Press Release - Federation of Estate Agents (Malta)

The Times of Malta today published a press release from FEA (Malta).

The title was "Estate Agents still unhappy with capital gains tax system" and the full article can be read by clicking here.

The Federation of estate Agents, in this article, also commented about the recent exchange of correspondence in The Times relating to the rental of property owned by non-Maltese (see previous blogs by clicking here).

Another article on the same newspaper, titled "Sliema residents split over proposed changes" is a resume' of the raging battle between Qui-si-sana residents and the goverment over a new car park, and also with regards other plans published in The Times on Wednesday including proposals to reorganise traffic in Sliema and pedestrianise parts of the town centre.

This previous article titled "Consultation over Sliema traffic plans" on February 22nd. 2006 can be read by clicking here.

In the letters section of The Times of Malta, a reader wrote in under the title "Bypass Safety" (click here to read letter)vis a' vis the imminent danger presented by the half collapsed bypass running over St.Paul's Bay toward's Xemxija, which had collapsed and been half cordoned off by concrete barriers due to excavations on an underlying building site. More recently a further mudslide swept off half the foundations from under a residence, leaving part of it perched in mid air.

MEPA is claiming it is not responsible for the safety of projects it has sanctioned, and this responsibility lies with the developer and architects. An inquiry into the matter has been ordered by Environment Minister George Pullicino , and a report should be issued within 6 weeks from February 8th. 2006.

National Architecture policy to be drawn up

The process to draft a National Policy for Architecture was launched yesterday at the Fine Arts Museum in Valletta, with a view to bringing Malta's built environment in line with EU practices.

Chamber of Architects president David Pace said the policy's aim would be to inform the public of their rights to enjoy a built environment that was socially, economically and environmentally sound; to work towards achieving a sustainable built environment for today's and future generations; to raise awareness of and protect cultural aspects of the built environment; and to contribute towards achieving good governance in architectural matters.

The full article on today's Times of Malta can be read here.

While such a step is heartening, and brings us one step closer to providing island residences of superior quality, I am stupefied as to why the maltese Federation of Estate Agents isn't being involved.

Landlord collecting rental arrears

Today's Times of Malta published a letter by Edward Delicata of St. Julian's.
The story echoes many other similair problems landlords are having with tenants who moved in under the old rental laws.

Following is the letter:

Tenant's Trickery

A tenant owed the landlord rental arrears plus interest and legal expenses amounting to Lm1,070. The tenant had to evict the premises by court order.
The tenant, as a last resort, provided a hazy assurance of payment by showing off cash amounting to Lm1,070. In spite of legal assistance provided to both parties, the tenant managed, by this hideous act, to obtain the best condition possible in renewing occupancy of the tenement, that is, leaving the owner without the money and occupying the premises once again by depositing in the registry of the court an amount of Lm180 as rent for a period of six years.
Furthermore, the premises have been valued by an architect at Lm8,000 in an occupied state and at Lm30,000 if vacant.

EU citizens rights to rent out their property in Malta

Dr. Simon Busuttil MEP wrote in today's Times of Malta, primarily to answer Dr. Peter Caruana Galizia's 'The Hybrid Holiday Home' article which in turn was written following yet another write up by Dr. Busuttil.
The centre of the debate is Malta's accession negotiations with the EU where the acquisition of immovable property (AIP permit) issued to EU Citizens precluded them from renting out a holiday home they purchased here in malta, when absent from the island.

Dr. Busuttil's letter titled 'Renting out property' can be read by clicking here.

The Times of Malta also published two more property related letters today. One from yet another angry reader who writes in about the now infamous Mepa debacle in Xemxija. The letter titled 'MEPA weak with the strong' can be read here.

Another letter titled 'Proper consultations' targets the recent cabinet meetings in Parliament discussing the white paper on rent law reforms. The article can be read here.

The white paper mentioned is the first step in the liberation process for properties rented out before 1995, where tenants had an automatic right to inherit these properties, and where many landlords are still collecting a pittance in rent per annum yet unable to evict the tenants.

Malta's Green Party is also seeking to abbrogate these socially unjust rent laws by a referendum, wherin 30,000 signatures have to be collected.
The pressure is definitely on, and the question is not if the reform takes place, but when, given that the next general elections are in 2008 and there are more tenants then landlords if one is fishing for votes.

Federation of Estate Agents meets Hon.Tonio Fenech

This morning the Maltese Federation of Estate Agents (FEA Malta) had a meeting with Hon. Tonio Fenech, Parliamentary Secretary in the Ministry of Finance. The meeting had been scheduled for last week, but was postponed to today at 10.30 am. by the Parliamentary Secretary himself.

The discussions centred on the following:

Property for Rent

Following a push by various entities to regularize the sector, the Federation has suggested a final withholding tax of 10% and a reduced license fee from the MTA (Malta Tourism Authority) on long lets, this to give owners incentive to fully regularize their position. The current scheme calls upon the landlord to pay 1 month's rent (non-refundable if contract is broken) to MTA, and 35% tax on profits. The only current exemption is 20% of the yearly rental income to cover maintenance costs. The rental income from a property is still relatively low when compared to it's sale value.

