Throughout the recent years, the Malta real estate market has remained considerably stable despite the 2008 global recession – which had a large and negative impact on several other European countries. During this time, the rental market in Malta remained especially strong, with several foreigners visiting Malta for business opportunities opting to rent real estate in Malta rather than splash out on hotels.
In the meantime, the Maltese government launched the latest Global Residence Scheme which is extremely favourable for those looking to reside in Europe, where applicants would have a minimum rental of €800 per month for property rented in Malta, or €730 per month for property rented in Gozo or the south of Malta.
Adding to this, there is always a local demand in Malta for properties that are available for rent – ranging from young adults seeking their own residence, home owners refurbishing their current home, single parents, short terms holidays, and of course there are the expatriates that come from the several industries that contribute to our buoyant rental market. These include iGaming, Finance, technology amongst other types of companies relocating or setting up shop in Malta..
Those who have invested in a buy-to-let property can enjoys a return on investment of between 3.5% and 7%, but this is dependent on several factors – the most contributing of which is the location. Properties purchased in high demand areas, such as Sliema, St Julian’s, Swieqi, Msida etc, are safe bets and allow the landlord to receive a higher market value every month. This is also true for SDAs (Special Designated Areas). However, tenants also consider the finishing and furnishing of the property to be important, and will be willing to pay more for high end amenities or super finishes.
Aside from the above advantages, there are several more reasons why buying to-let property has become so popular. At the moment, the Malta real estate market is enjoying a buyers’ market – which means that there are greater opportunities to purchase property. At the same time, the local banks are currently offering very competitive interest rates when taking a home loan. If you do your calculations well, your rental income may exceed the monthly repayment. Even if you choose to eventually sell the property, you are still likely to turn a profit as the current real estate market shows that the prices of property will continue to rise – thus allowing you to sell your property for more than you initially paid.
One of the most recent advantages created by the Government in order to regularise the rental market is the fact that landlords are given the option to have their gross rental income taxed at 15%. This was announced by the Hon. Dr. Edward Scicluna during his budget speech delivered to Parliament on the 4th November 2013. However, in a bid to curb tax evasion, any undeclared rental income will be taxed at 35%, plus penalties and fines.
Any property investor who owns a handful of buy-to-let properties may also avail himself of a property management company. This company will handle the daily transactions from A to Z, including collection of rent, handling of maintenance, commissioning of cleaners and several other tasks that may be burdensome to a busy landlord.
If you’re looking to buy a property as a rental investment, always seek the advice of a professional Malta real estate agent, ranging from guidance through the buying process, offering valuable input on the best locations, suggesting banks with favourable interest rates, calculating what residual income you can expect from your investment, and recommend a reputable property management company.