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Complete Guide to Renting Commercial Property in Malta

Written By April 29, 2022No Comments

Are you looking to rent commercial property in Malta? If so, you might be wondering where to start. Finding the perfect commercial property in Malta can be quite an arduous task, but you can make it a lot easier by partnering with the right real estate agent and following the steps below.

Step 1 – Find the right commercial property for your business

Your first step is to find the perfect real estate agent to assist you with the search. Communicate your budget and requirements, and they will present you with several options that meet your needs. From there, it is up to you to view, evaluate, and decide on the suitable unit for you.

Location is a crucial consideration when deciding where to rent. This isn’t just which locality it is in, but also who the neighbours are, how easy it is to find, if the road is good quality, or if there is a lot of building work going on nearby. Also, consider whether it is in an area prone to flooding during the wetter months. You might also look at parking, public transport links, and distance to cafes and supermarkets. Making sure your staff can travel to work easily and access amenities is another essential factor to consider.

At this stage, you should also look at whether you want to rent a furnished commercial property or an unfurnished one. There are plenty of both options available in multiple locations around the country. Other matters include the energy efficiency certificate, the classification and category of the building, heating and cooling,

Step 2 – Figure out costs and create a budget

An integral part of your business plan will be your budget. This will lay down essential information like how much money you have, how much you expect to make, and what you will spend it on. When renting commercial property in Malta, you need to factor in various costs at the budgeting stage.

Firstly, there is the rental cost. This will vary significantly depending on your premises, the unit’s finish, its size, and additional features. For example, a small shop in the south of Malta will cost less than a luxury finished penthouse office in Sliema. Factor in the location,  the finish and amenities you want, and what the premises will be used for.

Other costs you need to consider include service fees. For example, some offices may charge you for cleaning or maintaining communal spaces. You will also have to pay to clean and maintain the commercial space, as per the terms of your lease agreement. Then there is the matter of insurance- you should take out a policy that protects your business and the premises from events outside your control. Some leases will make insurance mandatory. You may also need to take out insurance for your employees while they are on the premises.

Then there are costs such as internet usage, water and electricity, and even gas. These bills will be paid periodically and can soon add up if you run a big enterprise. Other costs to consider include kitchen supplies, the purchase or rental of equipment, and applicable permits.

It is wise to draw up a budget, considering every possible expense. Remember to be a bit liberal with the totals, allowing yourself extra rather than not enough.

Step 3 – Negotiate the commercial lease agreement

The commercial lease agreement is the penultimate step of renting your commercial property. In most cases, the lease is between the landlord and the tenant, and it refers to a lease specifically for property used for business and commercial activity, as opposed to housing. The lease agreement governs every aspect of the deal. It lays down rules, requirements, obligations and terms under which the contract can be suspended or terminated. The exact conditions of the lease are governed under Maltese contract law but can still be customised to suit both parties’ needs.

The purpose of the commercial lease is not just to lay down rules but also to formalise the leasing of the property. It starts by naming those involved in the transaction and specifying the length of the contract and how it can be ended or renewed. It will also detail the cost when rent is payable and under what circumstances increases can be applied. Additionally, it states what will happen if rent is not paid or delays are incurred.

Other parts of the commercial lease will refer to matters such as communal areas, including the kitchen, toilets, the lobby, entrances, or lifts. Furthermore, it will clearly state who is responsible for maintenance and deliberate or wear and tear damage.

The lease is essential as it protects everyone involved from losing money and business interruption and provides recourse should anything go wrong. The lease should be drafted by a legal professional and be made available in a language you are familiar with. Upon signing by both parties, it becomes active and binding with immediate effect.

Step 4 – Complete the deal

Once you have found the perfect property, factored it into your budget, and agreed on the commercial lease, it is time to close the deal. The hard part might be over, but now the fun is just beginning. Running a business and maintaining a commercial property is quite a task, and of course, there is always the thought that you may outgrow it and have to start the whole process again!

Look out for

Before you sign on the dotted line, it is important you understand some of the key legal differences between commercial leases and common residential leases. In particular, terms relating to the amount of rent and length of tenancy.

Di Fermo Period: This is a lease with a definite period. A lease of this kind requires the tenant to pay the rent for the whole ‘di fermo’ period, regardless of what happens with the business. This means even if the company goes bankrupt or ceases to exist, the rent must still be paid until the end of the last.

Di Rispetto Period: A lease with a di rispetto clause means that the tenant can end the agreement during the period, as long as it is for a reason stipulated in the contract. For example, if the contract states the lease can be terminated in case of insolvency.

Typically, a commercial lease agreement lasts for five years with a two to three year di firmo period and a two to three year rispetto period.

If you are looking for commercial property in Malta, we can help. With decades of experience and deep knowledge of the local market and many businesses’ needs, we are ideally placed to work with you. Contact a member of our team today to find out more.