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Maltese property owners demanding clarification from government

Owners of properties leased out from the Joint Office, currently subject to a ground rent redemption scheme, claim to have been prevented from applying for the scheme for four years, with the result that they might now lose up to 25% of the property value.

The government scheme was introduced in 2002, and described as a 'concession', encouraging tenants of leased government property to become full homeowners. Under this scheme, tenants were encouraged to redeem the ground rent against a small payment; but the conditions of the scheme were changed last month in order to clamp down on abusive property speculation.

However, thousands of property owners who tried to use the scheme have been told that their applications could not be handled for bureaucratic reasons. Now, under new rules, they stand to pay a potential tax of 25% on the total property value.

These new conditions, which are intended to discourage property speculation, provide for a charge of 25% of the total sale price should the property be sold within five years of ground rent redemption. After that, the percentage paid drops by 5% every five years.

Edward Bonello, communications co-ordinator for the Finance Ministry, confirmed the situation. 'If the premises are sold after redemption within the first five years, the payment of 25% takes place. If the premises are sold after five years, no percentage has to be paid to the government, unless the sale is done for redevelopment purposes. In this case, the scale of percentages according to the lapse of time from redemption of ground rent comes into effect,' he said.

Originally the scheme was limited only to properties transferred to the State from the Church after an agreement in 1991. In 2004, it was extended to apply to all government-leased properties; but soon after its implementation, a number of such residential properties were sold for inflated prices within days of ground rent redemption, to be converted into apartment blocks.

The government was appalled that some speculators made tens of thousands of euros from the scheme and many of the properties were turned into blocks of flats.

It remains unclear, however, why up to 3,000 of the 5,000 owners to apply since 2004 were turned down.