Census skewed by rent laws

One of the arguments over the take-up of newly-constructed properties has long been that the rental market is growing.

However, figures released in the recent census show that only 8.7 per cent of rented properties were built after 1990. More than half of rented properties were built before 1956, with another surge between 1971 and 1980.

Apart from foreigners coming to Malta to work, people from broken marriages are often also cited as an important factor in demand. In fact, of the 9,808 who have not remarried, the census found that 3,686 live in rented property (38 per cent), a much higher percentage than for the population overall.

The figures raise interesting points for debate, especially because there were over 53,000 vacant properties in 2005, with an estimated 20,000 more permits issued by the end of this year.

It has become almost a matter of course for figures on the property market to be met with scepticism.

"The reason why more than half the rented properties were built prior to 1956 is that the majority of properties are still leased under the old rental laws. The census needs to analyse the old leases separately from the new leases. Don't forget that a property leased under the old laws cannot be rented over and over again," the letting manager of Dhalia, Benji Psaila, said.

"The key figures for rentals are a joke. Take the split between furnished and unfurnished, according to the census. The reality is that 90 per cent of all properties for lease with estate agents in Malta and Gozo are fully furnished while 10 per cent would be partly furnished and unfurnished. So the figures on what is really available for rent are being skewed by the old leases. I would say that 75 per cent of those 29,000 properties are old leases.

"The same applies to the average rent of Lm309 per annum: This is because the majority are old leases. We are not living in medieval times; Malta has moved on. The rates quoted by the census are all incorrect; Lm60 a month would only get you a garage!" he said.

Douglas Salt, of Frank Salt Real Estate, said that low rental returns, coupled with 35 per cent tax and only a 20 per cent allowance for expenses, were not enough of an incentive to overcome the hassle of renting out a property.

"Services, especially IT and ICTs, bring over a certain amount of 'foreign' workers all needing housing. The letting market to foreigners has grown substantially. With projects like SmartCity, this is set to grow further," he said.

Mr Psaila agrees that there are not enough incentives to rent.

"Landlords end up breaking even or making a miserable 10 to 20 per cent profit. Realistically it's not worth the hassle and it makes no sense to rent property in Malta. It's a shame because the government could generate considerable income," he said.

Francis Spiteri Paris of Perry Real Estate also believes that demand is growing for rental properties.

"Demand is growing but the supply of good ones is still limited. There is a perception that there are plenty of good, seafront properties and villas available but in reality not many are available for rent," he said.

Nor is he concerned at the number of vacant properties, saying he is convinced that prices will never go down.

"The government released more land in an attempt to keep prices down but it did not work. It is inevitable that the price of property increases as every time a residence changes hands, it incurs 10 per cent of its value in costs - what with stamp duty, real estate agency fees, notary fees and so on. And 10 per cent is a conservative figure!" he said.

Some agents also expressed doubts over whether the figures were skewed because people would not want to admit that properties were rented for tax purposes. But the permanent secretary at the Finance Ministry, Alfred Camilleri, does not believe this would be an issue.

"The statistics on rented properties in the census are not compiled on the basis of replies given by the lessors (the owners) as asserted but are based on information given by the lessees (the occupiers). Given this, there seems to be very little incentive for any under-declarations.

"As a matter of fact, the data we got from the latest census round were very consistent with what we got from the 1995 census and from other statistical enquiries like the Household Budgetary Survey," he said.

"In order to minimise any possible under-declarations and other sources of error, we excluded from the census the collection of information that might somehow be perceived by households as being of a sensitive nature. Notwithstanding this, all the collected data were submitted to an extensive range of validation tests. In addition all results were benchmarked against other independent statistical sources.

"These exercises were carried out in order to ensure the reliability of the collected information. While all statistics are subject to a margin of error, we have reason to believe that the margin of error in the census is in the region of 0.5 per cent."