Building up restoration

Property and development stakeholders woke up fairly content yesterday morning, with Budget measures deemed encouraging although lacking verve.

Foreign clients are intrigued by traditional Maltese buildings

“There were a couple of steps in the right direction,” said Trafford Busuttil, head of the real estate section of the Malta Chamber of Commerce, Enterprise and Industry.

“We would have liked a number of other proposals implemented but it’s a start.”

Malta Developers Association president Michael Falzon was pleased to see its proposal to incentivise development within Urban Conservation Areas (UCAs) had been adopted by the government.

As part of the scheme, companies will receive a 20 per cent tax credit on the costs of restoring Grade 1 and 2 scheduled buildings. Individuals will also receive a 20 per cent rebate, up to a maximum of €5,000. The permitted use for these buildings is to be widened to encourage their use as commercial premises.

Mr Falzon, however, felt the announced scheme was overly restrictive, as tax credits only applied to restoration works rather than rebuilding ones. “Many of these scheduled buildings are simply not suitable for modern-day office or home needs,” he said.

It would have been better, Mr Falzon felt, if rebuilding were permitted under strict conditions, such as leaving the façade intact.

Architect Richard Borg of Archi+ felt that, although the scheme was a positive one, it would not alleviate Malta’s vacant property crisis.

“Many vacant properties are not within UCAs. Developers need fiscal incentives to sell property they can’t get rid of,” he said.

To Mr Busuttil, although the scheme had its shortcomings, it symbolises a change in mindset. “For the first time, people are being rewarded for reusing and restoring property rather than using up even more virgin land.”

Din l-Art Ħelwa president Simone Mizzi described the urban conservation measures as “very good news”.

“It’s positive that the gov­­enment is encouraging the restoration and adaptation of old buildings to new use,” Ms Mizzi said.

Jerome Mamo of Simon Mamo Real Estate was also encouraged by the scheme, saying such measures helped promote the uniquely Maltese character of many village centres.

“Foreign clients are intrigued by traditional Maltese buildings and often seek them out. This scheme will hopefully increase the number of commercial properties available in old town centres.”

Praise was less forthcoming for the unchanged nature of Malta’s capital gains tax regime. As things stand, in most cases people selling vacant property must pay a 12 per cent capital gains tax. “The current system punishes developers forced to sell property at a loss,” Mr Falzon said.

Mr Busuttil agreed. “Sometimes an individual has to sell his property, even if it’s at a loss. Why should one be taxed on that loss?”

Both Mr Falzon and Mr Busuttil said they would have liked to see the option of paying a 35 per cent tax on profits, which exists for sellers within the first years of ownership, extended to all property sellers. In Mr Borg’s eyes, under the current system developers have little incentive to sell vacant properties.