Prices are dictated by spike in land value
by Keith Micallef
Property prices are on the rise as a result of a spike in the value of land, raw materials and labour costs and not because developers are becoming greedy, the Malta Developers Association president is insisting.
Sandro Chetcuti made this point when the Times of Malta sought his reaction to the pastoral letter from the country’s bishops marking the feast of the Nativity of the Blessed Virgin Mary, in which they called for more solidarity on housing.
In his reaction the MDA president said the Church should lead by example by using its own commercial bank and estates to support low-income earners acquiring their own property.
In their appeal, the bishops urged landlords and developers to adopt a social conscience and insisted that they should not be driven solely by greed.
“We Christians, who have a social conscience, should also have a heart and mind that exercise restraint on the rates that regulate the buying and renting of property according to just and equal criteria, underpinned by responsibility and solidarity,” the pastoral letter read.
The Church also expressed concern about incidents where families had no other option but to move out of their homes in the wake of overnight rent hikes they could not afford.
At the same time it acknowledged that ecclesiastical institutions should do more, despite their having already provided accommodation to 400 migrants and vulnerable persons in night shelters and homes.
In its reaction, the MDA agreed to the concerns raised by the Church but at the same time noted that a major reason for the rise in property prices and rents was the spike in the value of land.
“In the last five years a plot of land has doubled in price,” the MDA president said.
Moreover, he pointed out that stricter regulations for energy efficient buildings, increases in the prices of raw materials like concrete and steel and higher labour costs also resulted in properties becoming more expensive.
“Property buyers cannot be obliged by developers or the State to rent out their property below a reasonable value after having invested huge sums. This is not about developers or landlords being greedy but about recouping investments with all the risks involved,” Mr Chetcuti said.
The MDA insisted that the private sector’s first and foremost duty was to pay all taxes due, but it was up to the State to distribute the revenue to help those in need.
In this respect, the MDA remarked that the Housing Authority should lead the way to provide affordable accommodation for low-income earners.
Developers have expressed disappointment that in recent years the Housing Authority had only focused on maintenance work without keeping up with modern needs and necessities.
Mr Chetcuti also criticised the authority, saying it sold its properties and airspace at a pittance.
“You cannot have a situation where tenants who were given social housing decades ago still depend on the State even for minor maintenance work, while others are left waiting for assistance. There has to be a better distribution of the available resources by the Housing Authority, backed by the economic growth,” he noted.
Mr Chetcuti commended the various initiatives the Church had begun over the years to help the most vulnerable in society through institutes, orphanages and residential homes.
“While I subscribe to the Church’s appeal for more compassion with these people, I strongly believe that it could go a step further and make better use of one of its major assets – APS Bank,” he said.
“Such important assets, accumulated through the donations of benefactors, could be used to offer advantageous, even interest-free home loans at times, and other schemes whereby potential buyers who lack the financial means could be supported to acquire their own property.”
Mr Chetcuti called for schemes tailor-made to first-time buyers who cannot afford to take out a loan or lack the 10 per cent deposit to be eligible, saying this would be a very tangible way for the Church to practise what it preaches.
Moreover, he remarked that the Church was also in possession of other assets, donated over the years by generous benefactors, which could also be used as part of the drive to provide social accommodation.
Mr Chetcuti added that the MDA would be presenting other proposals before the next Budget.
“The higher the economic growth, the more sensible we must be to ensure that nobody lags behind,” he said.