Tenant owners against low rents. The Court does justice to owners for violation of respect for their property.
JUDGMENT
Bradshaw and others v. Malta 23.10.2018 (no. 37121/15)
SUMMARY
Owners against tenants. Right to property. Long-term lease of multi-storey property in a band club. The rent was only 1.25% of the lease value of the free market by 2014. The imbalance was clear. After 2014, the legislation allowed the rent to double, which amounted to about 3% of the estimated rental value. The rent was also about 14,000 euros less than the rent the tenant collected for the sub-lease to a catering company. The situation caused an imbalance and imposed an excessive burden on the owners, while allowing tenants to speculate. The ECtHR found a violation of the property right and awarded EUR 600,000 to the applicants.
PROVISION
Article 1 of the First Additional Protocol
PRINCIPAL FACTS
The applicants in this case are 24 Maltese nationals and a company based in Malta. The case
concerned a multi-storey property owned by the applicants in Valletta which was rented out as a
band club.
The applicants inherited the property and, under rent-control legislation in Malta, are obliged to
renew each year the lease their ancestors entered into in 1946 and are not allowed to demand an
increase in rent.
In 2011 they brought constitutional redress proceedings to complain that they were being denied
the use of their property without adequate compensation. The first-instance court found in their
favour, but this judgment was overturned on appeal in 2014. The Constitutional Court found in
particular that there had been no violation of the applicants’ rights because their ancestors had
entered into the rental agreement voluntarily and in full knowledge of the consequences. In 2016, it
also rejected the applicants’ request for a re-trial.
Relying on Article 1 of Protocol No. 1 (protection of property) to the European Convention, the
applicants argued that the State had failed to strike the right balance between their right to enjoy
their property and the community’s interest in protecting band clubs, in particular because the
amount of rent they received was significantly lower than the market value of the premises. Further
relying on Article 14 (prohibition of discrimination) in conjunction with Article 1 of Protocol No. 1,
they also alleged that they were being discriminated against because they had to renew their rent
agreement on a yearly basis, while, under amendments to the law made in 2009, others who leased
out property for commercial use would be freed from this obligation in 2028.
THE DECISION OF THE COURT
Article 1 of Protocol No. 1:
A band club had a cultural and social role in Maltese society and as such, the Court accepted that the measure pursued a legitimate aim in the public interest. Nevertheless, other considerations could be relevant to the proportionality of the measure. In particular, the use of property for reasons other than to secure the social welfare of tenants and prevent homelessness was a relevant factor in assessing the compensation due to the owner. The situation in the applicants’ case might be said to involve a degree of public interest which was significantly less marked than in other cases and which did not justify such a substantial reduction compared with the free market rental value.
Between 1967 (when Malta ratified the Convention) to 2013 (prior to the 2014 Regulations), the applicants were being paid a rent of approximately EUR 97 per month for a multi-storey property of 864 square metres in a prime location in the capital city. While that might have been an appropriate rent in the 1960s and 1970s, it could not be said to be so decades later. On the basis of the Government’s valuation of the annual rental value of the property in 2014, the applicants had been receiving 1.25% of the market rental value. The disproportionality was clear and manifest.
As for the period following 2014, while the Regulations allowed for more or less double the rent previously received by the applicants, it still amounted to around 3% of the rental value estimated by the Government (and around 1% of that estimated by the applicants). It was also around EUR 14,000 less than the rent the band club was obtaining for the use of part of the first floor by the catering facility. The situation remained disproportionate, and without any action by the legislature, it was likely to remain so indefinitely.
While the applicants did not have an absolute right to obtain rent at market value, despite the 2009 amendments, the amount of rent was very much lower than the market value of the premises. While the overall measure was, in principle, in the general interest, the fact that there also existed an underlying private interest of a commercial nature could not be disregarded. In such circumstances, both States and the Court in its supervisory role had to be vigilant to ensure that measures, such as the one at issue, did not give rise to an imbalance that imposed an excessive burden on landlords while allowing tenants to make inflated profits. It was also in such contexts that effective procedural safeguards became indispensable. Other than constitutional redress proceedings there were no other avenues which the applicants could have pursued to ameliorate their situation. Consequently, the application of the law itself lacked adequate procedural safeguards aimed at achieving a balance between the interests of the tenants and those of the owners.
Having regard to the use made of the property, the extremely low rent of the premises and the lack of procedural safeguards in the application of the law, a disproportionate and excessive burden had been imposed on the applicants, who had had to bear and continued to bear a significant part of the social and financial costs of supporting a local custom by supplying the band club with premises for its activities, including commercial activities. It followed that the Maltese State had failed to strike the requisite fair balance between the general interests of the community and the protection of the applicants’ right to the enjoyment of their property.(echrcaselaw.com).
