Issue link: https://maltatoday.uberflip.com/i/1011650
3 maltatoday | SUNDAY • 5 AUGUST 2018 NEWS Households have made hay from rising rents KURT SANSONE RENTS have skyrocketed over three years, pushing poorer families to the brink but the phenomenon has also benefit- ted many households, official figures show. Households made €85.8 mil- lion last year by renting out property, according to data released last week by the Na- tional Statistics Office. An analysis carried out by MaltaToday showed that in the three years between 2014 and 2017, households experi- enced an increase of 132% in income derived from rents. In contrast, household in- come derived from employ- ment rose by 17% during the same period and income from interest and dividends in- creased by a measly 3%. The information comes from the poverty indicator re- leased by the NSO last week, known as SILC (Statistics on Income and Living Condi- tions). The indicator includes a breakdown of household in- come in Malta, including that derived from rent. Rental income made up just 1.5% of all household income in 2017 but even here it con- stituted a higher portion than it did three years earlier. In 2014, with rental income re- corded at €36.9 million, this source of funds accounted for just 0.8% of all income for households. The statistics do not give a breakdown on the number of households that are ben- efitting from the accelerating rental market but economist Philip von Borckdorff said the figures suggested the increase was also due to more people renting out their own prop- erty. "Rents have increased, which contributes to the larger amount recorded by the NSO but there is also a phenomenon of more peo- ple renting out idle property they owned, such as summer homes, and others who have bought apartments to rent them out," Brockdorff said. He also noted that income from bank interest and divi- dends was less lucrative, which has prompted some to invest money in the property market. "The rental yield is phenom- enal when compared to other countries and in the current low interest rate environ- ment, the options to invest have been narrowed down, which has prompted people to buy property to let," he said. A similar view was expressed by Malta Developers Associa- tion Secretary General, Mi- chael Stivala. Writing in the Times of Malta last week, Stivala in- sisted that homeowners were benefiting from the property boom. "Often private homeown- ers opt to collaborate with a developer to demolish their home and build an apartment block to rent or sell, reinvest- ing the surplus value for the benefit of their offspring and becoming developers them- selves," he wrote. And with the demand for foreign labour remaining strong, Brockdorff said it was unlikely the current "frenzy" to invest in property would subside. But the economist did point to the irony that the very same growing foreign labour force that is contributing to higher rents because of in- creased demand, is also keep- ing wage-growth depressed. Brockdorff was not sur- prised by the relatively slow growth in income from em- ployment. "The growth in wages has been kept in check by the cheaper wages paid to foreigners," he said. Anti-poverty campaigners have been clamouring for government action to ap- ply the brakes on the rental market because the increases were outpricing poor families. But despite this emphasis by various organisations, includ- ing Caritas, the concern on rising rents does not appear to be widespread. Surveys on concerns carried out by MaltaToday have not featured rising rents as a top concern. This could possibly be ex- plained by the fact that the vast majority of Maltese are homeowners and it would ap- pear now, they are also profit- ing from a newly-discovered rental market. In the three years between 2014 and 2017, households experienced an increase of 132% in income derived from rent 42 75 24 64 90 35 70 45 04-08-2018 Draw No: 735 This is what households made from rent Year Income 2014 €36.9m 2015 €44.5m 2016 €54.7m 2017 €85.8m Source: SILC, NSO "There is also a phenomenon of more people renting out idle property they owned, such as summer homes, and others who have bought apartments to rent them out"