Artificial hike in prices of property

The property market is passing through a bad patch and levies, such as the final withholding tax,were increasing prices artificially, according to developers.

The Malta Developers Association expressed concern at the way the property market was being taxed by the government, in particular the imposition of the 12 per cent final withholding tax on the market value of a property being sold.

“When this market is in difficulty, it is in the interest of the national economy to ensure there will be no obstacles to the process of what should be a free market, a market that leads to the rising and falling of prices according to circumstances,” the MDA said.

It said there were too many instances when the final withholding tax on what the government believed to be the market value was so high it exceeded the capital gain that was supposed to be taxed.

The association said the government was refusing to realise the property market had changed and that market values remained the same as they were in the past.

“This discourages the possibility that prices will go down and is putting those who are under pressure to sell their property at low prices because of bank loans and other factors in an impossible situation,” it said.

The MDA acknowledged that developers had to face the consequences of the risks they took and not expect the government to help them or subsidise them in any way. However, the tax imposed should be just and not one that led to an artificial increase in property prices when the circumstances indicated otherwise.