What Landlords Should Keep In mind When Renting Out Commercial Property In Malta

Do you own a commercial property that's been sitting on the market for months? Just bought a commercial property and want to rent it out but don’t know where to start? What are a landlord’s responsibilities when renting commercial property in Malta? These are just some of the many questions that commercial property owners ask us for regularly. So we decided to put the most important suggestions in a quick and easy to read blog post to help out our esteemed clients.

• Rent Law for commercial property
• Landlords’ responsibilities when renting out commercial property in Malta
• Get to know your prospective tenant
• Think long term
• To what state should a property be finished to rent it
• Finding a trustworthy agent
• Price your property correctly

Rent Law for Commercial Property

We are often asked about the laws that apply when renting out commercial property in Malta. Although the Private Rent Law was introduced in 2020, Commercial Properties do not fall under this law. This is because, under Maltese Law, Commercial properties are properties that are not used for residential purposes but rather, made use of to generate a profit from the internal operations. In order for a commercial lease agreement to be considered valid and binding, a written agreement must be signed by both the lessor and lessee and only the terms stated in said agreement will apply to the lease. As a minimum the lease agreement must include the following details:

• Details of the property to be leased (address, identification of area etc.);
• Details on how the property being let will be used;
• The total duration of the lease agreement;
• Specify whether the lease may be extended and detail how the parties should be notified;
• The total amount of rent;
• What the acceptable means of payment for the rent are.

Landlords’ Responsibilities when renting out commercial property in Malta

When it comes to commercial properties, landlords of commercial properties have more responsibilities than owners of residential properties. Commercial lease agreements generally span over a few years so this means that it is recommended that a good relationship between Lessor and Lessee in order for both parties to succeed in the long run. Landlords’ must have a property insurance policy in place. This means that the insurance policy covering the exterior and structure of the property must be covered by the landlord in case anything had to happen to the property.

It is also very important that landlords keep up to date with payments for permits, any licences and utilities should they prefer to remain responsible for the fees. Any downtime for work might mean thousands of Euro worth of loss of business for Lessees and this is a situation that, unfortunately, is not unheard of here in Malta.

Other than these, responsibilities of any landlord depend on the agreement between the parties themselves so it is important to make sure you are clear on the clauses written in the contract prior to signing.

To what state should your property be finished to rent it

Although there is no general rule, we strongly suggest keeping your options as open as possible. Every perspective tenant will want to put their own mark on the property they are renting out, so finishing your property to a certain standard might work against you because the tenants might ask you to reverse certain changes you would have done, resulting in wasted funds from the side of the landlord. Have your property in a finished state of a decent standard but also be willing to take on some finishes yourself or give the tenant ample amount of time as a grace period to finish off the property. This leaves you casting out the largest net in order to attract as many perspective tenants as possible by not restricting your property.

Get to know your tenant

It can’t be stressed enough just how important it is to get to know your tenant before you agree to go into a lease agreement that can span years. Too often do problems arise after the lease has been signed and it is too late to get out of it without agreeing on a settlement for damages or even ending up in court. Get to know your perspective tenant and their business beforehand so that you don’t have any surprises later on. It is always recommended that Landlords do their own due diligence on clients before signing any lease agreement.

Think Long Term

In our ever-changing economic landscape in Malta, it's becoming increasingly important to take care of your tenants. The increase in construction has sharply increased the supply of commercial properties in Malta available on the market. This coupled with the decrease in demand due to various factors such as Covid-19, has shifted the market to more of a renters market. perspective tenants currently do have many options available to them on the market so it is a better strategy to get a tenant in and secure them for a long time rather than focusing on bringing in as much money as you can as quickly as possible. Unless your property is truly one of a kind, business won’t hesitate to up and leave a property if another, more feasible property comes available to them and will result in them making more money down the line. Remember these are business decisions that tenants are taking so landlords should think of them the same way. A little bit more of a discount in the first year might give clients more money to invest in your property and therefor leaving them more committed and in turn they will be less likely to leave for a cheaper option.

We have been seeing many good properties over the last two years come on the market because owners refuse to budge on their terms and some of these properties are still vacant after more than a year. Having your property vacant for a couple of months can mean thousands of Euro lost in rental income this is why we can’t stress enough that if you have a good tenant or a good trustworthy perspective tenant, how important it is to look after them.

Finding a trustworthy agent who can actually help you

There are many advantages to engaging an agent to help you lease out your commercial property in Malta. An experienced agent with good knowledge of the Maltese Commercial Real Estate market can help in many ways. They help qualify perspective tenants, saving you the hassle of having to do this dozens of times for different tenants. They can help with viewings so that you don’t have to. At QLC our agents are highly trained negotiators, this will end up saving you time dealing with clients and even sometimes lawyers and they will ensure that your property is priced correctly so that it can be rented out in the quickest amount of time at the best possible price, thereby giving you the best possible return on your investment. Once you have a good agent you can trust to help you with leasing your Commercial Property in Malta, trust what they tell you. Collectively at QLC, our agents make hundreds of phone calls on the behalf of both clients and owners everyday so we are very familiar with what is going on in the Commercial Real Estate Market and with the Business world in general here on our Island. We are here to help you to get the deal signed and send both lessor and lessee home happy.

Price your property correctly

Following the previous point, with the help of your trusted agent, price your property correctly so that it can be rented out in the shortest amount of time possible at the best possible price. Too often do we find properties that are overpriced and they sit empty on the market for months. A property is less likely to rent out, the longer it sits empty on the market as it will start to look like there is a problem with the property. Unfortunately Malta doesn’t work with a specific metric for valuation of commercial properties, so this means that the market will dictate the price through trial and error. Put your property on the market at a price, see the response you get from clients, reduce the price should you not receive any viewings and repeat as much as necessary.

Hopefully, you find this post informative and helpful. Should you wish to ask for some more advice, please don’t hesitate to contact Michael on +356 7937 1629 or via email on [email protected] or through our Facebook page.