Lettings are the bread and butter for many people in Malta. After all who could say no to an asset that historically has either held its value if not appreciating over time, while simultaneously having the ability to provide a passive source of income?
The devil in the detail comes in the latter section of the preceding sentence. This is not to point out the arguable nature of what ‘passive’ income means; instead, I ask that attention be directed to the larger picture – the income at hand fluctuates throughout the year. In other words, there is seasonality in the Maltese residential rental market due to the high influx of tourists, especially in the summer. This leads many to look for short lets in the summer and longer lets in the winter.
So, when is it really the best time to rent your rental? Is there such a thing as a best time at all?
The first idea that comes to mind is holiday lettings. Holiday lettings are defined as short let contracts that clients who are visiting the island take for weeks or maximum a few months at a time (think timeshare investment, but one that is actually worth the effort and money).
These clients are here to enjoy what the Maltese islands offer best – a sunny paradise getaway surrounded by arguably the most beautiful sea in the world. Thus, often times, the property that they rent out reflect exactly what they are looking for.
To expand on this form of letting, one has to discuss the idea of short vs long lets. What is more profitable to an investor or property owner? One might immediately say that short lets are more profitable, and yes there are feasibility studies carried out such as that of the Central Bank of Malta in May 2019 that showed that the 3,856 registered AirBnB hosts in Malta could potentially make as much as €2,400 monthly on their short lets.
That being said, there are some key factors to the study that may be getting overlooked by readers. The study is a study of potential revenue, but this does necessarily mean increased profit. Short/seasonal lets also attract VAT, more days when the property is empty (invariably during the weekdays) and these types of lets mean more work for the Landlord keeping the property clean and all appliances in working order. In other words, there is more risk, but not necessarily increased rewards.
Even though these are educated predictions, they are predictions, nonetheless. This can be best illustrated in the final point of discussion – does the client matter more than the season or vice versa?
So what is the conclusion we are to reach here? When is the best time to rent your property – short v long lets?
COVID has proven that all strategies can be challenged. Many in Malta relied on the short-let market pre-May 2020, which was decimated by COVID. Now these Owners/Investors have dipped their toes in the long-let market and might be realising it is less work and less demanding on the overheads – cleaning, repairs – and dealing with complaints. Though this means sacrificing the chances of switching back to short lets for at least 6 months (the new rental laws have dictated this timeframe) or longer.
In the long-let market, Malta seems stable on when to let due to the constant turn around in staff. Our stats at Luxfair show no real bias to one time of the year compared to the other, however, they do show well priced, well positioned and modern properties let really well.
Maybe the question should be not when, but what type of property lets better than others?
Derrick has been involved in Real Estate for over 30 years. He specialises in Real Estate Franchising, having worked in the UK, Middle East and Malta, setting up the Franchise model from scratch each time.
DISCLAIMER: The content of this article does not necessarily reflect or represent the views and opinions of The Malta Chamber of Commerce, Enterprise and Industry.