A total societal approach

There is an unescap­able societal philosophy connotation to the whole question of whatever shape the future Foreign Residency Scheme will take and decision-makers may choose to ignore it at their own peril.

Housing is not like collecting racehorses, yachts, antiques and other such concerns. In a small country that is 27.4 kilometres by 14.5 kilometres it would be very bad policy to indulge in, or succumb to, the sort of approach that is so close to the heart of the estate agents, property owners and building and construction lobbies. Such approach looks at residential property as (a) only an astutely subdivided market of different types of properties and (b) in terms of (very subject to interpretation) legal rights on property ownership.

On the contrary, given the inherent characteristics of the economic and environmental realities of the island, the correct policy approach should be one where housing, all housing, should be considered as one single reality just as much as education, social services, health services, etc are.

That even certain wealthy house owners regularly insist that, within terms of what the laws applicable to these areas say, they have as much “rights” as the other “lower” castes have to such services and citizen benefits, is indication that a differentiated stance or approach cannot be justifiably maintained in one part of life but not in another.

In simple words, one cannot be allowed to say “irrespective of under what type of regulations I am allowed to buy and own certain top-grade property in Malta, then having obtained such a permit to buy and reside here I should also be entitled to everything else that all Maltese, and indeed other EU, citizens can enjoy from the Maltese state”, including, say, the permission to keep such property practically vacant all the year round or even to indulge in convenient tax-avoiding practices of renting it out to relatives or friends who I encourage to visit Malta and stay in it to my benefit.

The situation, therefore, is not one that simply warrants looking at only what the acquisition of immovable property legislation, or, indeed, of what EU legislation, says on the matter. The situation is one that absolutely requires a total look at the whole of the property sector in Malta.

I could conveniently start by saying that at both IMF and EU levels there is serious worry at the level of exposure to precisely that sector by our banks. But I will avoid that simply by reverting to the reality I have repeatedly laboured, that of a seriously non-clearing market (some 50,000 properties at the conservative level; 70,000 according to certain other recent analysts).

That mass of obscenely highly- priced (especially when related to its real intrinsic worth) assets is an albatross hanging round the economy’s neck. If in any review of the new foreign residents scheme we simply pander to the property lobby giving it what it is only interested in (continued chance to just sell what earns it only ever larger commission kudos) then we will only continue to fuel the societal ditch that – again in a small country like Malta – divides the areas and the people living in Malta among themselves.

I am not saying there should only be one type, or price, of property. Definitely not. But I am saying, yes, that it is imperative that as much enthusiasm and legal constructs be present to get this big lump of national economic assets (the loanable funds, the work, the resources, the time, etc that went into them at some point in time or other) moving. Property taxation can be one avenue, a return to some revised form of requisitioning under more serious open and honest structures than those of the past, where it was turned into simple political robbery in many cases, more stringent registration requirements, and other ways, must certainly be explored even within and inseparably from the context of the current review of the conditions of the Permanent Residency Scheme.

Finance Minister Tonio Fenech is being wise when he insists the scheme must not strain the economy. However, the economy is one whole thing, and what happens in one area of it in Malta very quickly affects practically everywhere else. In a total property context, the economy, and the society within which it exists, are factually strained.

Grasping this opportunity to tackle the whole of the property issue would be a very good thing. Looking at whatever measures need to be taken only in terms of what EU rules say with regard to free movement of citizens and the right to own property elsewhere, could be very dangerous if not done within the specific realities of society and economy.

Pandering only to what the lobbyists say is also very dangerous and certainly the seed of eventually inevitable social strife or even, in the medium to long term, further economic woes.