Let Out Your Property
The letting market
Over the past decade, the rental market has boomed with demand exceeding supply all over the island. Both northern and southern areas of the island have experienced an influx of foreigners. This drives further demand for properties to rent in popular locations.
Traditionally, the Maltese have always preferred to own their property. The same situation continues today with 80% home ownership rates. While this remains the case, the popularity of letting in the Maltese islands has grown. Demand stems from foreigners moving to Malta for work, while requiring mobility in their living arrangement. Maltese people are also becoming interested in renting, whether for independence or to live with their partners on a trial basis before committing to marriage.
Dhalia letting specialists match the most suitable properties to a tenant’s requirements. This ensures that we continue to deliver a service to landlords and tenants that is unparalleled in Malta.
We advise on the most appropriate rental rates based on our exceptional knowledge of the market environment. Most properties would include furniture, fittings and appliances. Water, electricity and TV are not included in the rental rate if it is a long term let i.e. five months and over. These expenses are borne by the lessee on a consumption basis.
Landlords do not incur expenses in relation to their property, except the estate agent’s fee (usually half a month’s rent). It is accepted practice to lodge a sum equivalent to one month’s rent with the lessor as a deposit against breakages and outstanding bills. The deposit is refunded to the lessee upon the termination date of the lease, or offset against any pending bills or damages to the inventory as agreed between the parties.
Becoming a landlord
Malta property owners interested in letting out their property can contact us to set up an appointment to inspect the property. At the inspection, our letting consultant will take photos and other information about the property. Once this information is entered into our database, it is accessible to all our letting consultants to suggest to tenants. Serious potential tenants will view the property together with the letting consultant. Should they wish to secure the property, they will put down a deposit equal to a month’s rent and then sign a contract before moving in. Well-priced properties in high-demand areas tend to be let out fairly quickly, due to the fast-paced nature of the market at the moment.
An effective lease agreement
The lease agreement is usually drawn up by the letting agent and will contain the rights and obligations of the tenant and the landlord. This includes payment terms of rent, the utility bill arrangement, cleaning and maintenance duties, the rental period, the length of notice, and any rules for common areas. Utilities, television and internet bills are not usually included in the rent and must be paid by the tenant. Some landlords collect the fee and pass it on to suppliers on behalf of the tenant. Others prefer that the tenant settles such bills separately.
The lease agreement or contract is usually quite straightforward. Your letting consultant will act both as your agent and as a witness to the agreement.
The lessee will put down one month’s rent as a deposit, one month’s rent in advance, and half a month’s rent plus 18% VAT as the estate agency commission. The deposit is refundable on the last day of the contract after the property is inspected and found to be in the same condition, except for fair wear and tear, as on the day you would have moved into the property. All utility bills must also be paid by the lessee to the last day; otherwise this amount will be deducted from the deposit.
Tax, VAT & EPC
Because rental income is taxed, landlords are obliged to fill in Form TA 24 and submit this together with their tax payment.
When renting out your property, an energy performance certificate is required by law to present to the tenant. This document informs the tenant about the energy performance of the rental unit. It also gives recommendations for cost-effective improvement in order to upgrade its current energy efficiency class. Certificates are prepared by a qualified assessor who is registered with the Building Regulation Office. The certificate is valid for 10 years, unless there are significant changes made to the building. The assessment will take into consideration the property’s construction, finishing material, the quality of insulation and double or triple glazing.
More information can be found here.
There is always the risk of something going wrong when letting out your property. Taking out landlord insurance can cover the loss of rent should your tenant default and leave the property, and also cover the legal costs of legally evicting a tenant. Usually, landlord insurance will cover the following:
- Fire and smoke damage
- Malicious damage
- Lightening and earthquake
- Flooding and storm damage
Other losses covered by some insurers but not all:
- Replacement of broken glass, mirrors and bathroom fixtures
- Leak tracing and access
- Locks and keys
Your lender may have specific rules about insurance requirements if your rental property has a mortgage applied. There are several different options when it comes to insurance, so take your time and find one which suits you.
Tips to MINIMIZE risk when renting out your property
Use a reputable letting agency to find your tenant. If possible, request a reference from their former landlord.
Keep photographs of the state of the property prior to the tenant/s moving in. Also keep a detailed inventory report of furniture, appliances and other items within the rental unit.
Make sure your tenant knows how to contact you in case of emergency.
Proper maintenance of your property is the cornerstone of sustaining the value of the property, and also keeping a good relationship with your tenants.
Should you need to evict tenants, do so by giving proper written notice and following the laws and regulations regarding eviction in order to avoid unnecessary fees.