Developers’ lobby calls for wider incentives on properties in urban schemes

The Malta Developers Association said Budget 2012 has ignored many of its suggestions aimed at provoking a recovery of the property market, among them the need for a revision of the Capital Gains Tax system on the sale of property as the 12% tax on the sale price.

The MDA said the tax was serving as an unjust weight in the present circumstances when property prices are going down, as well as the exaggerated valuations carried out by the government property evaluation after contracts are published.

Noting the announced increase on the duty on cement, the MDA said this would continue to increase the cost of construction at a time when the construction industry is facing a downturn.

The lobby also said the urban centres scheme's sole focus on property being restored or rehabilitated - and not if the property is demolished and reconstructed - was restrictive and would not lead to the fulfilment of the scheme's aims.

"In these urban centres one finds buildings that cannot be adapted for residential or commercial use with the facilities one expects to find nowadays. MDA has always insisted that reconstruction in urban centres should respect the characteristics of the area where the works are carried out and should not result in an increase in development density. If these principles are observed, the restriction in the scheme is not justified," the MDA said in a statement.

Apart from this, the maximum €5,000 in the refund on cost or restoration works renders this refund negligible, the MDA said. "This measure will surely not serve as an incentive for this work to be carried out."

The MDA also noted that the ggovernment has partially adopted a suggestion it made on the rental market in the case of taxation of rents received from tenants who qualify for rent subsidies.

MDA had asked government to introduce a system of withholding tax for all income from rents with a less onerous consideration in the case of rents subsidised by the state for social reasons. "The small step announced by government will not help the rental market to grow and become stronger."