Five steps to becoming a good landlord
Maltese have always been inventive in finding ways to expend their assets and property has always been the cornerstone of sound investment.
This philosophy has never been truer than today when renting - previously anathema to the Maltese who are normally determined to own their property - has picked up as thousands of foreigners, with jobs in the financial or iGaming sectors, choose Malta as their temporary home.
Consequently, prices have shot up, especially in the more popular localities such as Sliema, St Julian’s and now Gzira, creating a dearth of properties for rent, especially after the introduction of the Individual Investor Programme.
So much so, that just two years ago, the Federation of Real Estate Agents had warned that there were simply not enough properties available for rent to meet the current demand, and called for changes to encourage more landlords to come forward.
Unfortunately, some enter the business driven solely by the euro signs flashing in their eyes. These unscrupulous characters perpetuate the wrong perception among bona fide tenants seeking to find a new home without the additional hassle of having to guard themselves against rip-offs.
So if you’ve heeded the call and are about to embark on becoming a new landlord, there are some important points to keep in mind, especially since there is, to date, very little regulation in the rental property market.
Finding the right rental property
If you’re looking to have your property rented all year round, then location is an important element. The most sought after areas are those with a high concentration of offices, shops, proximity to transport links, hotels, bars and beaches - think Sliema, St Julian’s, Gzira, Msida and the surrounding areas. The advantage of buying in these areas also means you can command a higher rent because of the demand. If your budget permits, try to find a place with ample light and space. Ensure the place is modernly furnished and well equipped with good appliances. Cracked tiles, clutter and a living room that looks like a furniture graveyard will only serve to scare off prospective tenants.
Finding a good tenant
This trumps everything… possibly even location. Some people try to rent without using a letting agent and while you may ride on beginner’s luck, the best option is to secure a letting specialist. Apart from giving you a sound market assessment of what you can expect to fetch - this normally comes for free without strings attached - they can also spare you the hassle of finding good tenants and help you secure the best return on your investment. Not using a letting specialist could see you either overpricing your property, which means it will remain empty for a month or more; or underpricing your property leading to a lower rental income for the entire period of that lease. Once a tenant decides to rent your place, the next step is drawing up a letting agreement detailing the conditions agreed upon, as well as the method of payment. A letting specialist - who can also provide the service of drawing up an inventory of all your belongings - will usually charge a half month’s rent plus VAT from the landlord and tenant.
Do a reference check
The last thing you want is to rent your property to a smooth-talking tenant only to later discover he’s also a slick criminal, or an immoral person who simply ups and leaves without paying the rent. The first step is to carry out a google search on every person to establish if they have been involved in any court cases. Ask for reference letters from their employer as well as a copy of their last three payslips to ensure they’re in a position to meet the monthly payments. And, if despite all the checks, there is something that still doesn’t feel right or you’re not convinced, move on to the next one. A bad tenant can sink your entire investment.
Connect with your tenant
It’s important to ensure you keep your tenant is happy… especially if you’ve landed somebody decent. Don’t try to haggle over utility bills - any person whether Maltese or foreign living in your rented accommodation is entitled to the residential tariff with full eco reductions applied. Also, make sure everything is properly maintained and if anything needs to be repaired get it fixed immediately. If you want to see if the property is being well kept you can arrange to you show up to personally collect the rent every month. However, keep in mind that it may be more convenient if this is paid through a standing order with the bank.
What to keep in mind
Ensure your property is properly insured.
Seek professional/legal advice and read the small print.
Allow for 10 per cent of the rent each year to replace worn-out fixtures, fittings and furnishings. Also, be prepared to redecorate and give the place a lick of paint every few years.
Don't assume the property will always be occupied so budget accordingly.
Ensure you comply with all the legal requirements expected from you as a landlord, especially for a VAT and tax perspective.