Government property may be sold by auction

The House of Representatives yesterday started debating a bill which will enable the government to auction land or vacant property it owns.

The bill also amends existing policy so that commercial leases which have expired may be renewed for up to 15 years without need for a fresh call for tender. The rent, however, will be changed to current commercial levels.

The changes are part of amendments to the Disposal of Government Land Act.

Home Affairs Minister Tonio Borg explained that there were currently four ways how the government could dispose of its property - a call for tender, a parliamentary resolution, transfer in terms of established policy such as the case of factories in industrial estates, and transfers to bodies set up by law, such as corporations and local councils.

This bill was now introducing auctions as a fifth way of how the government could transfer property.

The difference from the tendering system was that a bidder who submitted a tender offer had no opportunity to change his bid. The government was confident that in the case of prime site properties which could be of interest to several bidders, introducing the auction system would yield higher revenue.

Dr Borg said the auctions would be conducted by licensed auctioneers after due notice in the Government Gazette. The government would establish a minimum price and the property would not be transferred below that price. It had not been decided yet whether the bidders would be told of the minimum price beforehand.

Dr Borg said that land to be used for social purposes would not be auctioned. Neither would properties forming part of the national heritage or properties which were not vacant. Properties that were outside development zones would also not be auctioned, nor properties still under an expropriation order.

Turning to the second part of the bill, Dr Borg explained that the government policy on the transfer of property was currently renewed by the House every three years.

That policy was now being included in the law, so that renewal would not be needed every three years.

However the policy was being altered in the case of leased commercial properties whose term had expired and the lease was currently being renewed on a yearly basis.

At present, such leases could only be renewed for a new term after a fresh call for tenders. What the government had decided was that the lease of such premises would again be given to the current tenants under the conditions of the original title but the rent would be adjusted to current commercial values and the lease may not exceed 15 years.

In this way, the government would be raising its revenue while those who occupied these commercial premises could continue using them for a maximum of 15 years whereas at present they could be evicted since their term had expired.

Opposition speakers said they generally agreed with this bill.

Joe Brincat (MLP) argued, however, that the regulations to govern the auction of government property should be part of the law and not issued separately as a legal notice. In that way all bidders would know where they stood and one removed the possibility of abuse. He asked if foreigners would be able to participate in the auctions.

Charles Mangion (MLP) said the opposition agreed with the bill as it was aimed at facilitating the administrative work of the Lands Department and to yield the best return from the sale of land.

Dr Mangion also referred to the government policy on the transfer of properties. Speaking about kiosks grants on temporary emphyteusis, he said that tenants reaching pensionable age should be able to transfer the kiosks not just to members of their family, but also to third parties for a fixed amount due to the government. At the same time, the rent should be adjusted to current commercial rates.

He also referred to the minimum annual rent of Lm40 charged to caravan owners, arguing that since the caravans occupied prime seaside areas, the rent should be reviewed upwards as it was currently ridiculous.

Labour MP Joe Mizzi complained over the way the Cottonera project was evolving, saying new properties were out of character with the surroundings and spoilt the view for other residents. So much for the claims that this project would benefit the public in general. What one could see from the supposed belvedere was air conditioners and water tanks.

Labour MP Stefan Buontempo said it made sense for the government to dispose of its property through auction. But would everyone be able to submit bids. Who would regulate the sale? What if they could not pay? The government should copy the practice of other countries and set up a property disposal office to regulate the method of sale of property.

Winding up, Dr Borg said property where the tenant had a right of first refusal would not be auctioned. When such property was rented, the tenant would be asked to renounce renting rights so that the property could be sold, but the tenant would be given the right of first refusal. In such an instance, an auction would not be held.

There were other instances where the government could issue land for auction but give the persons living right next to this land, the right of first refusal. This could happen, for example, when the land was very small and could be linked to a neighbour's property.

The right of first refusal to farmers was to be given on just one plot and not on the whole land area since farmers were sometimes used by land owners to acquire land at cheap rates.

The minister pointed out that government income from rentals and sale of property had increased substantially this year although more improvement could be made.

The bill was given a second reading unanimously.