The Maltese rental property reform due to come into force on 1 January 2020 if the parliament votes in favour is seen to regulate and support the growth of the market, according to a recent blog post by CSB Group.
“While Malta continues to be a nation of homeowners, these regulations are expected to regulate and consequently support the growth of the rental property market as an alternative to homeownership, by curtailing abuse and tax evasion,” according to CSB Group.
Recognising the market as loosely regulated when compared to other markets in Malta, the Maltese government has voiced intentions to solidify a framework for the vertical, hence tabled proposals for the consideration of the parliament.
The proposals include several points that are aiming to make the market more transparent, and players more accountable. For example, all rental agreements concluded after 1 January 2020 and the ones already ended and expiring in 2021 or later need to be registered with the Housing Authority. Non-compliance will lead to fines.
Long-term rental agreements will receive support through fiscal incentives. Short-let contracts will need to be of six-month maximum duration and this will affect non-resident workers, non-resident students and those non-residents who plan a long stay in Malta. The new regulations will also leave tourism rentals unaffected.
Although the proposed regulations do not intend to touch upon prices of rental properties to let the market freely fluctuate, annual rental increases will come under scrutiny.
Both the lessor who wants to evict a tenant and the tenant wishing to terminate the lease agreement will have to give notice in accordance with the periods which will be prescribed in the regulations.
In addition, should a disagreement be taken to the court, lessors can evict a tenant at the first hearing, doing away with the long delays usually associated with court proceedings.
CSB Group believes that the proposed regulations are part of the government’s general vision for the property market.
These regulations include the government’s last budget proposal to introduce the introduction of the concept of Real Estate Investment Trusts (REITs) into Maltese law. REITs invest in real estate from which income is generated, and can be expected to grow within an economy such as Malta’s, according to CSB Group.