One in every five dwellings in Malta and more than one in every three in Gozo are empty all year round. This is the picture of a Maltese housing market where empty homes have shot up by a staggering 17,403 since 1995, while in the past seven years MEPA has issued permits for 47,821 new dwellings.
Malta is officially a small island whose construction madness is set against a backdrop of vacant properties, far larger than most other EU states except Portugal and Greece. Even with a landmass almost eight times as large as Malta’s and 100,000 more residents, Luxembourg has only 4,000 empty dwellings and 20,000 fewer properties. Ireland’s total stock of 1.4 million dwellings only has around 7,000 vacant properties. Malta’s oversupply of property has surpassed local demand – and only last week, veteran estate agent Frank Salt openly called on the Prime Minister to introduce incentives to encourage foreign buyers.
The latest property census has revealed that 22.4% of all properties in Malta are vacant all year round while another 5.2% consist in holiday homes which are vacant for most of the year. Over the past decade, empty properties have increased from 35,723 to 53,126 over the past decade. Excluding the 10,028 holiday homes which are occupied for some time of the year, 43,108 properties are completely vacant all year round.
Ironically most of this potential housing stock can be utilised without any major restoration cost. 23,076 or 43% of vacant properties are in a good state and a further 11,343 or 21% of the vacant property stock only need minor repairs.
With 36% of dwellings vacant all year round, St Julian’s emerges as the locality with the greatest amount of vacant properties, but still MEPA issued 1,870 new permits since 2000 – 1,002 of which were issued just in since 2004.
More than 35% of Gozitan dwellings are also vacant all year round. Another 12% are holiday homes, empty for most of the year. Despite the very high vacancy rate, in the past seven years MEPA issued 6,035 new permits in Gozo.
And in Malta it is not just old localities like Valletta, Sliema, and Floriana which have a high rate of empty dwellings. 61% of St Paul’s Bay is vacant for most of the year.
Even when excluding the 4,467 holiday homes in the locality, one is still left with 4,295 properties vacant all year round. It is also the locality which saw most planning permits for new dwellings in the past seven years – 4,249.
And Marsaskala, demographically one of Malta’s youngest towns, still has 26% of its dwellings vacant all year round. And still, MEPA issued 2,251 new permits between 2000 and 2006.
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Rental reform
The census may have vindicated Alternattiva Demokratika’s constant tub-thumping on the vacant property issue, but it also shows that liberalisation of the rent market does not automatically result in more properties in the market.
In fact it shows that partial liberalisation of the rent market in 1995 failed to revive the rent market – the number of rented properties has actually declined in the past decade from 28% in 1995 to just 21% in 2005. This could be a reflection of a preference for home ownership among the Maltese population who regard property as an investment for their family.
And in the absence of a tax on vacant properties, property speculators can also afford to hoard property until they find the right price in the property market. AD was the only party to suggest a very mild registration tax on vacant properties but the measure is opposed by all the other parties.
Landlords could still be wary of renting property due to a lack of trust in the state’s ability to protect their property rights. Memories of the state requisitioning private properties in the 1970s and 1980s and fears that a future government could tamper with the 1995 regulations dampen their confidence in the rent market.
But ultimately the general reluctance to rent property also boils down to the lack of any monetary advantage for the consumer. Paying a rent instead of a bank mortgage instalment does not pay especially when one considers that renting post-1995 properties gives very little security to the tenant. Surely the census shows that 76% of properties put on the rent market are rented out very cheaply for less than Lm17 a month.
But this could only be an indication that most of the rented properties in Malta still fall under the rent-controlled regime. On the other hand 13.9% of properties are rented at more than Lm58 a month. This is an indication of a market polarised between very cheap rent-controlled properties and relatively high rents. In fact only 10% of dwellings are rented at between Lm17-Lm58 a month.
Another indication that most rented properties are rent-controlled is that 53% of rented properties were built before 1956 and only 9% were constructed after 1990. Elderly people also make up for most of the tenants living in rented properties. In fact 69% of those living in these properties are over 50 years old. While only 15% of married couples live in a rented property, nearly 40% of separated and annulled persons rent their homes.