The debate about controlling rentals to tourists, especially through platforms such as Airbnb, is now raging, but it distracts us from one important point: why was this problem ignored until it became a crisis?
For years, red flags were raised about the number of properties actually licensed, with the most recent study commissioned by hoteliers suggesting that almost half the holiday homes in Malta operate without the relevant Malta Tourism Authority licence.
The survey found over 10,000 properties listed on platforms such as Airbnb, which is hardly difficult to check. The implications have always been huge, from the fact that half are outside the MTA’s quality control remit, to the undeclared tax that should have been paid from this income.
Assuming that they are rented out for an average of €80 every single day, as the Central Bank of Malta calculated – which is admittedly unlikely – this works out to €120-€140 million income a year.
Even if the MTA and the tax department have been trying to enforce the law, there is another major problem: how can you analyse tourism density and the impact on the property market when you do not take into account over 4,000 rental properties?
Those who invest in property to rent have a distinct market: mainly expatriates and tourists. The demand for rental properties has inevitably driven up supply, and prices have also risen higher in sought-after locations than in others. This put money into the developers’ pockets but has also put many properties out of the reach of families.
How many tourists does Malta want? Hoteliers will add thousands of beds over the coming years, putting considerable pressure on their own room rates. Arguments coming from this sector are often taken with a pinch of salt, given their clear agenda. But there is no doubt that taken holistically, the supply is more than just worrying.
Cities like Amsterdam and Venice have already taken drastic measures to control the numbers of visitors, and the Maltese government surely cannot be naïve enough to think the gravy train will not grind to a halt unless it takes informed policy decisions before it is too late.
Clearly, it is not just the quantity of tourists in rental accommodation that is upsetting neighbours, though. It is also their impact on noise pollution and rubbish, not to mention unacceptable behaviour, from dropping left-overs on people’s windowsills, to urinating on their doorsteps and vomiting in the lifts.
The proposal made by MTA chief Carlo Micallef is to allow residents in apartment blocks to decide whether to allow any short lets. The prime minister understands that some of those apartments might have been bought – at inflated prices – precisely to rent.
However, renting out those apartments is not only about income. It also comes with responsibility.
Landlords must enforce rules about rubbish collection, even if it is not convenient for cleaners who go there on days that waste is not picked up. And unruly tenants who wake up neighbours in the middle of the night cannot be tolerated.
Times of Malta has calculated that up to three of every four licensed holiday homes in Malta and Gozo could be impacted by the proposed new regulations, a proportion which will surely increase when unlicensed apartments are taken into account.
The reaction was what you would expect: estate agents worry about the impact on demand for sales as well as on prices; hoteliers want a fairer playing field when it comes to competition.
We should, however, go back to basics and clean up our act before we think about what to do next.