The five-year period within which people selling a second property can choose whether to pay a 12 per cent final withholding tax or 35 per cent on income, has been extended to seven years for 2010 and 2011.

The option between paying the withholding tax or the normal rates on capital gains was introduced in 2006 when the government had given a five-year term from the date of purchase by when sellers can choose through which system they wanted to pay.

The period is being extended to give the Maltese property market "much-needed support".

During 2009, in fact, property prices slumped because of the impact of the international financial crisis and an oversupply of certain types of residences.

The Finance Minister said government was also directing the Malta Environment and Planning Authority to investigate and propose methods on how suitable buildings in the core localities can be used to accommodate tourists or as office space. The proposals must be made by April next year.

Moreover, a joint working group is being set up to prepare a regulatory framework, including proposals for fiscal incentives, to spread economic activity at a local level.

The restoration of historical buildings or schedules Grade 1 properties is important to achieve this. To incentivise this, the government is prepared to refund 15.2 per cent of the total expense.

Addressing parking problems, Mr Fenech said Mepa was being directed to use the funds available through the Commuted Parking Payment Scheme to provide parking spaces in various places around the island, giving priority to those areas which are worst hit. The CPPS is a fund to which developers had to contribute when they did not provide enough parking facilities.