AlternattivA Demokratika is proposing a tax on vacant properties as a way to solve the housing problem.

Edward Fenech, AD spokesman on finance, tourism and the economy, said the most effective and cheapest solution to the housing problem was the introduction of "an advantageous tax mechanism" to place more properties onto the market, as well as legislation to ensure that vacant properties were well maintained.

"In the pre-Budget exercise, we specifically proposed that all properties that are not the owner's primary or secondary residence are to be subject to a flat rate 15 per cent on the assumed value of the rent of the property, being three per cent of the property's capital value. Thereafter, any rent received from this property would be tax free.

"Just to illustrate a typical example - an apartment that lies vacant, worth Lm40,000, will be subject to an annual charge of Lm180 payable, but any rent received by the landlord will be thereafter tax free," he said.

"We believe that these proposals will motivate owners of properties to place their properties back on the market for sale or rent. This will add to the effective stock of properties on the market and thus act to release pressure on further unsustainable increase in prices.

"They will also raise revenue for the government, revenue that can then be used to give assistance, not just to first-time buyers, but to all those needing assistance."