CasaRooms Director: Proposed short-let rules ‘lack the teeth’ to work

As Malta’s government prepares to table new regulations for the short-term rental market, property managers like CasaRooms Director Cecil McCarthy urges lawmakers to think bigger, arguing that the proposed measures lack the teeth to be truly effective.

The proposed legislation includes a three-month “cooling period” for switching a property from long-term (LTR) to short-term rental (STR) and a rule requiring owners’ contact details to be publicly visible. While the intent is recognised, the response from industry operators suggests the plans fall short.

For Mr McCarthy, the proposed three-month cooling period is seen as economically challenging and easily circumvented. 

“Landlords could easily go around this measure by opting to pay the €200 fine associated with the late registration of LTR leases,” he says.

Instead, he proposes a far more stringent measure to genuinely curb speculation and create housing stability. “If a property is registered with the Housing Authority for an LTR lease, the operator should be restricted from re-entering the STR market for a minimum of twelve months.”

This longer period would “significantly enhance market stability and effectively curb speculation” by forcing a serious commitment to one rental strategy, acknowledging that “the management requirements for LTR and STR are fundamentally different.”

Regarding the requirement to publicly display contact details, the concern is not about privacy but a lack of legal authority. Casa Rooms confirmed they are “fully prepared to provide neighbours with our emergency contact details,” a practice already in place with condominiums.

However, they warn that the policy, as drafted, simply passes the buck without solving the core problem. “The suggested policy… merely delegates the enforcement issue to property managers without providing the necessary legal leverage to resolve it.” They emphasised that as landlords and property managers, “we possess no legal authority to evict tenants or short-term guests,” a power that rests solely with the Police.

Which begs the question, should landlords be given more legal authority or should the Police up its resources?

“Property managers and landlords are not law enforcement entities. We cannot support a policy framework that effectively delegates policing responsibilities to private citizens or management companies,” he emphasises. 

“Instead, the Government should focus on allocating adequate resources to the Police Force to effectively handle the inevitable increase in noise and nuisance reports, which should correlate directly with the year-over-year increase in tourism.”

On market saturation 

Addressing concerns from hotels about an oversupply of beds, Mr McCarthy points to a market-led shift already in motion. “We are now observing a natural market correction between STR and LTR,” he explains, noting that over the past 18 months, a majority of their owners have been shifting strategy from STR back to LTR.

“Our company currently manages a portfolio of 300 properties across three islands, providing us with extensive, firsthand data on performance metrics for both the LTR and STR markets. Our operational experience shows that owners are more inclined to change strategies from STR to LTR for properties where market returns have naturally begun to stabilise. This internal shift demonstrates that the market is already self-correcting towards LTR stability where profitability warrants it.”

This is also driven by falling revenues for non-unique properties, which are “driving their returns back to parity with LTR yields.”

On the specific issue of regulating “extra beds” in rentals, they presented a dual view. While it may be a concern in the low season, “during peak and other high-demand periods, Malta consistently requires this extra capacity to meet tourism demand.” The high nightly prices during these months, he argues, are “clear evidence of the necessary market supply.”

The consensus from the front lines is that while regulation is welcome, it must be ambitious enough to create real change and equipped with the legal tools to be enforceable.