Terreni Heirs vs Avukat tal-Istat — Rent Control Violates Property Rights

Constitutional Court upholds €730,661 compensation award to landlord whose property rights were violated for decades by Malta's rent control legislation.

Constitutional Court · Chief Justice Mark Chetcuti, Hon. Judge Anthony Ellul, Hon. Judge Robert G. Mangion · 4 May 2026

Josephine Terreni, and after her death her heirs, brought constitutional proceedings against the tenant Mary Rose Mercieca and the Avukat tal-Istat (Attorney General), challenging the lawfulness of Malta's rent control legislation — specifically Chapter 69 of the Laws of Malta (the Ordinance Regulating the Renewal of Leases) and Act X of 2009. The property in question was No. 272, St Paul Street, Valletta, which had been rented to Mary Rose Mercieca since 1958 at an annual rent that had only grown to €186 per year by the time proceedings were instituted — a figure wholly disproportionate to the property's market value. The landlord argued that the legislation compelling her to continue letting the property against her will, at a pittance in rent with no adequate remedy, constituted a disproportionate interference with her fundamental right to peaceful enjoyment of her possessions, as protected by Article 37 and Article 39 of the Constitution of Malta, Article 6 of the European Convention on Human Rights, and Article 1 of the First Protocol to the Convention. She noted that decades of automatic lease renewal with frozen conditions had placed an unfair and uncompensated burden solely on her shoulders. The First Hall of the Civil Court (Constitutional Jurisdiction) agreed in part, finding in its judgment of 14 July 2023 that Chapter 69 and Act X of 2009 had violated the applicant's fundamental rights under Article 39 of the Constitution, Article 6 of the ECHR, and Article 1 of the First Protocol, up to May 2021. It awarded pecuniary damages of €720,661.20 and non-pecuniary damages of €10,000, to be paid by the Avukat tal-Istat. The claim under Article 37 of the Constitution was rejected, as the relevant legislation predated the 1962 Constitution and was shielded by Article 47(9). The Avukat tal-Istat appealed solely on the quantum of the pecuniary compensation, arguing the amount was excessive because it incorporated the development potential of the building — an element the State considered impermissible in this context. The heirs of the original applicant resisted the appeal, arguing that since no cross-appeal was filed on the finding of violation, those findings had passed into res judicata and were beyond challenge. The Constitutional Court was asked to adjudicate whether the compensation figure was legally justified, and the heirs additionally sought interest on the awarded sum from the date of the first-instance judgment.

The Constitutional Court upheld the appeal in part, reducing pecuniary damages from €720,661.20 to €538,870. The heirs' incidental application for interest was dismissed. Appeal costs to be split without taxation between the parties.

• Under Maltese constitutional law, pre-1962 legislation is shielded by Article 47(9) of the Constitution from challenge under Article 37, meaning landlords cannot rely on Article 37 to challenge rent control laws that predate Independence.
• Violations of the right to peaceful enjoyment of property under Article 1 of the First Protocol to the ECHR can only be claimed for events after 30 April 1987 under Article 7 of Chapter 319, as Malta's ratification only takes effect from that date.
• When the Avukat tal-Istat appeals only on quantum of compensation and not on the finding of a fundamental rights violation, the violation finding passes into res judicata and cannot be revisited by the appellate court.
• Maltese courts have recognised that prolonged rent control legislation keeping rents at artificially low levels — here €186 per year for a Valletta property — can constitute a disproportionate burden on landlords violating Article 39 of the Constitution and ECHR rights.
• In constitutional redress proceedings, heirs may apply to the court to have interest added to a compensation award if there is a significant delay between the first-instance judgment and the appellate decision, ensuring that the remedy remains effective.

Constitution of Malta Arts. 37, 39, 47(9); Chapter 69 Laws of Malta (Ordinance Regulating the Renewal of Leases); Act X of 2009; Civil Code Chapter 16 Arts. 1531B, 1531C, 1531F, 1531K; European Convention on Human Rights Art. 6 and Art. 1 First Protocol; Chapter 319 Laws of Malta Arts. 4(2), 7