The decision to publish the second half of the Census 2005 during budget week was a masterstroke in attempted political cover-up. With all the TV Budget debates, discussions and shouting matches going on, as well as dozens of articles in the print media, government was calculating that the shocking statistics that would be published in the Census would escape the public eye. Indeed, this report contains the most shocking statistic of all, but one, however, that comes as no surprise to the Greens. The Census declares that there are (in 2005, and growing) 53,126 vacant properties, equivalent to some 28 per cent of all property stock.
For many people such a statistic may not be any cause of concern. People who reason like Joe Saliba and George Pullicino may be tempted to say that this is a sign of national wealth. Kemm ghandna gid! When you think like a green, however, this statistic arouses just one emotion – anger. Why have successive governments, in a country this size and this densely populated, treated land as a commodity of infinite supply, rather than our scarcest, and hence most precious, national resource? Why, ever since Independence, have they encouraged the building of so many properties when so many more were being hoarded and left vacant? Why have they allowed the erosion of more of our countryside, denying successive generations the right to open space? Why did they, just months ago, sanction more building outside development zones when there exist enough vacant properties to house the next generation? Why did they sanction the building of more than 9,000 residential units in 2006, adding at least another 6,000 properties to a vacant stock of 53,000? How can Dr. Gonzi present another budget without even mentioning this?
The mind boggles at these questions. However, it is not difficult to understand why this has been allowed to happen when you consider that only two months ago the Secretary-General admitted that his party is financed by building contractors; likewise the opposition. This is something the Greens have been alleging for two decades. It was no surprise that neither Nationalists nor Labour had ever sued us over this allegation. We were right. Had they taken us to court they would have had to open their books and reveal what we already knew.
What is really absurd is not just the fact that there are so many vacant properties, but that government and opposition behave as though there aren’t any. Over the last three weeks Labour and the PN have been battling over whose policy to help first-time buyers is the best, ignoring the fact that property is not in short supply, but actually in over-supply. As soon as Labour announced its earth-shattering measures to “help” first time buyers (who also, not coincidentally, happen to be first time voters), the government snatched parts of this proposal and copied them into the budget. They will be dedicating the grand sum of half a million liri. Wow!
It is not my style to cry over split milk. The situation is what it is. However, there is no reason – social, political or economic – to allow the situation to get worse than it already is. If we were represented in Parliament by responsible politicians, they would deal with this issue without any further delay. What, then should happen?
The first thing that should be done is to reverse the mad decision to extend the development zones. There is no valid reason why government should endorse any more building on more virgin land. If government believes that the drawing up of building zones in the 1980s caused serious injustice to some people (certainly not to all), then it should provide financial compensation to those affected – full stop. The second thing that must be done is to enact legislation to enforce basic standards of maintenance on vacant property. It should not be acceptable for people to hoard property and leave it to rot to the detriment of residents who keep their homes in good shape. Property ownership comes with responsibilities.
Thirdly, as we have already proposed, we should introduce a beneficial tax system that actively encourages more properties to come onto the market (for rent or sale), and discourages hoarding. AD is proposing a system that excludes both primary and holiday residences. It would apply only from the third property upwards. Owners of these properties would have to register them and declare their value. They would then have to pay income tax of just 15 per cent on 3 per cent of the property’s value. For example, the owner of a property worth Lm45,000 would pay, each year, Lm202. However, if this property is rented out, then there would be no further tax liability. Effectively this system would greatly benefit those already renting out their property and those who intend to. Those who choose to keep their properties vacant should be free to do so, as long as they pay the annual charge. With this system, more properties would come onto the market for rent and sale, at more affordable prices and the construction of more properties for hoarding purposes would be significantly discouraged. The system would have to grant time concessions to those who, for example, are caught up in inheritance disputes.
On the basis of 50,000 vacant properties, this system would bring in between Lm7-9 million per annum. With this money, government can do at least three things. It can provide rent subsidies to the needy. It can introduce incentives to those who need to maintain their properties and it can give assistance to all buyers rather than just first time buyers, for example through tax relief on loan interest paid. Most importantly, we believe that the system would bring prices in line with economic reality.
Edward P. Fenech is Alternattiva Demokratika Spokesman for Finance, the Economy and Tourism