Buying to let investments in Malta, written by Andrew Agius Muscat

  • 27.April 2010
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L_24001_31141_3In recent years reports and statistics have revealed a considerable increase in the number of people investing in rental properties and therefore becoming new landlords. Indeed, for some, buy to let Malta property has become an alternative to other forms of investment.

Unlike banks and investment instruments such as bonds, property gives a double return: income in the form of rent plus capital growth, and in some areas capital growth has been quite outstanding. The income (initial yield) should be enough to cover your mortgage payments, with a margin for safety built-in.  At first glance Malta property is a foolproof way to wealth and security: once the place is successfully let all the landlord has to do is sit back and watch the money roll in! Well, it’s not quite as easy as that, but a properly managed property investment can be a very good way of increasing your wealth. There are pit falls though and if the management side is neglected you could have real problems. 

Letting is a relatively complex area which requires a fair amount of knowledge. The best option would therefore be to use a real estate agent in Malta to do your lettings and thus minimise the risks related to market knowledge and maximum promotion.  For the tenant, renting has become a convenient alternative to buying and for some it has become the only option:

  • Job mobility, job insecurity and short-term work contracts mean that many are now wary about becoming locked-in to owning a property.
  • Co-habitation prior to marriage again means that couples are often reluctant to become looked-in to a property and a large mortgage, which may be difficult to unravel if there is a split.
  • Higher divorce rates and an ageing population, with people in general living longer, has increased demand for housing and particularly single person accommodation.
  • In some high-priced areas first time buyers in Malta have been priced-out and renting has become the only option. 

For the landlord, whether it’s a side-line to an existing day job or a full-time occupation, buying to let a Malta property has become an alternative to other forms of savings and investment:

  • Renting property in Malta has become more socially acceptable in Malta, though there is still a long way to go before we reach mainland European and US levels. 
  • We have entered a more sympathetic legal climate for the landlord.
  • Buy-to-Let mortgages have meant that property investment has become a real alternative to stocks & shares, with an added bit of satisfaction and excitement for those who take to it.
  • Low interest rates offered by banks encourage people with some capital to look for better returns: property is generally a solid form of investment and rarely can you lose all your money, as you can with stocks and shares.
  • The volatility of the stock markets have made some consider property and “landlording” as a safe alternative. 

Many start-out buying and letting as a side-line and end up owning a portfolio of properties large enough to support them financially – indeed there have probably been more millionaires created in Europe from property related businesses than almost any other occupation. Furthermore, there is an added incentive to enter this field as it is now being predicted that early retirement may not be an option for most people and that pensions may not provide all we desire in old age. 

Look out for the next article that will give you an insight on Residential and Commercial investments as well as the customers that rent them.

Written by:

Andrew Agius Muscat – Business Management Analyst

Mr. Agius Muscat is a Business Management Analyst who has extensive back ground in the business world.  He is presently the Chief Executive Offices at the Malta Institute of Management and has held several top management positions. He recently held the position of Group Strategist and Planner for Attard Bros Group, a real estate developement and construction company in Malta.