Malta’s real estate rentals sector has thrived in recent years. Keeping a close eye on the latest trends at RE/MAX Lettings Malta are Edward Agius, CEO, and Lawrence Kelly, academy & HR manager.
The local real estate sector has not escaped the clutches of the COVID-19 pandemic this year. But while assumptions abound about its adverse effects on the property market, the reality in the rentals sector is quite different.
“This is certainly proving to be a year of change,” Lawrence Kelly, who manages RE/MAX Lettings Malta’s training academy, says. “It started with the rental reform law, which had a big impact at the beginning of the year.”
The Private Residential Leases Act that came into effect on January 1, introduced new directives on how private residential properties may be rented. Following this latest bid to regulate the rental market, landlords must register their properties with the Housing Authority, which also facilitates the quick resolution of disputes between landlords and tenants. Crucially, the Act has increased financial incentives for long-term contracts and imposed strict terms on minimum contract durations and notice periods.
While long lets start at one year in length, short-term lets are capped at six months and may only be offered to non-residents: workers, students and those looking to establish long-term residence locally.
“Landlords weren’t happy,” Kelly says. “They felt that while the legislation protects tenants, it inadequately supports renters. The reforms have led to visible shifts in the rental market as it has evolved due to the new legislation. The stipulations about who can rent and for how long have nudged the market towards favouring long lets over short rentals.”
“Then, in March, COVID-19 overshadowed the rental reform. Except the pandemic hasn’t negatively affected the rentals sector as hearsay might have you believe. The buying of property has changed course slightly because spending and investment habits always change in times of uncertainty. But while life somewhat came to a halt, the rental market has kept on moving because landlords are always looking to rent out property and people always need a home.
“We’re still receiving calls and signing contracts. For us, it’s been a time of positivity. It’s been uplifting to see over 80 per cent of the landlords we work with make concessions and be sympathetic to their tenants’ plight. And prospective tenants are being flexible on their preferred localities due to budgetary concerns. Parts of the island they may have previously overlooked are now being considered.”
The rental market has stabilised and this brings a lot of good because a pay cheque can be taken further
So the rental market has seen an upswing in affordability. “Last year, prices were unaffordable,” says Edward Agius, who heads RE/MAX Lettings Malta as CEO. “Rental prices were high and unaffordable for some as demand exceeded supply. Despite the adversity, COVID-19 has actually served to correct Malta’s rental housing market – a correction that had been a long time coming. Rather than being hindered, properties are now on the market at more realistic prices.
“Many landlords have lowered rents to avoid clinging to empty properties. A two-bedroom apartment in Sliema used to cost €1,400 per month depending on the type of finish and furniture. Now, we’re seeing a 15-25 per cent price correction. The rental market has stabilised and this brings a lot of good because a pay cheque can be taken further. Instead of sharing an apartment, leasing one alone has become feasible – and this increases demand for properties.”
And while the rental reform may have swayed some people away from short-term lets, Agius explains that three-month rentals still represent an important part of Malta’s rental sector, especially during summer.
“We’ve seen a lot of three-month rentals over the past few months,” Agius continues.
“Whether it’s a foreigner renting a villa with a pool for the summer or a Maltese family escaping to the seaside, the short-term rentals market remains busy, especially with local business.
“Of course, given that people are working from home more regularly, desk space and outdoor areas have become important criteria when on the property hunt in central Malta. That said, we’ve also got many clients looking to escape the hustle and bustle by heading to the countryside.”
Agius and Kelly agree that whatever happens in the rental market, the most important thing to remember is that both landlord and tenant should be happy with the final negotiated price and contract.
“People shouldn’t take advantage of the situation we’re in or whatever may happen tomorrow,” Agius remarks, “because regardless of the scenario, the rental agreement has to be a win-win situation to work in the long term.”