A favourite choice for investors has always been the owning of real estate as part of one’s investment portfolio, due to property’s regular capital appreciation. This applies both at home and abroad and even more so in Malta, where property has withstood many adversities over the last two decades – the global financial crisis in 2007-2009 and more recently the Covid-19 recession.
Traditionally Maltese properties were mainly rented to Expats but in recent years, particularly since the introduction of the changes to the old rent laws, renting to Maltese has also become the norm. This makes buying real estate as a rental investment in Malta popular in addition being a wise investment.
Having regard to property ownership as being a medium to long-term investment, there is a very good chance of you making a handsome profit, whether the property is you primary residence or a buy-to-let property.Historically, Malta’s housing market has constantly delivered good capital growth.
The years of 2019 and 2020 saw an inflation-adjusted rise in house prices of 1.23% and 4.82% respectively, according to the Central Bank of Malta. Considering 2020 was the year we were hit by Covid, that is pretty impressive. If we had to look at the first quarter of 2022, according to the House Price Index, prices rose even further by a very healthy 6.7%!As an owner of a rental property always treat it as a business. Malta’s returns on long term rentals range between 3% to 5% again reinforcing  that the residential rentals market has above average returns and growth potential. This excellent return must be kept in mind when it comes to furnishing the property – without going out of pocket, good furnishings go a long way to getting a higher rental

Being a landlord

Buying real estate can be lucrative but, just like any investment, comes with benefits and challenges. Costly mistakes can be made if you do not have the inside knowledge of where to buy your rental property, knowledge on leasing, how to go about financing it, tenant and landlord relationships, and property management. One word of advice here: seek the services of a reputable estate agent when buying property as a rental investment.

Once you get your buy-to-let property, for your investment to grow, it needs looking after. Important areas to consider are the common parts of the building when talking about apartments. The regular maintenance of the common parts will definitely ensure a better future resale of your property.

You might decide to manage the property yourself, but you should also consider getting a property management company to do this for you. It is true that it is an additional cost, but the service the company offers makes up for this through a wide range of services including coordinating of maintenance repairs, vetting new tenants, handling of punctual rent payments and liaising with tenants for on-going maintenance. Contact me if you are looking for a company who manages a huge portfolio of property’s for the most competitive fees charged on the island

You will also need to familiarise yourself with tax laws and landlord/tenant regulations.

Both tenants and landlords have rights and obligations regarding security deposits, minimum lease period requirements, eviction rules, and so on. Your agent will be able to explain these to you.

Reassuringly, in recent years, Malta’s rentals market has seen some very positive moves and the new rent laws regulate the market well and safeguard the rights and interests of both landlords and tenants alike.

Financing your investment

Money in the bank in Malta or for that matter in the EU, offers very low yields…… if anything at all! Therefore using your savings to put down a deposit or to finance your rental investment property makes a lot of sense.

Maltese banks have a number of loan packages for investors buying rental properties. Many of the banks offer diverse payment terms, so it would be a good idea to shop around. If you plan to only put down a deposit on the property, keep in mind that you will still need to pay your loan when the property is vacant.

Using the bank’s funds this way helps your money go that much further. An experienced agent can help guide you as to the ideal loan to equity ratio by making sure your expected rental income generates the returns you are hoping for.

It is also wise to protect your real estate investment by taking up a landlord insurance, which covers amongst other things for property damage and liability protection in case a tenant or a visitor suffers an injury as a result of property maintenance issues.

Location is key

When investing in a property with hopes of renting it out, location is key.

Think about potential selling points for your property, such as access to amenities, public transport, shopping centres, office regions and so on. Not only will this attract a greater pool of prospective tenants, but it will be an added asset should you decide to sell later.

It is always best to look at those areas that offer the highest rental return, highest capital growth as well as the best chance of renting out the property fast.

An experienced agent can guide you as to which developments are the most popular,  and any investment opportunities that might come up for sale in these developments. The agent might have access to a buy off-plan property, where you get in at the beginning and are able to take advantage of the investment growth of the property before it is completed. Smaller scale developments offer a more affordable price tag and if chosen correctly, allow for the same kinds of returns.

Location however is always key.

Owning real estate is a tried and trusted long-term investment option that can pay fantastic dividends. Get advice from an experienced estate agency, do your research.

Who will rent from you

Renters in Malta are drawn from youngsters leaving home, expats or foreign workers on short to long-term working contracts and even locals that are in between owning homes.

Malta has tens of thousands of expats in employment, many are contract workers looking for 1 to 2 year leases.  Their preference is to rather rent for the foreseeable future which is usually from 1-5 years. Many tenants,  if they are in Malta for an extended period, may opt to rent initially until they realise the potential of the real estate market and decide to buy a property.

If you are not going to be in Malta for a long time, renting a short term property makes more sense as it allows for greater flexibility. Rentals are popular because they are “easy-in” and short-term deals.

Malta’s rental market is extremely fast paced, even though there is a large selection of properties available to rent, don’t wait if you like a place, make a decision, as it won’t be on the market for long.


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