Final Withholding Tax

Following representations on the matter by the federation, no final withholding tax will be charged on our commission as long as this is mentioned in the convenium. Although the law has some weeks yet to pass through parliament, in the interest of the vendors that were going to opt for the 12% final withholding tax, the amount of commission and VAT due to the estate agent is to be mentioned in the convenium, for deduction.

Rental of property owned by EU citizens

No AIP is necessary if a property is bought by an EU citizen in order to rent it out - See my last posting below covering the discussions by Dr. Simon Busuttil MEP and Dr. Peter Caruana Galizia in the Times of Malta.

Newspaper articles today

Today's 'Talking Point' article on the backpage of The Times of Malta, continued putting pressure on MEPA (Malta Enviroment and Planning Authority) with regards to the Xemxija mud slide due to illegal development.
The article is available here under the title 'Safety and MEPA don't mix' by Mr. Joseph Grech, highlighting the ridiculous situation wherein MEPA is stating that is not responsible for the safety of property developments it sanctions.

The hybrid holiday home

Dr. Peter Caruana Galizia wrote an informative article on property buy-to-let options for foreigners, in today's Times of Malta, the essence of which is captured in bold text and reading: 'Once there is no pre-acquisition permit there can be no rental restriction.'

His article kicks off straight to the point.

"Simon Busuttil (February 1) argues that foreigners, including citizens of European member states other than Malta, should be allowed to rent out a Malta holiday home....."

".......The matter has not however been put in its proper perspective and Dr Busuttil is not quite right about the outcome of our negotiations."

Dr. Caruana Galizia's article goes on for the full length of page 12 of today's Times of Malta, and can be read online here .

He has assisted in the implementation of the necessary amendments to the law regulating the capacity of non-residents to acquire property in Malta following Malta’s accession to the European Union.

Dr. Simon Busuttil is a maltese MEP and the article in question from February 1st. titled "Owning Property in Malta" can be read by clicking here.

Inquiry into building site mudslide

Finally a positive headline on the Times of Malta front page vis a' vis the Xemxija mudslide. Click here Times of Malta 09/02/06 for the article and read a previous letter in the same newspaper dated January 30th. 2006 from a concerned property owner.

To quote part of the article, architect George Pullicino, the enviroment minister, is reported to have said:-

"In terms of the law, MEPA (click the link to see their new State of the Enviroment Report - A snapshot of the state of Malta's enviroment) had nothing to do with civil matters such as the safety of construction and potential damage to properties of third parties, issues of ownership and servitudes."

So what prevention system is there in place to protect property owners from developers? The law courts take years on end, and Polidano doesn't show up 99% of the time anyway, if we want to take him as a case in point. The other alternative, the Malta Arbitration Centre can settle disputes faster but lacks enforcement, and both parties have to agree and apply in writing for arbitration procedures to commence.

Meanwhile we have to contend with a legal amendment that will come into force shortly raising the maximum fine for the sanctioning of illegal development to Lm10,000 from the current Lm1,000.

Property Hijack

Again within the past few weeks property is making the headlines in the local papers. Again, and for the umpteenth time the issue has nothing to do with "real" estate laws, that is laws encouraging the quality of homes purchased, or incentivising the better upkeep of the enviroment in habitable areas, or improving the protection of home owners from falling prey to rampant illegal construction sites due to ineffective MEPA practices and loopholes.

If real estate legislation is in the headlines, you can bet your last penny that the subject line is property tax, the commercial aspects of the industry, and the creation of more side laws, and therefore more loopholes in the process. A viscious circle solely benefitting accountants no doubt.

To tax a property sale is of course understandable. Everything under the moon is taxed. However the current arguments raging on, see today's Times of Malta (Fenech, Dalli disagree on property tax), remind me of ancient Rome, where it is said that towards the end of the empire, the study of law and oratory had more to do with the the study of exceptions to the rule; directed at anomalies and designed complication rather then to any laws governing the reality of daily life.

There are quite a few crafty developers and businessmen on the island, and I'm not wearing rose tinted glasses yet. Some of these people will evade tax and use diverse mechanisms to do so no matter what. After making life miserable for all and sunder, with the man on the road trying to work out what is owed to the goverment on a one off sale, once the noose is closed tight enough, these predators will simply switch to a different vehicle to play their games leaving everyone else clear the mess.

When is real importance going to be given to the quality of units sold, and a sustainable development around them? When will small construction sites be properly screened off containing the dust and debris from billowing out into neighbouring homes? When will newly built units left in shell form be properly sealed off from the winter and not left humid, wet and cold for months on end, creating misery and dampness for buyers at a later stage?

When will property owners stop breaking into cold sweat when reading articles like this published in the Times 5th. February 2006 ? When will proper care be given to an increase in the real value of property, coming from proper legislation, social laws and sincere urban planning, and not from inflated costs?