BUYING PROPERTY TO LET

Buying Property to Let in Malta


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Buying property to letAlthough 80% of Maltese are homeowners, that still leaves 20% of the population who need rental accommodation. Property has always been a good investment in a financial portfolio and the stability as well as the growth of the Maltese property market is very attractive.

Reasons to Buy Property to Let

Although the safest form of saving is in financial funds (savings, pensions etc), it is never going to make you rich. Property is a more solid investment than stocks and shares and it is unlikely that you will lose the whole value of your investment as might happen with stocks and shares.

With property to let, you get two bites of the cherry. You have the capital investment of the property itself (which should grow in time) and also the rental income you receive. The rental income should be sufficient to pay the mortgage and provide a profit.

Reasons to Buy Property to Let in Malta

Safe: The Maltese property market is very stable with prices increasing year on year. It is a trend that is likely to continue thanks to a fast-growing economy with factors such as a low-interest-rate environment, buoyant disposable income, and the rising number of foreign workers in the country.

Opportunity: As well as an increasing home rental market, there is a large tourist market to tap. More than 1 million people visit Malta and Gozo every year and it is highly probable that you can have tenants all year round on either short or long term lets. Rental yields in Malta are moderate at around 4.5% but are steady and stable.

Top Tips for Buying Property to Let

A mortgage is a big commitment- especially if you already have one for your own residence. It is absolutely vital that when you make the decision to buy property to let you go into it with your eyes wide open of all the benefits and the pitfalls. Property to let can be lucrative but it is dependant on making good decisions. You need to:

  • Understand the rental market in the area you want to buy the property.
  • Do the maths of the investment, on-going costs, and rental yield.
  • Shop around to get the best buy-to-let mortgage.
  • Haggle over price
  • Think about your target tenant.
  • Understand the potential pitfalls
  • Consider how hands-on a landlord you want to be.

Buying property to let requires more involvement than buying a home to live in because there is an on-going need with regard to managing the property in order to maintain your rental income.

Pitfalls of Buy to Let

It is always wise to know where an investment can go wrong. These are the key pitfalls:

  • Your risks are concentrated if you only have one property in your portfolio
  • Your money is tied up in bricks and mortar and not really a liquid asset
  • You have the on-going commitment of being a landlord with all the responsibilities
  • It is easy to overlook extra costs
  • The government may introduce tax changes that affect your income or the property market may slump/fail.

The more knowledge you have and the more research you do, the better the chance of your investment paying off.

FAQ

Maltese banks offer home loans for property to let on virtually the same basis as mortgages for prime residences. You will need to meet the criteria for a buy-to-let loan as with a mortgage.
Essentially, no. The best route is to engage with the right professionals at each stage to ensure you move through the process smoothly. This is especially necessary if you have never previously purchased property in Malta.
The opportunities for rental properties are all over the islands.  If you are buying with the intent that the property is a holiday let, you might consider different criteria than if your target tenants are Maltese couples or families. This will also impact the criteria for the type of property you choose to buy for example, a villa with a pool in a main resort compared to an apartment in central Valletta.


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