Proposed Airbnb rules may cool investor interest, impacting Malta’s tourism hotspots

Tightening restrictions on short term rentals could lead to a decline in investor interest in holiday let properties, especially in tourist hotspots, says Konrad Sultana, Branch Manager at Dahlia Real Estate Services, responding to reports of new rules being floated by Government.

BusinessNow.mt reached out to Mr Sultana for his insights on how these regulations could reshape Malta’s property landscape, especially regarding short term rentals like those listed on Airbnb.

On 12th November, Malta Tourism Authority (MTA) CEO Carlo Micallef announced a proposal requiring apartment owners in Malta who wish to rent out their properties as short lets to secure the consent of their condominium neighbours.

Without this approval, landlords who rent out their properties as short lets on platforms like Airbnb would be unable to obtain the necessary MTA licence, Mr Micallef stated, noting that the rule change aims to balance community concerns with tourism needs.

Will investor interest in short lets decrease?

Mr Sultana believes that tightening restrictions on short term rentals could lead to a decline in investor interest in holiday let properties, especially in tourist hotspots.

“If restrictions on short term rentals tighten, it’s likely that investor interest in buying properties for holiday lets will drop,” he said.

This could, in turn, reduce demand in the property market and possibly steer investors toward properties suited for long term rentals. This reallocation of investor interest may influence both the types of properties developed and their locations, potentially decreasing competition in the tourism-heavy areas that currently see high demand for holiday lets.

Could this shift push property owners toward long term rentals?

According to Mr Sultana, the move from short term to long term rentals could be challenging for many property owners.

“This shift from short term to long term rentals feels unfair, especially for people who were encouraged to invest in holiday lets and are now facing restrictions that limit their options,” he remarked.

Mr Sultana pointed out that the restrictions could potentially harm Malta’s tourism economy without necessarily achieving the intended goal of increasing affordable housing for local residents.

His perspective highlights a gap in policy efficacy when it comes to ensuring housing accessibility while supporting those who invested in short term rentals in good faith.

Will the transition to long term rentals ease the housing market?

While the policy could address housing availability for locals, Mr Sultana remains sceptical about its impact. “I’m not convinced that many property owners will actually make the shift to long-term rentals,” he noted.

Even if some do, Mr Sultana is unsure whether this would significantly ease housing availability, as demand remains high and the rental market competitive.

His observations suggest that rental prices may not see a substantial decline, as the demand for rental properties across Malta continues to grow, making a notable impact on housing access less likely.

Could Malta lose its appeal to foreign investors?

Despite potential restrictions, Mr Sultana believes that Malta still holds appeal for foreign investors seeking rental income, particularly if other aspects of the country continue to improve.

“Factors like improved infrastructure, less traffic, cleaner surroundings, cleaner sea, and more open green spaces could still make Malta an attractive destination for foreign investors,” he said.

These qualities may mitigate the impact of stricter short let policies, especially for investors drawn by the island’s lifestyle and strategic location.

Will neighbours charge owners for their approval?

One of the more speculative impacts of this policy involves a possible development where neighbours might charge owners for their approval.

However, Mr Sultana is doubtful this will materialise. Instead, he foresees a rise in tension among condominium residents.

“It’s almost as if some people will think that if they can’t do it, then no one should, which will only fuel tension between neighbours,” he commented, noting that friction could grow as some residents view their inability to rent short term as inequitable.

As these proposed Airbnb regulations await public consultation, property investors, owners, and prospective tenants alike will be closely watching how the policy unfolds and how it may reshape Malta’s property market.