A more socially just scheme

A hallmark of this legislature is the consolidation of that which is sound and good, at the same time reforming and restructuring systems, policies, attitudes and laws to reflect our yearning for more social justice, efficiency and sustainable development through and through.

Recently, I announced the changes the government has introduced to the ground rent redemption scheme, launched by the Joint Office in 2002, following the 2001 budget speech. This scheme gave persons dwelling in property owned by the Joint Office, and subject to emphyteusis or (subsequently) lease, the opportunity to redeem the ground rent, thereby becoming owners of their own residences. The scheme was in line with the spirit of the Church-state agreement of 1991 whereby the Church transferred to the state about 80,000 properties for these to be used in the furtherance of social justice.

As expected, this scheme was greatly welcomed and more than 5,400 requests for redemption were made to the Government Property Division (GPD). Each application required an extensive exercise of verification and preparatory work. This led to the materialisation of a substantial backlog - a direct result of the great success achieved by the scheme. Thus, the other day we announced the temporary suspension of the scheme, giving the GPD the necessary time to process and conclude the existing applications. The GPD is committing itself to substantially reducing the backlog of more than 3,000 applications within the short term and, thereafter, issuing another scheme (not necessarily with the same conditions).

In order to better reflect the spirit of the 1991 Church-state agreement, the reforms just announced also launched a new set of conditions by which existing applicants shall need to abide. These new rules are designed to curb sporadic yet blatant and unacceptable cases of abuse that have been taking place.

Working on the reform, the GPD noted that individuals were redeeming their ground rent, hence becoming owners of their property, at the cost of a few thousand euros, then selling off the property for redevelopment purposes shortly thereafter at full-blown market prices, far higher than the amount paid to the government. Cases of property being redeemed in the last few years for €1,164 and then resold two weeks later at more than €559,050 were recorded. Even though this abuse was legitimate, all honest law-abiding taxpayers will agree that it is not morally correct for the government to be, inadvertently, funding speculation through a scheme which is aimed to grant ownership of homes. Apart from this being a breach of the spirit of the 1991 agreement, the leitmotif of which was to promote that which was socially just.

For this reason, applicants are now required to satisfy a set of checks that will determine that the property being redeemed is indeed the applicant's residence, as was the motivation behind the 2002 scheme.

Further to this, if the property is redeemed and then sold for redevelopment purposes, a percentage of the resale shall be paid to the government.

This percentage, that varies between 10 and 25 per cent, is calculated according to the lapse of time from the date of redemption of ground rent, diminishing as the years pass, up to a maximum of 20 years. If the resale takes place within five years from redemption, 25 per cent of the reselling price will need to be paid to the government. This, however, will not apply to people selling their newly-redeemed residence to their parents or children or to brothers and sisters within those five years. In any case, after the five years are up, no percentage will be due to the government as long as the unit of residence is used as a residence for a maximum of 20 years.

We have catered for other exceptions to address particular circumstances and realities, like cases of individuals with a disability and who are registered with the National Commission for Persons with Disability who would like to redeem their property and resell it in order to improve the accessibility to their homes.

In this light, the government is making it amply clear that anyone who applied to make use of this scheme for genuine and the originally intended purposes need not worry. The reform of this scheme, we believe, reflects further the spirit in which the international agreement between the Holy See and the Maltese state was made and as a result of which the Joint Office was created. We have catered for humanitarian situations while reducing as far as humanely possible scope for abuse.

The scheme is aimed at offering the possibility of home ownership and we believe that that is exactly what it should do. At the end of the day, this is all about ensuring true sustainable development.

Dr Azzopardi is Parliamentary Secretary for Revenues and Land.

jason.azzopardi@gov.mt