Lawyers urge consultation on ‘excessive’ permanent residents’ scheme rules

Chamber of Advocates calls for consultation on new rules to end prolonged suspension of permanent residency scheme.

The Chamber of Advocates has expressed concern at the lack of government consultation on the suspension of the residence scheme regulations, previously brought to public attention by the Chamber of Commerce.

The rules facilitate the entry and indefinite stay of foreigners to Malta who must first fulfil eligibility rules on heir good standing, minimum income, and wealth requirements – primarily attracting affluent workers. But they were abruptly stopped by the finance ministry over suspicion of abuse.

The Chamber’s secretary-general Stefan Camilleri said the scheme had been abused by a “minority of advisors and real estate agents locally and board who highlighted too commercially the indirect legal consequences of taking up residence in Malta to further their business interests.”

Camilleri hinted that a significant incident where an EU national had qualified for overseas medical treatment for serious illness at the expense of the national health system, may have contributed to suspicion of abuse of the scheme.

He said many lawyers represent clients who had commenced their relocation to Malta only to find their residence status was now in limbo, after having paid for accommodation, transportation, school fees for children and other deposits on homes.

“While the Chamber sympathises with this reaction, amendments in 20006 proved to have gone overboard in assuring that documents presented in support of an application for residence were genuine to avoid real abuse,” Camilleri said.

EU nationals in Malta under the scheme are entitled to free healthcare by virtue of EU citizenship, but non-EU nationals can only access such medical care upon qualifying for long-term residence status.

“The Chamber agrees with the need to revisit the rules but it fears the changes being considered by government will go overboard in redressing these concerns, rendering the scheme unattractive at a time when Malta’s competitiveness is under attack by jurisdictions who are more sensitive to wealthy foreigners seeking residence therein,” Camilleri said.

Camilleri said Cyprus, Monaco, and Switzerland have been “fast to respond” with favourable conditions to attract the rich and affluent.

"The Chamber urges the government to open up discussions and expedite the issue of new regulations to bring to an end this prolonged period of uncertainty for applicants and approved families caught up in the midst of this suspension," Camilleri said.

Published MaltaToday Wed 27th April 2011

How to increase the sale value of your property

Here's an excellent short article from zillow.com about increasing the value of your property for sale.

Understand first of all that there IS a difference between price and value. Price is the amount you are asking for the property. Value is buyer perceived, and this perception of value is influenced by many factors such as location, features, condition, comparison to other purchase option, etc. By attending to details that can have a positive impact on the value, sellers can significantly increase their chance of attracting qualified buyers willing to pay the asking price.

Some tips to achieve a positive impact on value are:

• Perceived size impacts value, even more so than actual square footage. Open floor plans make a room feel bigger than larger spaces with smaller rooms. Showing property that is furniture free, or at reduced clutter, helps to make the space feel bigger.
• Vacancy increases sale-ability. Property is easier to show and easier to sell, and quicker to take possession of when it is vacant at the time it is offered for sale. Evidence of problems to take possession of the property -- such as encroachments, or tenants who wont allow buyer tours -- negatively impact value. Vacancy also helps the buyer walk through the property imagining ownership. Sellers should remove personal trinkets and family pictures as well as being conveniently absent during a buyer tour.
• Cosmetics are important.
  • Fresh paint will always add more value than it costs.
  • Clean or new carpet/flooring adds more value than it costs.
  • Landscaping adds more value than it costs. At the very minimum, make the entrance area neat.
  • If you can, add some colorful flowers and new sod.
• Take care of the obvious! The spot on the ceiling from the roof leak takes thousands of dollars from the perceived value and the offer price.
• Condition affects value. Do a seller's home inspection to identify and fix the problem BEFORE closing. No point holding up your check a few extra days; plus a failed buyer's inspection could cost you the sale. Buyers will often bargain down your asking price to accomodate for property condition and repairs.
• If you can, remodel/update the kitchen and master bathroom. These two areas have a big impact on home buying decisions.
• Strategic renovations impact value and your bottom line. Don't spend more money to renovate the place than you can recapture in value on the sales price.

