Suspension of property scheme ‘attacks Malta’s competitiveness’

Malta’s competitiveness in attracting the “rich and affluent” to purchase property and contribute to the economy is “under attack”, according to the Chamber of Advocates.

Chamber general secretary Stefan Camilleri said countries like Cyprus, Monaco and Switzerland were fast to respond” with favourable conditions to attract such “high-net-worth individuals”.

As a result, he called for consultation in an effort to come up with new rules and end the prolonged suspension of the Permanent Residency Scheme, after the government last year uncovered what it described as abuse of the scheme.

Under the scheme, foreigners buying property worth more than €60,000 were given the option of obtaining residency after five years. While this obliged them to pay tax, it also entitled them to the same benefits extended to Maltese citizens, including free health care.

Several cases prompted a rethink of the scheme, to the dismay of the real estate industry, which last year alone saw 151 foreigners buy €35 million worth of property.

One of the cases involved an elderly British cancer patient who received €500,000 worth of free treatment in Malta after buying a €100,000 property. Finance Minister Tonio Fenech said it was not only this case that led to the suspension. The industry is insisting the arrangement could easily have been modified to avoid cases such as the one raised by the government, but without suspending it, potentially closing the door on millions of euros in property sales.

Dr Camilleri said the scheme had been abused by a “minority of advisers and real estate agents locally and abroad, who highlighted too commercially the indirect legal consequences of taking up residence in Malta to further their business interests”.

He said many lawyers represented clients who had started their relocation to Malta only to find that their residence status was now in limbo, after having paid for accommodation, transportation, school fees for children and other deposits on homes.

“The Chamber agrees with the need to revisit the rules but it fears the changes being considered by government will go overboard in redressing these concerns, rendering the scheme unattractive at a time when Malta’s competitiveness is under attack by jurisdictions that are more sensitive to wealthy foreigners seeking residence therein,” Dr Camilleri said.

He urged the government to open discussions and “expedite the issue of new regulations to bring an end to this prolonged period of uncertainty for applicants and approved families caught up in the midst of this suspension”.