Current rent prices are unsustainable, Chamber of Commerce warns

The current situation in the private rental sector is not sustainable, the Malta Chamber of Commerce has warned, as it lamented that the government’s White Paper on rent had failed to provide long-term solutions for the issue.

In a report analysing the present situations which it presented to the government, the Chamber said that, in recent years, the country has enjoyed a cycle of notable year-on-year economic growth, which has led to an excess of demand for labour that can’t be satisfied with Maltese workers.

The labour market has now become reliant on the consistent attraction of additional foreign workers, it said, and this is in turn causing stress on the housing market.

The Chamber cautioned against responding to this through excessive construction of new property, as this might remain vacant if Malta’s positive economic situation changes.

“This cycle has benefitted the country significantly from an output perspective, but it is also cause for substantial stress on the country’s infrastructure and most notably, on the housing market. The current situation is characterised mainly by the fact that the shortage of workers is being matched by a shortage of affordable accommodation,” the Chamber said.

“However, the Chamber firmly believes that due to the irreversible nature of construction, it would be detrimental to the country to flood the market with new residential property that may remain vacant when the economic cycle eventually turns."

In light of the status quo, the Chamber put forward a number of recommendations aimed at safeguarding the country’s long-term sustainability and competitiveness in the global market :

• A re-assessment of the IIP programme’s property investment eligibility criteria
• A thorough audit of all private and public vacant property followed by efforts and incentives to place said resources to good use and form part of the rental property market
• A clear and directional role for the Planning Authority in ensuring supply of affordable permanent housing that addresses the needs of today and those planned for the future through policies and initiatives that promote the satisfaction of urgent market priorities while guiding/advising the market on any risk of specific potential unfeasible land uses
• The implementation of the reforms proposed by the Malta Chamber and other bodies in 2018 related to Pre-June 1995 leased residential properties
• Feasible, effective and reversible housing solutions that create immediate supply of affordable, comfortable yet reversible accommodation

“The country, its society and economy cannot afford the current rate of increase in accommodation costs to persist. Therefore, strong and timely action is required to tackle the different factors that are contributing to the situation in order to safeguard the quality of life and sustainable growth in Malta” the Chamber added.