What should landlords look out for when taking on new tenants?

As the rental market in Malta has boomed, more and more people have become landlords, often with just one or two properties bought to supplement their income and eventually, their pensions.

Unlike some other countries, the rental market is not dominated by companies and landlords with very large holdings. Mostly, landlords are people with little previous experience in the field.

This can give rise to various problems associated with inexperience.

Meanwhile, new rental laws mean that even long-term landlords need to stay updated on the latest changes, and adapt their practices.

Renting your property can bring with it plenty of headaches, so here are some tips that new and experienced landlords alike should keep in mind to make the experience a smooth and profitable one.

1. Write up a rental contract in line with the law

The introduction of a law covering rental agreements has established best practice in the field, but some landlords may be unaware of the provisions enshrined in law.

QuickLets head of letting Marc Zammit Lupi says that contracts are sometimes drawn up with di fermo periods that are longer than those stated in the law.

Currently, for one year leases, the first six months are mandatory for the tenant. After that, tenants may at any point inform the landlord that they will be cancelling the lease, provided they give a notice period of at least one month.

“No clauses should ever go against what the rent law states, and this is a common mistake some landlords make when drafting up their own lease agreement.”

Luckily, the Housing Authority provides its own template for rental contracts, so landlords can simply download the document to make sure that their leases are fully compliant.

2. Read through the contract with the tenant

It is important not to take anything for granted when handing over the keys to your property. That includes the fact that the renter actually understands the contract. Locals and foreigners alike might assume they know it all and just sign on the dotted line, but this could present problems later on.

Francis Xavier Darmanin, an experienced landlord with multiple properties, says it is not uncommon for tenants to come to him with requests a couple of months into their tenancy – requests that would not be made at all if they had understood the contract they were signing.

“Sometimes, they seem stunned when I point out that what we are talking about is clearly in the contract.”

3. Make sure the tenant can afford the lease

While being careful not to get too intrusive, landlords would do well to ask prospective tenants how they plan to pay the rent. This is all the more important when the rent is relatively high.

Mr Zammit Lupi suggests asking the tenant for proof of funds or employment, to be confident that they will be able to make the necessary payments, while Mr Darmanin goes a step further and recommends asking for some clarity on their savings, to avoid situations where the tenant loses their job and can no longer afford the rent.

Ultimately, eviction is no simple task. Landlords have no recourse to police or other authorities if their tenants are no longer paying the rent, so you want to be sure that this situation does not arise.

4. Always conduct basic due diligence

A simple Google and social media search is often enough to allow a landlord to determine whether a prospective tenant is the right fit. Landlords are under no obligation to accept anyone’s lifestyle – at least not until the contract is signed.

Simple things like observing the background of photos uploaded by prospective tenants to determine the conditions of their previous home can make a big difference.

5. Set the right deposit amount

Widespread practice is to set the deposit at one month’s rent, but this can go higher if needed. This often depends on the standard of furniture and finishings in a property, but there are other reasons why landlords might want to increase the amount.

Mr Darmanin points to a situation where tenants leave unannounced after just a couple of months. To hedge against this, he suggests asking for a deposit equivalent to two months’ rent. To make things fair on the tenant, landlords may return half of that upon the lapse of the seven-month minimum.

“When you have tenants like this, you might also have to change the keys to the apartment, and probably the front door of the block too. That’s an additional expense to look out for.”

Mr Zammit Lupi warns, however, that setting a high deposit amount may deter clients from committing to the property, making this one area where good due diligence may make the difference.

6. Make it clear that the deposit is not the last month’s rent

It may be common practice in some countries, but allowing the deposit to be used in lieu of the last month’s rent is a big no-no, according to Mr Darmanin.

“Landlords should definitely include a provision in the contract to stipulate that the deposit is not the last month’s rent,” he says.

“You might have a tenant who informs you they are leaving, so you can keep the deposit. But that makes no sense. What about checking the inventory? What about checking for breakages? What shape is the property in?

“There are many things that a deposit may be useful for, but the last month’s rent is not one of them. I would definitely include that in the contract to make sure there is no misunderstanding about it.”

7. Cleanliness is paramount

One clause Mr Darmanin strongly suggests including in the contract is an obligation to keep the property reasonably clean, reserving the right to hire professional cleaners – at the tenant’s expense – should this not be the case.

8. Inspect regularly

Linked to the point about cleanliness, landlords should inspect their property from time to time. Ultimately, the property is the landlord’s responsibility to maintain. Small things that might not bother the tenant enough to request a fix may end up being big problems, and a major expense.

Landlords have the right to inspect a property regularly as long as they give tenants 48 hours’ notice, according to Mr Zammit Lupi, who however advises against doing so too liberally to avoid impinging on the tenants’ privacy.

Inspections are more worthwhile early on in the lease duration, allowing landlords to determine tenants’ level of cleanliness and sense of respect for the property.

The less a place is cleaned, the more the things in it don’t work, points out Mr Darmanin.

“If you use an oven and you just never clean it, at the end of the day you’re going to have oil gathering at the bottom. If you don’t clean the vents of the AC, after two years you’re going to have problems with the AC. The bathroom, if you don’t clean the tiles, mould is going to build up. So they’re causing permanent damage which cannot be regarded as wear and tear. Because that’s negligence.”