Renting out property in Malta can be a profitable investment, but it also comes with a set of legal and financial responsibilities that landlords must carefully navigate. Whether you’re renting out your first property or managing a larger portfolio, understanding the legalities and financial obligations of property rental is crucial to ensuring a smooth and successful experience.

At BENESTATES, we provide expert guidance to help landlords. Here’s a comprehensive overview of the key legal and financial aspects that every landlord in Malta should be aware of.

1. Understanding Rental Contracts and Lease Agreements

In Malta, the relationship between landlords and tenants is governed by lease agreements. These contracts must be carefully crafted to protect both parties and ensure the rental process runs smoothly.

• Type of Lease: Landlords must decide whether to offer a fixed-term lease or a periodic lease. Fixed-term leases are common and provide security to both parties, while periodic leases offer more flexibility.
• Legal Requirements: According to Maltese law, lease agreements must be written, and the terms must be clearly outlined to avoid disputes. Essential details include the rent amount, payment schedule, responsibilities for property maintenance, and the length of the tenancy.
• Registry of Lease Contracts: Since 2020, it’s mandatory for all lease agreements to be registered with the Malta Housing Authority (MHA). Failure to do so can result in penalties.

2. Property Taxes and Financial Obligations

As a landlord, understanding the financial implications of renting out property is crucial for maintaining profitability and complying with Maltese tax laws.

• Income Tax: Rental income is subject to taxation. In Malta, rental income is taxed at a flat rate of 15%, which applies to both local and foreign landlords.
• Stamp Duty & Capital Gains Tax: If a landlord sells a property, the seller must pay capital transfer taxes on the transfer of any property located in Malta, whilst stamp duty is paid by the buyer.
• VAT Considerations: While residential rental properties are generally exempt from VAT, certain commercial properties may require VAT registration.

Check out this Commissioner of Revenue page source for further guidance.

It’s vital for landlords to consult with a professional to ensure compliance with VAT regulations if they’re renting out commercial spaces.

3. Tenant Screening and Legal Compliance

Landlords are responsible for ensuring that they rent to tenants who meet legal criteria. In Malta, certain tenant protection laws are in place, and landlords need to ensure their rental practices adhere to these regulations.

• Tenant Rights: Tenants in Malta have rights to fair treatment, including protection from eviction without just cause. Landlords must adhere to the terms of the lease agreement and cannot evict tenants arbitrarily.
• Deposits and Rent Arrears: Landlords should request a deposit to cover potential damages. Additionally, landlords must know the proper procedures for handling rent arrears and initiating legal actions if necessary.

4. Lease Agreement Attestation

When leesing your property to a non-Maltese applicant who is applying for a Residence Document it is important to note that they must submit a Lease Agreement Attestation Form together with other supporting documents. This form must be completed and signed by the landlord/lessor and attested by either a Lawyer, Notary or Legal Procurator.

Not every applicant is required to submit a Lease Agreement Attestation Form. It specifically applies to new or still abroad applicants, i.e.: Those submitting applications after September 23, 2024.

5. Ongoing Property Management and Maintenance

Managing a rental property requires constant attention to upkeep and maintenance. As a landlord, you have a duty of care to ensure the property is safe and in good condition for tenants.

• Health and Safety Standards: Landlords must ensure that their properties meet minimum health and safety standards, including fire safety regulations, electrical inspections, and plumbing. If a tenant feels unsafe, they may have the right to seek legal action.
• Regular Maintenance: Regular property inspections are a good practice to identify issues before they become major problems. Benestates offers property management services, including maintenance coordination, to ensure that your property remains in top condition.

6. How BENESTATES Helps Landlords Navigate Legal and Financial Matters

At BENESTATES, we offer comprehensive support to landlords, ensuring they’re always on the right side of the law while maximising their rental income.

• Legal and Tax Advice: Our team can guide you to find the right professionals, helping you avoid pitfalls and ensure compliance.
• Lease Agreement Assistance: We can help you find the right professionals to draft legally sound lease agreements that protect both you and your tenants while adhering to all regulatory requirements.
• Property Management: For landlords who prefer a more hands-off approach, our property management services ensure your property is well-maintained and your tenants are satisfied.
• Market Expertise: We help landlords set competitive rental prices based on market conditions and guide them on strategies to attract high-quality tenants.

Navigating the legal and financial landscape of property rental in Malta can be complex, but with the right support, it’s entirely manageable. At BENESTATES, we pride ourselves on offering expert guidance and comprehensive services to landlords, ensuring that your property investment is well-managed.

Ready to rent your property with confidence? Contact BENESTATES today to get started!