The rental market in Malta has been healthy for the past few years, but over the last 24 months it has witnessed a period of exceptional activity. The large number of new companies operating in online gaming, ICT, financial services, banking and so on have brought with them a substantial number of expatriates who all need places to rent.
Long lets are the most common form of rentals in Malta, and these range from periods of six months to three or even five years. On a long let, once the lessor and the lessee agree on the terms and conditions of the rental, a standard rental agreement is signed between the lessor and the lessee, which stipulates these conditions together with the monthly rental amount.
A refundable security deposit usually equivalent to at least one month's rent is also paid on contract, and the rent is usually paid monthly or quarterly in advance. The real estate agent who in most cases negotiates the structure of the rental with both the lessor and lessee is paid half a month's commission and VAT from both parties.
Over recent years the market standards have been raised tremendously, where tenants are looking for quality accommodation with most comforts and amenities. This has led many owners to compete in the quality of décor and furnishings, in order to secure the appropriate rental value and more importantly to ensure their property is rented before that of others.
The current legislation demands that a lessor declare the rental in income tax returns and pays tax on the rental income according to their relevant tax bracket. Besides this, a lessor is obliged to pay 5 per cent VAT on rentals to individuals, so long as they are not Maltese citizens.
The antiquated rental laws also demand that a long let is licensed with the Malta Tourism Authority, where a licence fee equivalent to one month's rent is also paid annually, unless the tenant has been living in Malta for more than one year.
Both the current tax and licensing legislations are a big deterrent to those considering renting out their property, and more so to those contemplating to purchase a property with the intention to rent it out.
Over the last year the Federation of Estate Agents (FEA) has been lobbying intensely for the government and the MTA to revise these outdated laws and legislations, with a view to encouraging more property owners to rent out their property and help this evolving market.
It is time to disassociate the current Malta Tourism Authority holiday apartment regulations from long-term rentals. When a long-term rental is concluded, it generally means that an agreement has been reached between the landlord and the tenant and both parties are satisfied with the outcome of this agreement. So, no third party should have the right to dictate how equipped this property should be, whether it is air-conditioned or not, or how modern the furnishings are, as this is most probably reflected in the price and one pays for what one gets.
Although we agree and insist on the MTA regulating and controlling the licensing of holiday properties, we think that its involvement in the licensing of long-let properties is both a costly exercise and no longer appropriate.
Mr Casolani is the public relations officer of the Federation of Estate Agents and director of Belair Real Estate.
Long lets are the most common form of rentals in Malta, and these range from periods of six months to three or even five years. On a long let, once the lessor and the lessee agree on the terms and conditions of the rental, a standard rental agreement is signed between the lessor and the lessee, which stipulates these conditions together with the monthly rental amount.
A refundable security deposit usually equivalent to at least one month's rent is also paid on contract, and the rent is usually paid monthly or quarterly in advance. The real estate agent who in most cases negotiates the structure of the rental with both the lessor and lessee is paid half a month's commission and VAT from both parties.
Over recent years the market standards have been raised tremendously, where tenants are looking for quality accommodation with most comforts and amenities. This has led many owners to compete in the quality of décor and furnishings, in order to secure the appropriate rental value and more importantly to ensure their property is rented before that of others.
The current legislation demands that a lessor declare the rental in income tax returns and pays tax on the rental income according to their relevant tax bracket. Besides this, a lessor is obliged to pay 5 per cent VAT on rentals to individuals, so long as they are not Maltese citizens.
The antiquated rental laws also demand that a long let is licensed with the Malta Tourism Authority, where a licence fee equivalent to one month's rent is also paid annually, unless the tenant has been living in Malta for more than one year.
Both the current tax and licensing legislations are a big deterrent to those considering renting out their property, and more so to those contemplating to purchase a property with the intention to rent it out.
Over the last year the Federation of Estate Agents (FEA) has been lobbying intensely for the government and the MTA to revise these outdated laws and legislations, with a view to encouraging more property owners to rent out their property and help this evolving market.
It is time to disassociate the current Malta Tourism Authority holiday apartment regulations from long-term rentals. When a long-term rental is concluded, it generally means that an agreement has been reached between the landlord and the tenant and both parties are satisfied with the outcome of this agreement. So, no third party should have the right to dictate how equipped this property should be, whether it is air-conditioned or not, or how modern the furnishings are, as this is most probably reflected in the price and one pays for what one gets.
Although we agree and insist on the MTA regulating and controlling the licensing of holiday properties, we think that its involvement in the licensing of long-let properties is both a costly exercise and no longer appropriate.
Mr Casolani is the public relations officer of the Federation of Estate Agents and director of Belair Real Estate.