News & Events
The Evolution of Malta’s Rental Market
Author: James Camilleri
Published on Malta Chamber 4th March 2019
Contrary to what is being experienced in this decade, in the previous century, rent regulation in Malta was terribly rigid, creating other types of problems. During the Second World War, various legislative enactments were targeted at the dire situations of a population devastated by hardship. However, these pieces of legislation remained in place even after the conflict between nations subsided. This inertia of the lawmaker made relations between landlords and tenants very problematic and handicapped the rental market.
The Maltese population generally leans towards home-ownership, and though this may be influenced by several factors, the lack of adequate regulation of the rental market is bound to be a contributing factor. The present rental market is a knot the Government needs urgently to unravel, and yet previous experience has proved that it is a minefield no legislator can lightly tread through.
The Parliamentary Secretariat for Social Accommodation within the Ministry for the Family, Children’s Rights and Social Solidarity had issued a White Paper Consultation ‘Renting As A Housing Alternative’ from 15th October to 30th November 2018. The amendments being proposed included the establishment of a period of one year as the minimum length of a residential lease and duty of landlords to give a suitable notice period of their intention not to renew a lease. The deposit requested on the signing of lease agreements is another currently unregulated area of the rental market that would benefit from legislative intervention. This, in fact, is an element of property leasing that is causing instances of abuse both from the side of landlords and from tenants.
Revising the rate of rent within a lease period is yet another cause for contention between landlord and tenant, as landlords wish to be able to periodically revise the rate of rent to be close to the market value, whereas tenants are reluctant to see the rate of rent increase. This in turn leads to landlords offering short leases rather than longer ones. It is hoped the proposed registration of lease agreements will have the desired effect of ensuring there is a check on the agreements’ compliance with new regulations, possibly avoiding the risk of tax evasion experienced in the past.
It is the lower income-earning tenants or would-be tenants that are facing the worst cases of strife, for example, by being outbid by groups of eight or more foreigners who are unwittingly capable of sharing an apartment intended for two or three persons. The harsh reality is that people who cannot cope with the recent property market price hikes are being pushed into the dreaded state of homelessness. The White Paper mentioned above envisions the setting up of a department for overlooking the rental market falling under the Housing Authority. In essence, a rental contract would need to be registered with this department, including a form from utility billing company ARMS indicating who the tenants on the contract are. As already mentioned, the deposit at the point of contracting is a possible cause for contention and the White Paper sees this amount being declared along with the said registration. Registration of a rental contract will be the responsibility of the landlord, although a tenant may register the rental contract should the landlord fail to do so.
The changes in social and economic realities being witnessed are creating tensions in the property market that should have been tackled by the legislator many years ago. But it is useless pointing fingers at previous legislatures. The present Government needs to urgently intervene, while keeping in mind the mistakes made by post-war legislators, where over-regulation lead to stifling of the market.
Author: James Camilleri
Junior Legal Assistant, PKF Malta
Published on Malta Chamber on Monday 4th March 2019.