While insisting there was no “property bubble”, the Finance Minister this morning said that government would be addressing the increase in rent rates by rolling out Budget incentives to increase the supply of property on the market.
Edward Scicluna was speaking during a pre-budget business breakfast in the presence of social partners, in which he gave a brief overview of the current economic situation and the way forward.
In his address, the finance minister hinted at some of the measures of the forthcoming Budget set for October 9, saying it would look at income issues across the board to support pensioners, "working poor” and other vulnerable sectors of society. Prof. Scicluna said that government was considering extending benefits rolled out three years ago to encourage those on the unemployment register to find a job. “The tapering schemes (whereby they kept receiving a fraction of their unemployment benefits to boost their income) will terminate this year, and we need to find solutions to have some incentives in place.”
“The tapering schemes (whereby they kept receiving a fraction of their unemployment benefits to boost their income) will terminate this year, and we need to find solutions to have some incentives in place.”
On the housing situation the finance minister acknowledged that rent rates had gone up and in some cases there had been “unacceptable” hikes. He said government had plans to seek a medium-term compromise which would be acceptable to both landlords and tenants.
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“There is no bubble but the issue is a question of higher demand than supply,” he said.
“The rental market needs regulation which does not mean price control,” Prof. Scicluna added.
For this reason, the Budget will include policies meant to increase the supply of property on the market in order to keep prices affordable.
During the debate Michael Stivala from the Malta Developers' Association called for an upward revision of the monthly minimum rent threshold set in the citizenship scheme, saying this was eating up most of the low-budget apartments on the market. Mr Stivala suggested a minimum threshold in the region of €3,000. However, Prof. Scicluna did not commit himself on the matter, saying this was an “interesting point”.
The finance minister also referred to the controversial plan to increase the annual leave allotment to compensate for public holidays which fall on a weekend. His comments were in response to criticism and warnings from employers and the private sector that such measure would dent their competitiveness.
However, Prof. Scicluna insisted that this would cost less than 0.5% of an employee’s salary, which would translate to an annual expense between €8 and 9 million. “'This is much less than the annual wage increases but businesses need time to adapt for it,” he pointed out.
Asked about the proposal to have free school transport across the board - even for Church and independent schools - in a bid to mitigate morning rush hour traffic congestion, he said the plan was to roll it out in October next year.