Better data leads to better decisions. This applies to both public and private enterprises.

With this spirit in mind, the Housing Authority, as the regulator of the private rental market in Malta, has just published a detailed report that provides a holistic assessment of this sector based on registered contracts.

While the latest developments in rents always capture the media headlines, in this report we provide much more information on the rental market – information that is only accessible from the rent register – such as the number of registered contracts, the prevalence of renewals and multi-year leases, changes in tenancy duration, the characteristics of rental properties and their spatial distribution across the country.

In doing so, we hope that this report, now in its third edition, will contribute to enhance the transparency of the rental market in Malta. Beginning this year, we plan to start publishing updates of this report on a biannual basis.

The sector is very dynamic and is expanding rapidly. At the end of 2022, the number of active rental contracts stood at 47,879, an increase of 24% compared to a year earlier. This increase is consistent with recently published statistics by Jobsplus that showed a sharp increase in the number of foreign workers in 2022, arguably one of the main drivers of demand for rental accommodation. The population of foreign workers rose to almost 97,000 in 2022, with the economy adding 20,575 expats in 2022.

This inflow of foreign workers is leading to increased demand for rental accommodation and upward pressures on rents. Registered rents increased by 6%-9% in the second half of 2022 compared to the same period a year earlier. Our estimates indicate that at the end of 2022, rents have exceeded their pre-pandemic levels. Similar trends are observed with advertised listings collected by the Central Bank of Malta. 

In 2022, the Housing Authority received a total of 21,529 renewals. The majority of these renewals were automatic and for a duration of one year. It is fair to point out, however, that around a quarter of these renewals were terminated prematurely, which tends to exacerbate the administrative burden on the authority’s staff.

Despite this, we estimate that 36% of the renewals in 2022 have been renewed more than once.  This implies that slightly more than a third of the renewals were multi-annual roll-overs, an indication that the relationship and lease conditions were mutually beneficial for both parties.

Renewals help to maintain rental stability since they remove the information asymmetry – a situation when one party in a transaction has more information than the other – between landlords and tenants that is prevalent at the start of a new contract. Indeed, around 95% of renewals in 2022 were renewed with the same rent. Because of these renewals, tenancy duration has been gradually increasing since the establishment of the register.

The distribution of rental contracts by locality has remained very similar over the past three years. St Paul’s Bay remains the most popular locality, with almost 7,300 contracts that amount to 16% of all residential contracts registered with the Housing Authority.

Other popular localities for rental accommodation include Sliema, Msida, Gżira and St Julian’s. It is clear, however, that over time, the registration of rental contracts is becoming increasingly spread across the country and in 2022, there were 13 localities with more than 1,000 active registered contracts.

When we looked at long-term contracts signed in the second half of 2022, we found that around 27% had a monthly rent between €700 and €899, while the share of contracts exceeding €1,000 per month stood at 29%.

For shared spaces, around 60% of contracts were between €100 and €299 per month. However, the share of the contracts for shared spaces stood at only 5% of the total contracts in the register, which is at odds with the widespread practice of co-sharing among foreign workers in Malta.

We also uncovered a relatively large share of recently signed contracts with rents below €500 for long-term leases. These rents are significantly lower than the prevailing market rates, especially when compared with advertised listings by estate agents. Instead these tend to be more akin to the rents charged for shared spaces. We suspect that some landlords are resorting to register shared spaces as long-term contracts to circumvent the restrictive conditions in the current regulations of what constitutes a shared space. We intend to investigate this further.

Statistics from Jobsplus indicate that the composition of foreign workers in Malta is also changing rapidly. Whereas in 2016, only 29% of foreign workers were third-country nationals (TCNs), their share rose to 63% in 2022. The most common TCN nationalities in 2022 were from the Asian continent, with the largest communities being from India, the Philippines and Nepal. Suffice to say that the number of Indian workers is now as big as the Italian community.

The increase in the share of TCNs implies that sharing arrangements are also changing. While co-sharing has always been common with foreign workers, anecdotal evidence indicates that overcrowding is more prevalent with TCNs, especially those from African and Asian communities. Part of this can be due to discrimination, which results in lower access to housing and segregation. However, this is also due to different preferences for work and leisure.

To send remittances to their families back home, some might be willing to stay in relatively overcrowded accommodation if this helps to lower their housing costs. This trend is likely to continue.

Going forward, more emphasis needs to be placed on maintaining minimum standards in rental accommodation, both to safeguard the well-being and the quality of life of these workers and also to minimise the nuisance to neighbours residing close by.

The Housing Authority and the Ministry for Social and Affordable Housing are currently holding discussions with key stakeholders to update the regulations in the Private Residential Leases Act. In this way, we will ensure that the regulations of the country’s private rental market continue to adequately reflect the evolving market needs and realities.

Matthew Zerafa is the CEO of the Housing Authority and Brian Micallef is the executive head in charge of policy at the Housing Authority. The views expressed in this article are those of the authors.