It has been two years since the introduction of legislation for all those in real estate to be licensed and it is sadly common knowledge that the reform is being widely and flagrantly ignored. Without the effective checks and balances that monitor and encourage adherence to what was a new and significant sectorial legislation, Malta is playing with fire once again with its financial reputation.
The government’s own National Risk Assessment report back in 2018 identified real estate in Malta as one of its most high-risk industries, even more so than iGaming. The property industry naturally involves high-value transactions, which are “exposed to being misused or abused, to invest proceeds of crime in real estate assets, possibly through layers of legal entities and arrangements to obscure the trail of evidence”.
Introducing regularisation and compliance, aside from thwarting illicit financial manipulations, also bring about better consumer protection.
For the average consumer, their participation in the property market involves what is usually the biggest and most consequential transaction of their lives.
Working with someone in possession of a licence assures clients they are in the hands of people that can be trusted, of good repute and who fundamentally know what they are doing. Bad actors can easily exploit the uninformed and vulnerable, to what can lead to life-changing and, possibly, devastating consequences.
The introduction of licences was not a handicap for the industry. We, at Dhalia, like the majority of our fellow professional players in the market, lauded it as a much-needed reform that would lead to the cultivation of better practices and standards.
Being licensed merely means those involved in your property deal have no dodgy financial or criminal history, with mandatory training from an accredited training institution that includes basic knowledge of the legal, financial, technical and communication issues related to real estate, its marketing and sale.
Malta is playing with fire once again with its financial reputation- Alan Grima
The idea of sectorial legislation was floated by the government back in 2016, with the bill being introduced five years later, in 2021, indubitably as part of wider concerted efforts to get Malta off the FATF grey list. As from January 1 of last year, only licensed real estate agents, property brokers, branch managers and property consultants can supposedly operate legally. Those who do not comply are liable to an administrative fine “not exceeding €20,000”, according to the legislation.
However, a mere scan on social media – the platforms where real estate has organically extended to – shows amateurs and people who should know better openly marketing properties and practising as real estate professionals without the necessary licence or oversight.
To add insult to injury, to this day, even certified and licensed estate agents have not received their physical licences due to the lack of resources and administrative efficiency at the real estate licensing board. This further complicates the situation, making it challenging for potential clients to differentiate between qualified professionals and unlicensed practitioners in the market.
Without the threat of inspections and sanctions, the likelihood of the law being taken seriously is naught. It is incredibly frustrating. As most of our industry did, we embraced what is a change to all of our operations and made sure we were fully compliant, with all of our employees being given training and also acquiring their licence by the given deadline.
At Dhalia, we believed in this reform, so much so that we established the first accredited training academy, open to even non-Dhalia recruits, to make sure the qualifications and training were easily available.
And, yet, as it stands, those who avoid regularisation are still able to operate with confidence, with loose ethics and dubious practices giving a bad reputation to us all who operate legitimately. It just leaves those of us who bothered and did our bit wondering what was the extra expense and trouble for. Isn’t any risk to Malta’s financial reputation and one of its biggest industries worth the effort to safeguard it?
The implementation and execution of this reform sadly demonstrates how just getting regulations on the books is not enough. If it was identified and viewed as needed, enforcement is imperative for the reform not to be yet another cosmetic exercise and to truly bring legitimacy and peace of mind to what is such an important industry.
Alan Grima is CEO of Dhalia Real Estate.