The president of the Federation of Real Estate Agents Ian Casolani.

There are simply not enough properties available for rent to meet current demand, and a number of changes should be made to encourage landlords to come forward, according to the president of the Federation of Real Estate Agents Ian Casolani.

“This is already a big problem, especially in the sought-after areas – primarily Valletta to Baħar iċ-Ċagħaq and adjacent villages.

“My own company, Belair, has 12 negotiators on letting and their biggest challenge is to find properties to let. It is the same with all the agents,” he said.

The federation believes that stakeholders need to do more to encourage people to invest in property for rental purposes. One of the sectors that came under fire was the banking one.

“The banks need to play a better part in this. Their ‘buy-to-let’ package is ridiculous. They want too much security and interest rates are too high,” Mr Casolani said.

Another way to increase supply would be to allow non-EU nationals to rent out their properties. At the moment this is easy to do in the 12 specially-designated areas dotted around Malta, but is subject to too much red tape if the property is located anywhere else.

Landlords also require a licence from the Malta Tourism Authority (MTA).

“The MTA licenses property which is rented for periods of less than a year. But the landlord still needs an MTA licence, even if the property is to be rented for longer, just to cover that first year.

“In theory, the authority is meant to come and inspect the premises and the landlord has to pay one month’s rent as the fee. We have been arguing against this for years. It is not even done most of the times. And if you call the MTA and ask five different people about it, you would get five different answers. We need to do away with all that. It is a ridiculous system,” he said.

“Holiday rentals, where you get someone coming in from overseas are different, as you need to ensure that what is advertised is what is actually available and so on. But a long let is an arrangement between a landlord and a lessee based on an informed decision. If the tenant is willing to pay less and accept torn curtains, so be it.”

More people need to invest inproperty forrental purposes

So much for supply. But what about demand?

The main impetus is coming from foreigners, mostly EU nationals, in Malta because their business or company has brought them here, with thousands in the financial services and i-gaming sectors. Mr Casolani described these as “the dream expat investor” and they move here with their families, put their children into school and integrate into the Maltese lifestyle – many of them putting down anchors that outlive their initial reason for coming to Malta.

But there is now more demand building up from both the Individual Investor Programme – which has attracted more than 140 applicants so far – and, to a lesser extent, the resurrected Global Residence Programme.

“Enquiries are slowly trickling in for the Global Residence Programme, but the IIP has overshadowed it in terms of the effort being made on marketing Malta. The latter also attracts a different audience as clearly these are people looking for a passport and not just residence.

“We have been very encouraged by the fact that so many of the IIP applicants start out looking at rentals but seem to be quite open to the idea of buying once they see what is actually available. But we are clearly not going to be able to offer hundreds of properties in this very highend category,” he warned.

“There are simply not that many available for sale or for rental – although we would hope that deve-lopments in the pipeline will keep these potential investors in mind.”

The sales and marketing manager of Pender Ville, Michael de Maria, corroborated Mr Casolani’s viewpoint.

Pendergardens has residents from over 20 different countries – more when you take into consideration those who are renting there.

“With the clever mix of apartments of different sizes, the second- to-none location, the attractive piazza and the competitive prices, we have managed to attract purchasers who reside here permanently, holiday home owners and those who bought as a rental investment,” he said.

“The ‘old’ Permanent Residence Scheme was popular with purchasers at Pendergardens, but after its suspension, the replacement High Net Worth Individual Scheme and the Global Residence Programme never quite took off. We still have to see the effect of the IIP, but I think the majority in the programme are opting to rent rather than buy,” he added.

Demand may actually be easier to forecast than actual supply is to calculate – something the federation is keenly aware of.

“We are working on compiling data but it is very difficult and will take time. We are talking to some big audit firms on a model to take this forward which would be transparent and confidential enough for the operators to accept. We have spoken to government about funding as it would cost a lot of money to do well – beyond anything the operators could fund.”

The biggest problem is estimating the size of the undeclared rental market – which the federation hopes will decline with time once the 15 per cent flat tax and the scheme being planned by the government (see above) are introduced.

One of the main concerns is whether high demand is starting to have an impact on prices.

“Yes, prices are going up, especially in Sliema and St Julian’s – but only nominally so far. On the whole, what we are seeing is that whereas a few years ago landlords might have been willing to negotiate a lower price in order to get a tenant, now they tend to hold out until they get what they are asking.

“At the end of the day, let the market forces of supply and demand work.”