Launch of Lands’ Authority Scheme –Revision of Commercial Leases and Recognition of Heirs upon demise of the lessee.

‘Such a scheme strongly compliments Government’s recent economic success, clearly proving that the economy is gradually and surely recovering, placing us in a stronger position to stand shoulder to shoulder with everyone’ – Minister Schembri

Minister for the Economy and Industry, Silvio Schembri, launched the Lands’ Authority Scheme in relation to the revision of commercial leases and recognition of heirs upon demise of the lessee.

Minister Schembri explained that currently there are 400 commercial leases on Government properties which have expired or are about to expire, as well as a large number of renewals which are also on hold in view of the inordinate rise in the rental value. Several of these commercial leases are generally considered to be traditional, family-run businesses with a limited turnover.

In fact, the scenario which led to the scheme showed a drastic rise in the increase of the revised rental value, paving the way for the Lands’ Authority’s intervention in establishing a scheme. ‘, As a Government, we are seeking through this scheme to provide an equitable and affordable solution with the aim of aiding all businesses which are currently in this situation. The scheme shall be limited to those leases which have expired and are pending renewal,’ said Minister Schembri.

It was explained that the scheme is not only limited to those leases which have expired and are pending renewal but also those which are due to expire in the near future, up to the end of year 2023. The scheme shall consider all requests for recognition of heirs up to the end of the year 2023.

Minister Schembri explained that the Lands’ Authority identified three scenarios  which will be beneficial to owners.

First scenario is lease holders with expired leases or leases about to expire but only up to the end of 2023, who have either refused new terms or have not even applied for renewal. In this case, commercial leases entered into prior to the 25^th April 2017, and which have now expired, or shall expire before the end of 2023, shall be automatically renewed with a standard annual increase of 5% for date of expiry up to 1^st of June 2028.

Second scenario is that of lease holders who have accepted the renewal and are paying the revised rates but whose lease expires before 1^st of June 2028.  In this case, an automatic extension up to 1^st June 2028 applies together with a refund for difference in rates by giving notice of a credit note, as well as the establishing of a new rental value of +5%/annum as of the last expiry date.  Commercial leases entered into prior to the 25^th April 2017 and which have now expired or shall expire before the end of 2023, shall be automatically renewed with a standard annual increase of 5% from date of expiry up to the 1^st of June 2028.

Third scenario is that of lease holders who have already accepted the renewal and are paying the revised rates but lease expires after the 1^st of June 2028. In this case lease holders can retain the current lease agreement, together with the current rental rates and relative expiry date; or accept the renewal of commercial leases and revision of rental rates of 2021, in which case the lease expiry date shall be changed to that of the 1^st of June 2028.

With regard to the recognition of heirs upon demise of the lessee, Minister Schembri explained that prior to the establishment of this scheme, when a commercial lease was passed from father to son, the stima peritali was carried out. Now, the heirs will be recognised and the 5% rental increase per annum will be applied.

Minister Schembri said that official letters will be sent to all owners who are eligible to benefit from this scheme.

‘It is with great satisfaction to note that even amid adverse circumstances, as a Government, we strived to leave nobody behind. Through this scheme we sought to not only reach out to all businesses but tangibly ease any unnecessary hardships. Such a scheme strongly compliments Government’s recent economic success, proving that the economy is gradually and surely recovering, placing us in a stronger position to stand shoulder to shoulder with everyone,’ said Schembri.

Robert Vella, Chief Executive Officer of the Lands’ Authority explained that owners who qualify for the scheme will be notified through an official letter which shall include an invoice with the new rates. Moreover, those owners who have already paid the market value rate (stima peritali) will be contacted by the Authority, which shall in turn explain the scheme in detail including  their eligibility for a refund as well as  payment due according to the new rates. ‘This is being done to ensure an equitable solution which includes those who have paid or accepted the new rates. Concurrently, the Authority is looking into new schemes aimed at tenants, in order to ensure that it is constantly responsive to current needs and to encourage new investors to pursue their ventures and commit to the leasing of government property for commercial purposes,’ said Vella.