Juan Ameen
Property prices board 'relies on magazines'
Board of Special Commission inherited 595 pending cases
Coincidentally, this week, a property exhibition runs until Sunday at the MFCC in Ta' Qali. Photo: Matthew Mirabelli
The board tasked with ensuring that people do not under-declare the value of their property to avoid tax has no technical expertise and relies on real estate magazines as a point of reference for prices, according to an official report.
Moreover, when probed, the board failed to explain why certain prices were accepted while others were referred to government-appointed architects for review, the Auditor General said.
The report was about a performance audit of the Capital Transfers Duty Department within the Finance Ministry that processes duty owed to the government when properties are sold.
The board in question is an internal body within the department and is tasked with verifying whether the declared value of a sale is correct.
The Auditor pointed out that the board did not have any formal terms of reference or guidelines and did not document the reasoning behind its decisions.
Also, since none of the board members had any technical background on property evaluations, they kept themselves informed by, among other things, reviewing property publications. This, the Auditor said, created problems because most publications listed the asking price, which very often varied greatly from the market value.
Gozitan properties are scrutinised more because, unlike with Malta, property sold on the sister island needs to include detailed plans.
If the need arose, the board could appoint an architect to review the property valuation to see whether it reflected the market price.
But the report noted that, for example, properties valued between €50,001 and €100,000 had a higher probability of being referred to architects.
In fact, almost 75 per cent of applications valued in this bracket had a property inspection in 2008.
Also, in 2008, half of inspected properties, with the exception of garages, were deemed to have been under-declared and their value had to be revised upwards - especially plots of land and flats.
Yet, despite this volume of revisions, a case study by the Auditor's office revealed that the board had still accepted declared property valuations that were below market price.
"There are no further checks and balances following an acceptance of the declared value of property by the internal board. Erroneous declarations of property will lead to a loss of revenue," the report said.
The report also referred to concerns raised by the Malta Institute of Accountants on the absence of a set method that calculated the value of property. As a result, the valuation could not be verified or challenged, it said.
The Auditor noted that the Board of Special Commissioners - responsible for dealing with the buyer's or seller's objections - had not been functioning since 2004. The board was re-constituted in September 2009 and will now inherit the 595 pending cases.
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Albert Bezzina
Mar 5th 2010, 19:48
Maybe now that Mr John Dalli is EU Commissioner for consumer affairs he may look into the fiscal morality being practiced back home. He was after all the one who said this phrase.... I believe!
Steve Sant
Mar 5th 2010, 18:45
You know it doesn't surprise me at all. In fact there are no real experts at the Government dept, and I've very rarely come across people who could scientifically give a definition to the word valuation. I am an estate agent, not by profession, but by family history. I have seen flactuations and fake hype prices due to so many factors, that sometimes prices look like someone out there invents them by the minute. Just because Peppi next door got x thousands, then mine must obviously be worth more. I can name only a few experts that really do know how to price property, and even they sometimes use the average method. But the so called experts at the Property prices board simply invent most of the times. I'm sorry if there is 1 person in there that can really value a property, the other 99 cannot, and thats fact.
Anthony Grech
Mar 5th 2010, 18:05
T Camilleri Please spare me the outrage. I don't know what island you live on, but all you need to do is ask a few friends and neighbours and see if I am right or not. You could probably call a few estate agents and they too would tell you it is common practice. I never said that EVERYONE does it I said it was common practice, which I still say it is. Maybe you are a person who would never do such a thing and if you are, good for you but don't pretend this doesn't happen on a regular basis.
Phil Humphries
Mar 5th 2010, 16:12
What !? - This beggars belief.
How can a claim based on nothing more than someone reading hopeful valuations in property magazines have any basis in law outside of Zimbabwe or Disneyland?
Hasn't this been challenged in the Courts before or since EU membership?
A. Zahra
Mar 5th 2010, 14:51
I was a victim of this board. I was fined for the purchase of a property which I bought it after it had been valued by a bank architect and sold to me with the authorisation of the bank. The vendor was forced to sell property because of the bank. It is a most unjust situation. If government treats its citizens like criminals, I do not see why I should not treat the government as I would a thief. Patta parata.
Joseph Grech
Mar 5th 2010, 14:12
This is terrible news of the worst order. Unjust and inefficient dilettantism which certainly has negative and possibly hard-hitting financial results on people. Not to mention government finance!
Those responsible need to explain how such a Board (without any technical expertise) could have been set up in the first place!
How right the Malta Institute of Accountants were to express their concern! This latest exposure should serve as yet another example that unfortunately shows all is not functioning properly at the Ministry of Finance. Far from it.
It was only thanks to the excellent work of the the Auditor that this scandalous scenario was exposed. Who will now assume responsibility?
T Camilleri
Mar 5th 2010, 14:03
Anthony Grech PROVE that EVERYONE has done so or STOP making ALLEGATIONS.
Andrew Gatt
Mar 5th 2010, 14:02
Amateurish and unprofessional IN THE EXTREME. No wonder so many people receive ridiculous assessments............which are reduced by 90% if one pays up within a certain timeframe. Unbelievable. They rely on magazines...Beano and Dandy, I bet!
g. scerri
Mar 5th 2010, 13:19
Seems to me that this is just another tax-collecting setup.
Nyal Xuereb
Mar 5th 2010, 12:11
So I find a property on a magazine which is 400K, but since the owner is leaving the island he wants to get a deal done fast. The owner goes down to 300K but because the board saw it marked at 400K on the magazine I get fined. This is ridiculous. Why cannot there be a deal called bargain on thi island?
Anthony Grech
Mar 5th 2010, 11:38
Let me just say, that it is standard practice here, and everyone knows it, that there is the declared price and a seperate higher actual price. I don't think I actually know a single person who has actually declared the actaul price they paid for a house to the government. Everyone is a part of this game, the lawyers, estate agents, notories, buyers and sellers. Certainly the government must know this, as it is common knowledge to every man on teh street.