Vacant property in Malta worth €7 billion

Malta's stock of vacant property is an unused economic asset worth €7 billion Trafford Busuttil, a representative of the real estate section of the Chamber of Commerce said this morning. Were those funds to be active in the economy, they would generate some €350 million per year, he said.

Mr Busuttil was one of the speakers at a business breakfast organised by the Malta Developers' Association, the Chamber of Commerce and Industry, the Federation of Building and Civil Engineering Contractors and the Chamber of Architects.

Mr Busuttil noted that according to the 2005 census, there were 53,000 vacant dwellings in Malta.

Unfortunately, he said, returns from rental in Malta were still among the lowest in Europe.

He proposed a 10 percent withholding tax as a way to encourage owners of vacant properties to put those properties on the market.

Finance Minister Tonio Fenech said it was true that the rental market had not caught on as much as one would have wished, despite an updating of the laws by the government. The Maltese, he said, now had a culture of being home owners, which not a bad thing in itself.

Michael Falzon, president of the Malta Developers' Association, said abandoned properties had a role to play in sustainable development since they could be refurbished or redeveloped instead of further building on virgin land.

Vincent Cassar, from the Chamber of Architects, noted that a big chunk of the vacant properties did not comply with current  sanitary and planning laws and it was therefore very difficult for their owners to sell them. This, he said, was an issue which needed to be discussed further. 

The situation at Mepa dominated much of this morning's proceedings, with several speakers complaining about the fees and about procedures. Others complained of inconsistency in decision-making.

Mr Falzon said there was a need to reconsider the tariffs charged for development applications, especially regarding urban conservation areas.

He also argued that the Capital Gains Tax in Malta was too high - among the highest in Europe. He said this needed to be reviewed, as an incentive for the building of more energy-efficient buildings and to help first-time buyers.  

Mr Falzon and other participants also criticised the recently re-launched Permanent Residents' Scheme. Mr Falzon said the minimum threshold on the purchase of property was too high, the scheme was too bureaucratic and it was unworkable.

Mr Cassar asked if an impact assessment was made before the new scheme was launched.

Labour MP Roderick Galdes also argued that the scheme was overly-expensive and bureaucratic.

Mr Fenech, however, pointed out that the scheme was meant to attract high net value customers. If the minimum investment of €500,000 was too high, what high net value people did one wish to attract?

Mr Fenech said that under the former scheme, there had been a risk of people abusing, using Malta as a tax haven. Malta, Mr Fenech said, simply could not risk having its reputation as a financial centre undermined for the sale of a few properties.

Developer Anglu Xuereb called for more public private partnerships, such as for the development of car parks, schools and the regeneration of the area currently occupied by the Marsa power station.