Information Note on the Court’s case-law No. 176
July 2014
Statileo v. Croatia - 12027/10
Judgment 10.7.2014 [Section I]
Article 1 of Protocol No. 1
Article 1 para. 2 of Protocol No. 1
Control of the use of property
Obligation under protected tenancy legislation for landlord to let property for indefinite period without adequate rent: violation
Facts – The applicant owned a 66 square metre flat in Split occupied by a tenant who had been granted a specially protected tenancy in the 1950s. Specially protected tenancies were abolished in 1996 by the Lease of Flats Act, which provided that the holders of such tenancies in respect of privately owned flats were to become “protected tenants”. Private owners were required to enter into lease contracts of indefinite duration with the former holders of specially protected tenancies at a “protected rent” that was significantly lower than the market rent. The applicant was subsequently ordered by the domestic courts to grant a lease to his former specially protected tenant at a monthly rent of approximately EUR 14. In his application to the European Court he complained under Article 1 of Protocol No. 1 that he had been unable to regain possession of his flat or charge a market rent.
Law – Article 1 of Protocol No. 1: The interference with the applicant’s property rights constituted a measure of control of the use of his property and was aimed at promoting the economic well-being of the country and the protection of the rights of others. Under the system established by the Lease of Flats Act, landlords had little or no influence on the choice of tenant or the essential terms of the lease such as its duration or the rights to terminate. A landlord who intended to move into the flat or install his or her members of his family was allowed to terminate only if he had no other accommodation and was entitled to permanent social assistance or was over sixty and the lessee owned suitable accommodation in the same municipality. Such rules left little or no possibility for landlords to regain possession as the likelihood of protected tenants leaving voluntarily was generally remote. Moreover, landlords were under obligations to maintain the flat in a condition suitable for habitation and to pay a condominium fee to cover the costs of maintaining the building in which the flat was located.
The landlords’ right to derive profits from the flat was subject to statutory restrictions. They were entitled to receive a protected rent, which was sometimes lower than the condominium fee they had to pay for maintenance. In addition, they had to pay income tax on the rent received, while the market value of the property dropped because of the protected tenancy. The amount of rent received by the applicant was about 25 times lower than the market rent and thus grossly disproportionate. While it was true that the States enjoyed a wide margin of appreciation in measures such as the control of rent levels, the margin was not unlimited and the consequences of such measures could not be contrary to the Convention standards. The Court recognised that, in the context of the fundamental reform of the country’s political, legal and economic system during the transition for the socialist regime to a democratic state, the had Croatian authorities faced an exceptionally difficult task in having to balance the rights of landlords and the protected tenants who occupied their flats for a long time. However, the Court was unable to discern a demand of general interest capable of justifying such comprehensive restrictions on the applicant’s property rights. In the present case there had been no fair distribution of the social and financial burden resulting from the reform of the housing sector. Instead, a disproportionate and excessive individual burden was placed on the applicant as a landlord as he was required to bear most of the social and financial costs of providing housing for the protected tenant and his family. The Croatian authorities had thus failed to strike the requisite balance between the general interests of the community and the protection of the applicant’s property rights.
Conclusion: violation (unanimously).
Article 41: EUR 8,200 in respect of pecuniary and EUR 1,500 in respect of non-pecuniary damage.
(See also Hutten-Czapska v. Poland [GC], 35014/97, 19 June 2006, Information Note 87; Amato Gauci v. Malta, 47045/06, 15 September 2009; Lindheim and Others v. Norway, 13221/08 and 2139/10, 12 June 2012, Information Note 153; and, for a case where the tenant complained of the impact of housing reforms on his rights, Berger-Krall and Others v. Slovenia, 14717/04, 12 June 2014, Information Note 175)

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