Malta’s private rental market leaves most tenants financially overburdened

Malta’s private rental market has left most tenants financially strained, with the majority of households unable to afford their homes without exceeding recommended housing cost limits, a new report has revealed.

The study, conducted by Solidarjetà using Housing Authority data, analysed 38 household scenarios against median market rents to evaluate affordability across different income levels and family compositions.

“Malta’s renters are overburdened, even by the loosest definitions of affordability,” the report states. “It is only the exception, not the rule, that a tenant can afford the property they inhabit.”

The analysis follows the Housing Authority’s standard that housing costs should not exceed 25% of disposable income. Households were categorised into four groups: Affordable (less than 25%), Marginally Affordable (25-30%), Stressed (30-40%), and Overburdened (more than 40%).

The findings come as Malta’s housing market has experienced dramatic growth in recent years. Property prices rose by 59% since 2017, with Malta’s total housing value tripling to €88 billion in a decade, driven by land scarcity and speculation. Between 2023 and 2024 alone, housing prices increased by 5%.

The study shows that only three of 38 scenarios could cover median rental costs, and even then only with government subsidies. Rising rents have outpaced wage growth and cost-of-living adjustments, leaving households across income brackets struggling to secure affordable accommodation.

The report’s locality-level data shows just how severe the situation is. Single individuals on a minimum wage cannot afford a one-bedroom apartment in any of the 20 localities assessed. Meanwhile, even a single person earning €35,000 annually is “overburdened” in every locality for one-, two-, and three-bedroom apartments.

Typically, households earning €35,000 or €40,000 gross annually cannot afford median rent in most areas. A single individual earning €35,000 would be unable to afford median rent for a one-, two-, or three-bedroom apartment in any location.

The research also reveals a significant problem with the Housing Benefit Scheme (HBS). Strict eligibility thresholds mean that some households earning slightly above the limit face a sudden loss of affordability, leaving them with a smaller housing budget than households earning less but still qualifying for the benefit.

This is illustrated in scenarios where a household earning just €1 above the HBS threshold loses access to up to €500 in monthly support, instantly pushing them into the overburdened bracket. The study notes that some households with lower incomes end up with a higher effective housing budget than households with higher incomes.

Even relaxing the affordability benchmark from 25% to 30% does not substantially improve outcomes. For instance, a single person at the subsidy threshold could afford a one-bedroom apartment in only three out of 20 localities at the 25% level. Increasing the limit to 30% made it possible in just three additional localities.

Across all scenarios, the sensitivity analysis shows that overburdening is more normal than the exception. Of the 44 localities assessed for two-bedroom apartments, a single parent earning €35,000 is overburdened in 27 of them and stressed in the rest. Even with subsidies, a significant share of localities remains out of reach.

Most situations fall into Eurostat’s definition of overburdened, where housing expenses surpass 40% of disposable income. A single parent earning €35,000 would be overburdened in 27 out of 44 localities. These figures do not account for additional costs such as utilities.

For families, the picture remains bare. Couples with two children earning €40,000 can afford only the median rent in one locality for a two-bedroom apartment, and none for a three-bedroom unit. Even two parents each earning €20,000 fail to meet affordability thresholds across nearly all regions.

Regionally, the Northern Harbour area is consistently the least affordable across all household types, with affordability ratios dropping as low as 35-45% for minimum-wage or low-income earners. Gozo, while often seen as “cheaper,” still leaves most households overburdened unless they qualify for the upper subsidy tiers.

The report suggests enhancing rent controls by setting limits on maximum increases, expanding eligibility for the Housing Benefit Scheme, and gradually reducing benefits to remove the subsidy trap.

The study stresses that Malta must align housing costs with the 25% income benchmark, which is currently not met. Without stricter rent increase regulation, tenants face ongoing financial strain. It recommends temporary rent freezes, limits on rent hikes, and caps on increases to stabilise the rental market.

The report highlights the scarcity of long-term leases, with fewer than 7% lasting over a year. It advocates for encouraging or mandating longer agreements to improve tenant security, predictability, and protection from sudden rent increases. The authors also call for ending no-fault evictions, warning that current policies allow lease terminations despite tenants fulfilling obligations, fostering insecurity and threatening affordability.

The study suggests compensation for tenants illegally evicted, akin to employment law protections. It also notes delays in the Housing Benefit Scheme during contract changes, with slow payments leaving tenants unable to cover rent and increasing financial risk. Ensuring timely payments is vital for stability.

Finally, the study argues that Malta cannot realistically address affordability without significantly expanding its supply of public and affordable housing. They call for a minimum quota of 30% affordable units in all new developments by 2030, stressing that market-driven construction alone has failed to meet the needs of both low- and middle-income households. Without intervention, the report warns, housing pressures are likely to intensify rather than ease.

Johanna Macrae from Solidarjetà called the situation “completely untenable” and said solutions are needed. She noted that while the Private Residential Leases Act helps tenants, it has a loophole on rent increases: contracts over a year can rise 5% annually, but shorter contracts face no limit, allowing landlords to offer one-year leases with big rent hikes.

Macrae emphasised the housing market's uniqueness because shelter is essential, not a luxury. She noted tenants often overspend, sacrificing wealth-building and future resources. Recently, Solidarjetà helped hundreds, winning over €13,000 in November by recovering deposits, fighting illegal charges, and preventing evictions.

She highlighted third-country nationals in Malta’s rental market who depend on registered contracts to avoid deportation amid disputes with landlords. She called on unions like Solidarjetà to seek recognition and support, aiding tenants in living affordably, securely, and with dignity.