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Malta’s Leading Letting Agent Makes Case For Why Rent Situation Is Not As Bad As It’s Often Made Out To Be 

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The dramatic spike in Malta’s rent prices in recent years has raised fears of a completely out-of-control market, with consequences as severe as thousands of Maltese tenants getting kicked on the streets.

Yet Steve Mercieca, co-founder of Quicklets – Malta’s largest letting agency – does not pay heed to these warnings and indeed believes the rental market has already started plateauing.

“The average rent in central Milan is more than triple what it is in Malta and the rent in Dublin is also triple that of Malta, but the average wages in Milan and Dublin are only double, not triple, those of Malta,” he told Lovin Malta.

“The average rent in Malta is just under €947 a month and that’s mainly two and three bedrooms as the Planning Authority doesn’t allow blocks of one bedrooms easily. When compared with some of Europe’s biggest cities, Malta is the cheapest by far, except for Athens. Meanwhile, properties in Malta are huge in comparison – a 40-50 square metre apartment in London or Amsterdam costs more than a 100 square metre apartment in Malta.”

“However, in Malta, we have a tendency of not liking to spend too much on accommodation because our culture is one where we invest in our lifestyle more than in our property.”

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How rent in Malta compares with major European cities

While this may just be a standstill image of the situation, Mercieca has reason to believe rent prices will no longer increase as they did in recent years. Indeed, he suggests apartments used to be sorely undervalued and have now caught up to their true value.

“When we started out in 2013, there were properties right in the middle of the city centre going for under €500 a month,” he said. “I remember there was a one-bedroom apartment near the Hilton, owned by a streetwise contractor no less, that was on the market for €466. That is exactly equivalent to LM200, which means the price didn’t go up at all in the five years since Malta changed currencies in 2007.”

Between 2013 and 2016, foreign interest in Malta grew significantly, causing a spike in demand and, consequently, a rent rise of around 93%. After years of stagnation, that apartment near the Hilton is now worth between €900 and €1000. A breath of fresh air for landlords, to be sure, but also a pain for thousands of ordinary residents – most foreign but also Maltese – who had no other option but to get used to lower standards of living while hoping their rent wouldn’t be increased too much at the end of their contracts.

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Apartments bang in the centre of St Julian’s were going for as cheap as €466 five years ago

There are many theories as to why demand peaked so dramatically within those few years, with a popular target of blame being the Individual Investor Programs, which requires people who purchase Maltese citizenship to rent property for at least €1,333 a month.

However, Mercieca argues that the number of IIP citizens is a very minimal proportion of the total number of tenants and instead attributes the spike in rent demand to a rise in international interest in Malta, fuelled online marketing of the island through Facebook, Instagram and Snapchat along with all the users pages, followers and groups.

“Malta is no longer the hidden gem of the Mediterranean,” he says. “Besides all the social media, Malta’s popularity grew with cheap flights on Ryanair and cheap accommodation on Airbnb and booking.com.”

Whatever the case, rent prices now seem to be showing early signs of stability, with prices only increasing by around 5% in the past 12 months as more apartments are being released onto the market. And Mercieca believes they cannot rise much higher unless wages increase, simply because they will no longer be affordable.

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A photo of the Blue Lagoon in 2012 (Photo by Simone Olivero)

“No matter how many more companies come to Malta and no matter how many people they employ, the property market will not go up unless the employers increase their staff’s wages,” he said.

Where Mercieca does see room for further growth in the near future is at the higher end of the property market, but only if the quality of these apartments takes the next leap forwards.

“I don’t believe the maximum rent will increase further unless the added value of the apartment goes up and the level of finishing increases,” he said.

Meanwhile, the QuickLets co-owner also has a couple of ideas to make life easier for tenants on average incomes:

Property

• The rent threshold for IIP citizens must increase significantly, so as to ensure these new wealthy Maltese citizens are competing at the high end of the market and not with people seeking a more affordable place to rent.

• Landlords should be incentivised to rent out affordable properties by slashing their rent tax from 15% to 5% of their income. Hence bringing more availability under 800 Euro per month.

• Designated areas should be found for both the offices and employee residences of new industries, such as the several blockchain companies that have declared interest to relocate to Malta. This way, the employees will not have to commute to work and the rental market will not be impacted for everyone else.

• Planning policies should be less restrictive and allow developers to build blocks of one-bedroom apartments in certain areas. As it stands, blocks of flats can only contain one-bedroom apartments if they also contain larger apartments with more bedrooms.

• The notorious traffic and transportation problem should be tackled head-on, so as to make it less of a headache for people to live on the outskirts and commute to city centres for work.

Mercieca’s plans come as the government gets ready to publish a White Paper on housing. Prime Minister Joseph Muscat said the plan will be unveiled imminently and that his intention is to stabilise the rental market and clamp down on rent abuse but without state intervention in the market.

What do you make of this assessment of the rental property market?

READ NEXT: Struggling Families Relying On Valletta Foodbank Following Rising Rent Prices

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Tim is interested in the rapid evolution of human society and is passionate about justice, human rights and cutting-edge political debates. You can follow him on Instagram or Twitter/X at @timdiacono or reach out to him at [email protected]

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