Letter to the Editor - The Times of Malta

Tuesday, April 19, 2011, by John Hollamby, St Julians

Lack of meaningful statistics on property

There is a huge investment in property development, house and apartment ownership, mortgage investment etc. in Malta.
It follows therefore that there should be first-class analysis of trends in values, numbers of transactions and other important matters such as the number of vacant properties forming developers’ land banks, vacant new build property and no doubt many other critical pieces of information to enable the state as well as investors, would-be purchasers and sellers, mortgage providers and so on to make their decisions on a basis of reliable information.
However, the only published statistics, so far as I can see, is an analysis based on the number of properties being advertised and the asking prices. It is a fact of life that estate agents everywhere almost invariably suggest inflated prices in the hope of selling to an uninformed purchaser and also to attempt to “talk up the market” rather than give realistic advice or admit that there is a depression in the market. It follows therefore that this basis for statistics is fundamentally flawed. That a government department and the public should have to rely on such erroneous information beggars belief.

Kenneth J. Borg wants to stay in touch on LinkedIn

LinkedIn I'd like to add you to my professional network on LinkedIn. Kenneth J. Borg Managing Director www.62582.com Malta Confirm that you know Kenneth J. © 2011, LinkedIn Corporation

Residency scheme must not strain economy, says Fenech

A revised permanent residency scheme must ensure high-value people attracted to Malta contribute to the country’s economy rather than strain it, Finance Minister Tonio Fenech said yesterday.
The new scheme, intended to replace the one suspended in December, must strike a balance between the payback for the country and the strain caused by the benefits people taking up such a scheme were offered, he said.

Mr Fenech said talks were under way with the European Commission, which was approached by people who took advantage of the scheme and received their permanent residency permits and who asked for clarifications because they wanted more benefits.
The property scheme for foreigners was suspended after several cases prompted a rethink of the system, to the dismay of the real estate industry, which last year saw 151 foreigners buying €35 million worth of property.

One of the cases involved an elderly British cancer patient who received €500,000 worth of free treatment in Malta after buying a €100,000 property. Mr Fenech said it was not only this case that led to the suspension.

The elderly man was one of hundreds who took advantage of the permanent residency scheme, which gave foreigners buying property worth more than €60,000 the option of obtaining residency after five years. This, in turn, obliged them to pay tax but entitled them to the benefits extended to Maltese citizens, including free health care.
The industry is insisting the arrangement could easily have been modified to avoid cases such as the one raised by the government but without suspending it, potentially closing the door on millions of euros in property sales.

John Huber, a member of the management board of the Chamber of Commerce, Enterprise and Industry, said the case of the British cancer patient was not only “possibly a one-off case” but could be unrelated.
Any EU national who takes up residence on the island can have a Maltese health entitlement card without having to pay tax here. On the other hand, residence permit holders have obligations imposed on them, including the payment of a minimum tax.
“Suspending the scheme will not stop another case like the reported one happening, as long as Malta remains an EU member state. The chamber has been trying to convince the government this is not a property issue, but a holistic one that benefits the whole economy,” he said.

However, Mr Fenech said real estate agents were “wrongly marketing” the scheme by giving the impression anyone who took it up would have a right to free health care and education, as if they were Maltese residents.
“We have to be careful we don’t end up with a situation where the country’s citizens, through their taxes, pay for extra services in return for a small amount of €4,000 the country was making in tax, apart from the investment in property,” he said.
“We had a number of cases that opened our eyes and we have no option but to revise it.”

Asked about discussions with the Commission, Mr Huber said if Malta was being questioned, the government should ask the Commission to look into the Portuguese scheme introduced late last year, which was offering a 10-year zero-per-cent tax rate for retirees.
“We were already losing potential clients before the scheme was suspended. You can imagine what is happening now. The irony is we are ‘giving’ business away to competitors who we are helping to bail out,” he said.

Ian Casolani, president of the chamber’s real estate section, said these people did not need Maltese free health care and free education as “they have adequate cover for these already and do not need us to provide it for them”.

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