COVID came at a time when the rent registration law was also implemented, said Edward Agius, the CEO of RE/MAX Lettings Malta, while taking part in this afternoon’s episode of The Boardroom.
With presenter and business writer Jo Caruana, Mr Agius, together with other guests on the panel, discussed the state of Malta’s rental market currently, how we got here and where they expect it to go.
The rent registration law came into effect this January, which obligated landlords to register rental contracts with the relevant authority, minimum and maximum rental periods, and a raft of other measures aimed at stabilising the market. Just three months after the law was implemented, COVID struck.
“We tried to educate owners on how they have to register their rental contracts, what clauses to include, and how the new system will work, and then COVID hit. People then started asking their landlords for discounts – which in many cases such requests were for a price that reflects reality. It was definitely a challenging six months.”
Previous years’ growth within the rental market came in line with growth within the Maltese economy, explained Mr Agius.
“Over the last few years, the rental market has boomed. Our economy had increased, on a yearly basis, within the gaming, financial services, pharmaceutical companies and other markets. So, for the last few years, the rental market has been going up.”
Taking a positive tone, Mr Agius said that while growth projections for 2020 were not reached, it is important to see both sides of the coin.
“Definitely, we experienced a correction of the market, which was well needed,” he said.
Mr Agius remarked that in previous years, rental prices continued to increase due to demand by far outstripping supply for multiple reasons. In the current scenario, with people leaving the island, job losses, some offices asking workers to return to countries where those companies are based, this has seen an increase in availability of apartments.
He did not want to say that prices have gone down, but rather that a correction of prices has taken place which is a better reflection of reality.
“As regards figures, it was still a good year. It is not the increase we expected like we experienced in recent years, but it was still a good year. We saw opportunities where people were sharing apartments, and, now, they can afford to rent their own apartment.
“Let’s see the positive side of this pandemic, it wasn’t just masks, sanitisers and all that. There was a positive side to the industry. Obviously, we had our challenges through limitations in the way we could work, but for a lot of people property became affordable again,” he remarked.
Is it still viable to buy to let?
When asked, Mr Agius gave an unequivocal “yes”. He commented that surely there would be some good opportunities on the market by those owners who are more cash strapped and have no choice but to sell, but generally speaking, Mr Agius wholeheartedly believes that it remains one of the best investments on the island, and that it “will always remain our [Malta’s] forte”.
Apartments vs Beautification
Asked about whether it is time to put the breaks on the construction of more apartments, and instead focus on the beautification of existing buildings, Mr Agius conceded that there will always be demand for blocks and other buildings.
He would not say that it is time to put a stop to development, and reminded the audience that it is not just the buy-to-let market driving growth, but also first and second-time buyers, people buying holiday homes and summer residences.
As Mr Agius concluded, he advised both landlords and tenants to be reasonable in the current market conditions.
“When concluding a contract, it has to be a win/win situation. Let us not take advantage of the situation. We will get through this.”