Update 2: Agents say Australia Hall was grossly undervalued

Update 2: Agents say Australia Hall was grossly undervalued

(Adds PN, PL statements)

“Ridiculously low” is how property dealers and estate agents described the sum of just over €582,000 the Labour Party says Australia Hall and 6,000 square metres of land in St Andrews were sold for.

Although both Labour and the buyers – A.H. Development Ltd – insist the price reflects “the reasonable value of the property” in terms of the Income Tax Act, people in the real estate business contacted by Times of Malta disagree.

According to taxation laws, upon the transfer of property, the seller will have to pay capital gains tax and the buyer the stamp duty.

The tax payable varies according to the value of the sale declared in the contract. The lower the price declared, the lower the taxes to be paid.

This newspaper looked up real estate websites to view prices being quoted for property in the Australia Hall area.

A 500-square-metre plot of land for development in St Andrew’s is being offered by Re/Max for €905,000 (see table). The area is one-twelfth of the land sold by Labour. The same applies to similar plots in areas adjacent to St Andrew’s such as Pembroke and Madliena.

Industry sources told Times of Malta the current market price for land in St Andrew’s stood at about €1,000 per square metre.

“Even if the area is not good for development, something which is not the case for Australia Hall, the price of the whole transaction is grossly far off the current market price,” a leading property agent said. “I will be more than happy if the Labour Party offers me this property at twice the price it sold it for. I’ll buy it tomorrow,” he added sarcastically.

Another estate agent explained that although the price mentioned could reflect what the historic building (Australia Hall) and the adjacent land would have fetched 20 years ago, when the original promise of sale was signed, “it is surely far off the mark in today’s market”.

“I would like to know the name of the government architect who will sign a declaration that the property’s value reflects current market prices,” the estate agent said.

By law, stamp duty has to be paid according to the current market value of the property when the final contract is signed.

According to the contract signed by Labour last July, the stamp duty was set at €29,120 and was in relation to the price of the promise of sale signed in 1995.

The law puts stamp duty at five per cent of the declared sale of the property.

A government architect would have to agree with the value quoted following a site inspection. He may order a re-evaluation if he feels the sellers under declared the value of the property.

Site Size Price Status
Plot for development  (St Andrews) 500sq/m €905,000 For sale (Re/Max)
Plot (Pembroke) 562sq/m €730,000 For sale (Frank Salt)
Plot (Madliena) 600 sq/m €800,000 For sale (Frank Salt)
Australia Hall + land 6,112 sq/m €582,343 SOLD by Labour Party

PN statement

In a statement this afternoon, the Nationalist Party said this continued to show how corrupt the Labour government was.

The case, the PN said, uncovered a number of scandals, one worse than the other.

Labour had dropped the government's court case against the party, it then sold the property while a law against party financing was on Parliament's agenda, and it declared a ridiculous value for the property to pay only a fraction of the tax due.

PL statement

The Labour Party replied that Australia Hall was given to the PL in compensation for the former Malta Shipbuilding and a large tract of land it had bought from the private sector and which cost much more.

The contract signed now was based on a promise of sale reached nearly 20 years ago on prices the party had been bound to. The contract had taken such a long time to be published because of the two court cases, a constitutional one by the Nationalist Party and a vindictive one by the Nationalist government. The PN had eventually dropped its case.

The PL said political parties in Malta were exempt from tax payment so it was another malicious lie that the PL had declared a low value to pay less tax.

The PL said that the PN’s allegations were libellous but at this stage it would not be taking legal action as it would be difficult for the PN to pay the damages because of the financial situation it was in.

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