Tenants of retail outlets and catering establishments located on government property in parts of Valletta may convert their lease agreement into a 45-year temporary emphyteusis under a new scheme unveiled yesterday.
Ground rents will vary from €500 per square metre each year in prime commercial areas to €20 for shops located on the outskirts of the capital.
Details of this Shop Scheme were announced by Planning Parliamentary Secretary Michael Falzon.
He said early feedback from the business community was positive, as the scheme would allow tenants to use the property as collateral to take loans or invest.
The government would consider extending the scheme to include premises used as offices.
However, he warned that the government would be stepping up enforcement and taking all the steps – including eviction – if lease agreements were blatantly breached.
He said it was prohibited to split government-owned shops into several retail outlets or to rent out the property to third parties at exorbitant rates.
The scheme, which opens on Monday, will be applicable for Class 4B retail shops, as well as those selling food and drink, including those where cooking is allowed onsite.
Dr Falzon said outlets located in the City Gate Arcades, within the block of St John’s Co- Cathedral and the block around the Old University building had been excluded from this scheme. This was being done since in future some of these shops might have to make way for the extension of the new Parliament or the St John’s Co-Cathedral museum.
The ground rent will vary according to floor area size and geographical location. Shops along the pedestrian part of Merchants and Republic streets fall under the zone with an annual rate of €500 per square metre. The second most expensive are the secondary roads interconnecting Valletta’s two main thoroughfares, with a rate of €300 per square metre. The rate drops to €100 in zone three and €20 in zone four.
Though tenants will be allowed to transfer the emphyteutical concession to third parties, government reserves the right to refuse any such request at its sole discretion.
“Needless to say, a tenant wanting to transfer the emphyteusis to a third party intending to open a gentleman’s club or a discotheque in Republic Street would be a non-starter,” he said.
A €500 non-refundable administrative fee has to be submitted with each application and the scheme will remain open for a year.