Empty homes boost

Living rooms across the country lit up yesterday evening as Maltese families settled down to follow the Budget speech. But there was little warmth in the tens of thousands of vacant properties across the country.

In 2005, it was estimated that there were 53,000 vacant properties in Malta. Some now put the number closer to 70,000. Whatever the true figure, there is widespread consensus that the issue must be tackled and people encouraged to restore vacant dwellings rather than build new ones.

With this in mind, the Budget announced a series of measures aimed at incentivising the use of vacant property.

Property heirs will be spared any duty payments on property transfer documents up to the end of 2013 in an attempt at encouraging consolidated property ownership.

Individuals who choose to restore a property for private use will benefit from a 20 per cent rebate up to a maximum of €5,000.

Those who restore properties to rent for residential purposes will be levied a flat 10 per cent withholding tax on income; commercial properties will pay 15 per cent. If individuals or companies decide to sell their vacant properties, they will pay a 10 per cent withholding tax or 30 per cent tax on the gain. This latter rate replaces the previous 35 per cent rate.

20 per cent

– is the rebate that individuals who choose to restore a property for private use will benefit from

In an attempt to encourage companies to invest in dilapidated buildings and relocate to aging town centres, companies will receive a 20 per cent tax credit on any restoration costs they fork out for Grade 1 and Grade 2 scheduled buildings.

Such buildings are protected and can only undergo restricted restoration and renovation works but the Budget announced that the Malta Environment and Planning Authority “will be widening the permitted use for these types of properties” to allow them to be used as guest houses, offices and other commercial premises.

The Budget, however, specified that the tax credit will only apply to renovation works not demolition and rebuilding.

There was the briefest of nods towards first-time buyers, with the Finance Minister saying the government will ease the payment of loans and help build and renovate first residences without going into any further detail.

Approximately 2,800 families in Valletta and Cottonera, living in houses built on government-expropriated land, will be given the option of buying their homes outright thanks to a €1.8 million fund being given to the Land Department. This fund will capitalise on the acquisition rent paid on such properties over the past decades.

One further property-related measure was announced. Home owners will now be able to rent a second property out to families qualifying for a rent subsidy with such rentals qualifying for a 10 per cent withholding tax rate.