‘Puzzled’ Housing Authority to tackle irregularities on registration of shared space contracts

The Housing Authority is considering changing the rules on shared space contracts to address existing restrictive conditions that may be leading to irregularities.

Two “irregularities” in the rental market were noted in the Private Rental Market in Malta study released last month by the authority.

The first was the noticeably low amount of registered shared space contracts within Malta’s rental market, while the second oddity was the unusually large percentage of long-term leases with monthly rents under €500.

This, the report said, has led to speculation that some landlords have tried registering shared spaces as long-term leases to get past the restrictive conditions tied to shared space contracts.

The rent distribution of long-term leases may be intentionally altered by these actions, giving the impression that rents are lower than they actually are.

Responding to MaltaToday’s questions, a spokesperson for the Housing Authority explained that currently, a contract for shared spaces has a fixed term of six months and cannot be extended. The extension of these contracts for shared spaces and the provision for renewal are two potential solutions that are currently being studied, the spokesperson said.

Specifying that the currently observed behaviour from landlords is “not abuse per se as long as the contracts are registered with the Housing Authority,” the spokesperson remarked that the current situation offers its own challenges.

In one such challenge, if a landlord signs a long-term residential lease with five tenants, one of which decides to vacate the property and is replaced by another tenant, as things stand, the landlord must cancel the previous lease agreement that listed the names of the five original tenants and replace it with a new one that includes the information about the new tenants. This is a bureaucratic burden in itself.

When asked if the suspiciously low number of shared spaces had ever been investigated by the authority, the spokesperson said “the authority does not intervene between the parties as long as the contract falls within the parameters of the law.”

Here it was highlighted that by the end of 2022, slightly less than 95% of active contracts were for long-term leases with only 5% classified as shared spaces. Meanwhile, the share of short-term leases stood below 0.5% of active contracts.

This low share of shared space contracts was described as “puzzling” by the authority in its analysis of the rental market. “This is puzzling given the anecdotal evidence of widespread co-sharing arrangements by foreign workers that rely on this sector for accommodation.”

Earlier in July, sister newspaper Illum reported that on social media one can easily find numerous beds and rooms for rent at around €150 to €400 per month, which provide a snapshot of the poor living conditions that some foreign workers are living in.

According to the investigation, some of the small rooms are shared by many people.

The vast majority of foreign employees in Malta earn less than €20,000 annually, according to information tabled in parliament in January of this year.

Statistics for 2021, show that out of the 37,688 foreign employees in Malta at the time, more than 21,000 were paid less than €15,000 annually.