In the realm of property ownership and real estate, the concept of ground rent, or ‘cens’ in Maltese, plays a significant role. Ground rent, also known as emphyteusis, is an imposition upon immovable property, mainly land or airspace. It affects any structure constructed on the land but does not extend its influence over the ownership of the building itself. In this blog post, we’ll delve into the various aspects of ground rent, its imposition, different types, and the intriguing process of redeeming it.

Imposing a Ground Rent

When a property changes hands, the owner may choose to impose a ground rent or a sub-ground rent, depending on the situation. The individual or entity imposing the ground rent is known as the dominus, while the person acquiring the property becomes the emphyteuta. Typically, ground rents are paid annually, thus referred to as ‘annual ground rent.’ It is essential to note that in such cases where a new ground rent is established, the purchaser must pay the corresponding stamp duty.

Types of Ground Rent

• Perpetual Ground Rent: As the name implies, perpetual ground rent is established at a fixed rate indefinitely. This means the rate remains unchanged throughout the duration of the lease.
• Perpetual Revisable Ground Rent: Similar to perpetual ground rent, this type is established at the outset but includes a provision for periodic adjustments to account for inflation. Commonly, such adjustments are pegged to factors like the cost of living or minimum wage.
• Temporary Ground Rent: Temporary ground rent, as the name suggests, has an expiry date and may be comparable to a long lease. In this scenario, land or airspace is granted for a predefined period, often lasting 99 or 150 years. Once this period concludes, the land or airspace is meant to revert to the original owner. However, in some cases where the property serves as the ordinary residence of the emphyteuta, the right to convert the title may arise. Depending on legal circumstances, this conversion could lead to either a lease or a perpetual ground rent.
• Temporary Revisable Ground Rent: Like perpetual revisable ground rent, this type also includes a provision for adjustments to reflect inflation. The fee is increased at predetermined periods, for example, every 25 years.

Redemption of Ground Rent

• Perpetual (non-Revisable) Ground Rent: Perpetual ground rent can be redeemed at any time, either through a contract between the parties or by filing a schedule of redemption (cedola) in court. The redemption calculation is relatively straightforward – multiply the ground rent by 20.
• Perpetual Revisable Ground Rent: Owners of properties subject to perpetual revisable ground rent may redeem it within 12 months after each revision. During this period, the redemption can be made at the same rates as the non-revisable.
• Temporary (non-Revisable) Ground Rent: The redemption of temporary non-revisable ground rent is not obligatory for the superior landlord, and each case must be negotiated on its merits.
• Temporary Revisable Ground Rent: As with temporary non-revisable ground rent, redemption is subject to negotiation for each specific case.

Who owns the Ground Rents?

• Joint Office: The Joint Office plays a pivotal role in overseeing the administration of properties that were transferred to the government by the Church, in accordance with a significant and historic 1992 agreement.
• Private: As the name implies, this ground rent is privately owned. This ground rent can be owned by an individual or by multiple members. 
• Church (Curia): Some of the properties were still retained by the church. These ground rents are few and far between.

In conclusion, ground rent, or emphyteusis, is a unique aspect of property ownership in Malta that affects land and airspace. With various types of ground rents and redemption options available, navigating this system can be intricate. Whether you are an owner or a prospective purchaser, understanding ground rent is vital for making informed decisions in the real estate market. As such, it is essential to work closely with legal professionals and experts to ensure a smooth and successful property transaction.

Written by: Luke Curmi – Head of Real Estate