A critical appreciation of Article 12B of the Housing (decontrol) Ordinance

Abstract

Leases governed by the Housing (Decontrol) Ordinance remain the subject of great controversy, owing to their restrictive measures that burden the lessor to an inordinate extent. In fact, such leases have been impugned ad nauseam both in front of the domestic Constitutional Court and before the European Court of Human Rights, provoking a plethora of judgements which strike such legislation for failing to strike a fair balance between the needs of society and the preservation of the lessor’s fundamental right to enjoyment of property. Notwithstanding the legitimate aim sought out by the Ordinance, the problem stems from the fact that it failed to acclimate to the market developments, thus becoming anachronistic. Following the Courts’ contemplation of tenant eviction as remedy to stop the infringements perpetrated this law, the legislator decided to overcome the lethargy and intervene by virtue of Act XXVII of 2018, in attempt to rectify the situation, eliminate uncertainties and strike a fair balance. Essentially, whilst the ramifications surrounding Article 12B are manifold, three key features characterise such provision, namely, the rent revision mechanism capped at 2% p.a. on the freehold value of the property, which qualifying landlords could avail by applying to the Rent Regulation Board; the means testing mechanism which both the tenant and his / her successors have to satisfy for the continuation of the tenancy and the new ‘tenant’ definition that restricts the causa mortis transfer of the tenancy. Such elements serve to offset some of the imbalances propagated by the Ordinance by providing decent compensation to the lessor, by ensuring that the tenant’s need for social protection subsists and by reverting the property back to its owner when such need ceases. Having said that, Article 12B is still no panacea. In fact, besides its failure to capture controlled leases that do not emanate from the Ordinance, such provision still lacks, inter alia, adequate procedural safeguards when it comes to evicting the tenant, which serves to show that further legislative reform is necessary in this field.