Housing affordability

It is a known fact that the local market is flooded with property in most towns and villages. However, severe problems loom, primary among which is housing affordability. Young people simply cannot afford the high prices being offered in the free market which means that they can never become home owners.

The Malta Labour Party has addressed the situation by proposing a series of initiatives in order to help such families, including ad hoc families made up, for example, of separated persons. This is in the belief that they have a right to find decent homes at reasonably affordable prices rather than at the exorbitant prices we are all aware of.

A 10 per cent grant: A new Labour government shall establish a fund through which grants not exceeding 10 per cent of the price can be made. This means that first-time buyers shall be given a grant not exceeding Lm5,000 up to the maximum price of property of Lm50,000. Such a sum shall be refunded to the government, with accrued bank interest, only if the couple decides to sell its property.

Capping of interest rate at 4.5 per cent: Exorbitant and uncontrolled interest rates are eating into the pockets of buyers, especially first-time buyers. In this regard Labour is proposing to cap such interest rates at 4.5 per cent. Such a measure shall apply for the first seven years of the loan, and also to whoever is already in the possession of his sole residential unit.

Subsidy on the interest rate: The government cannot impose bank interest rates on loans. Therefore, since a new Labour government would cap this interest rate at 4.5 per cent, the difference between this rate and the actual bank interest shall be subsidised from the same fund referred to above.

Stamp duty of 3.5 per cent applicable on the first Lm50,000 (up from the first Lm30,000): A new Labour government will ensure that the stamp duty of 3.5 per cent on the first residential property is applied on the first Lm50,000 up from the first Lm30,000 as is the current situation. This measure shall therefore result in a net gain on tax of a maximum of Lm300.

Redundancy respite: A new Labour government shall alleviate genuine redundancy cases where the individual is burdened with a house loan, by introducing a one-year moratorium on bank re-payments until alternative employment is obtained within that period. Such a proposal is aimed at assisting those individuals adversely hit by redundancy and subsequent unemployment to do their utmost to find alternative employment. In a dire time of need, such hapless individuals also need to be saved from having to sell their family silver or risk losing their property outright, as has happened so often. Moreover, such a proposal is aimed at giving a psychological boost to these persons when they are undergoing such a trauma. It could help them see the positive side and concentrate upon helping themselves find a job, instead of using their time merely trying to make ends meet.

It is therefore being proposed that during this one-year moratorium both the repayment of the principal and the accrued interest are suspended, with a new Labour government intervening in the meantime with the local banks to address the issue of repayments.

In the prevalent scenario wherein a Nationalist government has dismantled social banks such as the Lohombus Corporation, Labour feels it would be its responsibility to take such social action, once such a social aspect seems to have been struck off from the responsibility of local banks.

Enhanced conditions for renting of property: A new Labour government shall, in the first place, retain the concept of renting property to those families who, because of their particular circumstances, cannot afford to service bank loans. Furthermore, a new Labour government shall exhort the Housing Authority to continue to provide adequate residential units for renting, to assure an honourable standard of living for such families, despite their social condition as described. In this regard, a new Labour government shall evaluate effective measures to sustain all those new families requiring such support who opt to rent instead of buy property.

One cannot justify the criticism recently meted out by the Nationalist government in this regard. In fact a government press release demonstrated its crass misunderstanding of such initiatives, stating that they are already in force, when in reality all and sundry know that they are not.

One has to bear in mind that both the shared ownership scheme and the equity scheme are on a completely different footing, because of the following:

• In the shared ownership and in the equity schemes, the government is co-proprietor with the buyer - whereas the grant as proposed by a new Labour government shall ensure sole ownership;

• A sole owner can therefore sell his property whenever s/he so wishes at the market rate obtaining at the time of sale, whereas in the co-proprietorship scenario, this cannot happen;

• In the shared ownership and in the equity schemes, the value of property is determined by the Housing Authority, not by the free market;

• The co-proprietorship scenario contains a medley of stiff conditions which render both schemes cumbersome and non-user friendly.

I wish to draw attention to the fact that only six applicants have applied to procure property from the private sector under the equity scheme.

The Labour Party is not against such existing schemes, but will undertake to streamline them to render them attractive so they can be embraced by a wider band of Maltese society. It is absolutely untrue that currently there exists any scheme or agreement with any commercial bank to help those unemployed who already took home loans from the banks.

The Nationalist government is trying to instil the idea that under a Labour government the stamp duty on properties that cost in excess of Lm50,000 shall be raised to more than five per cent. This is absolutely untrue.

The attacks levelled by the Nationalist Party in government stem from the fact that they have realised that their political influence on the country is coming to an end.

This is causing them to panic and to be hysterical, and to go on the offensive with feeble attacks.

How can anybody, in his right frame of mind, first allege that such initiatives already exist and at the same time launch a hysterical attack on them?

If anything, if such initiatives already exist, which is not the case, it would have been beneficial for them to know in the first place what schemes are being adopted by the Housing Authority.

Dr Buontempo is Labour spokesman on housing and property.