Kaizenlog

Welcome to Kaizenlog.com If you're new here, you may want to subscribe to my RSS feed , Twitter You can contact us by using the contact form or submitting a comment. Thanks for visiting!

Press Conference 28/10/2007
Malta at risk of a property crash – AD

In a press conference held in Sliema, Alternattiva Demokratika - The Green Party stated, in very strong terms, that Malta is risking a property crash because it is represented in parliament by a government and opposition who ignore the fundamental problem of over supply in the property market. The Greens stated that nether government not opposition have the policies do deal with this problem; worse still is the fact that they do not have the courage even to admit the problem. Ever since the Census 2005 was published, the media of the two large parties have ignored the shocking statistic of vacant property stock, a fact that evidences the parties’ unholy relationships with the construction industry lobbies.

Chairperson Dr. Harry Vassallo stated that “as we have been saying for many years now, Malta is over supplied with residential property. The Census 2005 reveals a property stock of over 53,000. If one deducts from these holiday homes of some 10,000, but adds all the properties that have been built since 2005, it results that the number of purely vacant properties is close to the 50,000 mark. Over one fourth of this country’s property is lying vacant - for government this does not even seem to be an issue, since nothing was even mentioned in the budget. The capricious environmental destruction and health hazard resulting from this is immense and will affect future generations. At this stage we believe that the country faces a serious risk of a property implosion, particularly if MEPA grants more permits to build complexes with thousands of apartments for which there is no effective demand. A responsible government would recognise the risk the country faces and take action. The
opposition must also understand that it is in the national interest to face this issue.”

Edward Fenech, spokesperson on Finance and the Economy then explained what the Green party’s proposals are to but an end to what he termed “the crazy status quo”. He said that “at this point the most important thing is for government to have policy in place to ensure the better utilisation of this gigantic property stock whilst discouraging more building that will continue destroying this country’s environment, whilst putting the country at even bigger risk of a property crash. At the rate we MEPA is granting permits, the vacant property stock will rise to a level that will certainly lead to a sharp drop in prices; a situation that will harm thousands of families. In this regard we are proposing the following:

The decision to extend buildings outside development zones taken last year should be reversed. With so many vacant properties, there is no need of extending development zones any further.

The resources of the construction industry must be diverted towards restoration and maintenance of properties rather than new construction. With 53,000 vacant properties there are enough residences for the next generation.

Government should impose basic standards of maintenance on these vacant properties. Nobody should be allowed to keep property in a derelict state to the detriment of residents who keep their properties well maintained. Property rights also come with responsibilities.

The government should consider our proposals to implement a system that actively encourages more of these properties to come onto the market for rent or sale, whilst discouraging property hoarding. We have specifically proposed a system that will exempt both primary residences and holiday residences. It will apply only from the third property upwards. With this system, all those owning three or more properties would register these properties and declare their values. On an annual basis they would be subject to a charge amounting to just 15% of the rental value of the property, which the law already states should be 3%. This will amount to an annual charge of 0.45% of the capital value. For example a property worth Lm 50,000 would be subject to an annual charge of just Lm 225. However if that property is rented out, then there are no income taxes to be paid. Rent would effectively be tax-free. This system would, simultaneously, incentivise rent and discourage hoarding.

Dr. Vassallo concluded saying that “it is truly disappointing that this government, with the support of a silent opposition, has allowed the building of so much property that now lies vacant and unused, especially when you consider the tiny dimension of these islands and the critical lack of open spaces. What we have is a useless and hideous environmental scourge in order to please the building industry, that is financing the two large political parties. It is pathetic then listening to government battling on how they are proposing to assist first time buyers, when there is clearly no shortage of supply. The most effective policy to assist first time buyers is to have a system that puts more properties onto the market; a measure that will allow property to be priced at a more affordable level. The system that we are proposing will encourage more properties to come onto the market, both for sale and rental. In addition it will generate between 7 - 9 million liri per annum, a sum that
government can use to assist all those in need, rather than measures just focused towards first time buyers. Government has no reaction to this situation apart from mimicking the proposals of the MLP with a paltry half a million liri.

Ralph Cassar
A/PRO
99894962

Popularity: 2% [?]

Listen to this podcast

 Print This Post

This entry was posted on Monday, October 29th, 2007 at and is filed under Malta.You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.