The repercussions of the liberalisation of the rental market in Malta on the construction industry

Abstract

In early May 2005 the Prime Minister, Dr.Lawrence Gonzi's intervention in a public speech was reported as follows· "With regard to rent laws, another hot potato, Dr Gonzi could not understand why 20,000 properties in Malta and Gozo were vacant when the law had been changed in 1995. While he disagreed that tenants should be renting out properties for a pittance, at the same time the country could not afford to have thousands of people on the streets because they were kicked out of their homes by their landlords. Dr Gonzi acknowledged the problems young couples faced to be able to afford a property and the fact that they were putting off having children due to such expenses. Serious attention was being paid to the issue which had "tremendous" social implications, he said. The Housing Authority was building properties that were sold at subsidised prices but it could not keep up with the demand and added that the government needed to experiment with public-private partnerships... " (The Times Thursday, May 5, 2005) This statement is the essence of this dissertation which seeks to analyse the effect of the 1995 deregulation on the rental market and construction industry, whilst assessing the impact of a further rent deregulation on such sectors. Through a property market analysis it will be pointed out that the situation can not remain unchanged for it to be sustainable in the long run. However a further rent deregulation on its own may not be enough to shift the present situation. Recommendations for other actions to accompany such a deregulation will be made and discussed in this Dissertation.