case. Consequently, to resume possession of the premises, the owners will have to file an application to this end before the Rent Regulation Board at the end of the current lease.

The Board will accede to the applicants' request if the tenant (i) has, in the course of the previous lease, failed to pay the rent punctually, or (ii) has caused considerable damage to the premises, or (iii) otherwise failed to comply with the conditions of the lease, or (iv) has used the premises for any purpose other than that for which they were leased, or (v) has sublet or made over the lease without the express consent of the lessor.

With respect to the second question, much depends upon the exact terms of the agreement. However, even if the agreement is in the most general terms, it seems rather unlikely that the parties really agreed, for all effects and purposes of law, to leave the rent unaltered forever.

Thus, in the hope that the Rent Regulation Board might view the matter from this point of view, and in the hope that it sees that it is just and reasonable in the circumstances and at law to increase the rent, if the rent due is less than Lm40 a year, lessors are to apply to the Board, at least one month before the expiration of the lease, for a rent increase.

If the rent due exceeds Lm40, within a month lessors are to give notice to the tenant, by means of a judicial letter, of their intention to increase the rent and if the tenant wishes to contest the increase, he must apply to the Board for the rejection of the increase. In default of such application, tenant shall be deemed to have accepted the proposed increase.

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