Last Updated on Thursday, 26 September, 2024 at 10:04 am by Andre Camilleri
A report published by the Housing Authority on five schemes aimed at facilitating home ownership in Malta showed that 1,391 households were beneficiaries within a span of 5 years, with an expenditure of over €52 million.
The Housing Authority said around “1 household (was) assisted to become a homeowner every 2 days”. It said that the expenditure on these schemes has increased substantially over time, with the Housing Authority investing more than €52 million on the five schemes, between 2017 and 2023.
Furthermore, the Housing Authority said that in the first 6 months, between January and June, of 2024, a total of 137 households benefitted from these five schemes so far, with the Sir Sid Darek (SSD) scheme being the most popular with final deeds signed with 68 households, followed by 38 households through the Equity Sharing scheme and 26 households via the Deposit Guarantee scheme. It added that whilst the uptake of the New Hope scheme is broadly in line with that observed in 2023, the beneficiaries from the Social Loans scheme continued to decline.
The Housing Authority schemes aim at improving housing affordability in Malta can be grouped into 3 categories; first, schemes intended to assist buyers or tenants to become homeowners; schemes that provide financial assistance to improve rental affordability and finally; schemes intended to increase buyers’ purchasing power and make the property more habitable.
The Housing Authority said that five schemes are available to help prospective buyers or tenants to become homeowners. These are: the Deposit Guarantee scheme, the Equity Sharing scheme, the Social Loan scheme, the New Hope scheme, and the SSD scheme. It added that all five are targeted towards the needs of specific target profiles, primarily based on age and income.
The Housing Authority explained that Deposit Guarantee Scheme, introduced in 2020, is intended to assist persons under 40 years who are eligible for a home loan but do not have the necessary liquidity to pay the required 10% down payment. It explained that the deposit, through a home loan, for properties worth up to €225,000, would be repaid over 25 years at no interest as it would be borne by the Housing Authority itself.
The Housing Authority said that the Equity Sharing Scheme, introduced in 2019, is aimed towards individuals aged over 30 years who, due to their age and income, cannot take a loan that suffices to purchase their home. It explained that by this scheme, the Housing Authority would purchase up to 50%, not exceeding €100,000, of a property worth up to €250,000.
Meanwhile, the Housing Authority said that the Social Loan Scheme, introduced in 2017 in collaboration with two leading commercial banks and the Foundation for Social Welfare Services, provides low-income earners with a monthly subsidy towards their home loan with the total amount of loan, where applicable, covering the deposit related to the purchasing of the property. On the other hand, it said that the 2021-launched New Hope Scheme is targeted for individuals who face difficulties when taking up a life insurance policy needed for their home loan due to medical conditions.
The Housing Authority said that the fifth scheme in this series, the Sir Sid Darek Scheme, whose current scheme was launched in 2014 with similar schemes previously existing, serves to provide an opportunity for residents residing in eligible social housing properties to become owner occupiers and continue using the property as their ordinary residence.
The Housing Authority explained that its expenditure on these schemes increased substantially after 2020 whilst pointing out that it invested more than €25,000,000 between 2017 and 2023 on four schemes, excluding the SSD. It added that most of its expenditure is accounted for by the Equity Sharing and the Deposit Guarantee schemes, which together account for 95% of this spending. Furthermore, it said that since 2017, the subsidies provided by the Authority to tenants on SSD purchases amounted to more than €27,000,000.
The Housing Authority broke down the schemes as follows; since 2017, the number of beneficiaries for these five schemes are: 700 for the Sir Sid Darek (SSD), 261 for the Deposit Guarantee, 244 for Equity Sharing, 174 for Social Loans and 12 for the New Hope. It explained that the higher number of SSD beneficiaries are chiefly due to the current version of this scheme being in place since 2014, whilst the deposit guarantee and the equity sharing schemes had been introduced in 2020.
The Housing Authority said that furthermore, the report analysed how these schemes target different age profiles, income levels and marital statuses. It explained that the beneficiaries of the Deposit Guarantee, Social Loan and New Hope tend to be young adults, the Equity Sharing targets relatively older individuals, while most of the beneficiaries of Sir Sid Darek are over 60 years old.
In a breakdown of the analysis, the Housing Authority said that the beneficiaries of the Deposit Guarantee and the Social Loan Schemes are primarily young adults, aged less than 30, followed by those in the 30-39 age group with the New Hope scheme also having a broadly similar age profile. Meanwhile, it said that the Equity Sharing scheme consists of 61% of the beneficiaries being in the 40-49 age group and 25% in the 50-59 age bracket. It added that more than 80% of the SSD beneficiaries are over 60 years old.
Honing in on the Deposit Guarantee scheme, the Housing Authority found that despite the younger age of the beneficiaries, they tended to have a higher income than those of the Equity sharing scheme with just over half of those who benefitted from the Equity Sharing having an income of less than €19,000 per annum, with another 20% having an annual income between €19,000 and €21,999. It said that meanwhile, only 10% of the Deposit Guarantee beneficiaries earned less than €19,000 with 31% of the beneficiaries reporting an income between €19,000 and €21,999, and nearly half of them earning between €22,000 and €30,999.
With regards to the marital status of beneficiaries, the Housing Authority said that between 45% and 60% of the beneficiaries of the Deposit Guarantee, Social Loan and New Hope are single individuals, whilst slightly more than half of those who availed of the Equity Sharing scheme were separated. On the other hand, it found a significant share of beneficiaries of the Social Loan scheme also included single parents. Finally, it said that married couples represent more than half of those who benefitted from the SSD, followed by those who are widowed.
The Housing Authority said the report in question is the first in a 3-part series documenting each of the previously mentioned categories, with the present one focusing on the first category: those aimed at facilitating homeownership. It said that Malta is a nation of homeowners with the latest Census confirming that Maltese households have one of the highest homeownership rates in the EU.
The Housing Authority said that the 2021 Census found that Malta’s overall homeownership rate stood around 75% noting that this share is generally lower than that obtained in other surveys, such as the EU-SILC, primarily because the latter tends to inadequately cover the migrant population in Malta. It added that one of the main advantages of the Census is that its granularity allows for a decomposition of the homeownership rate by citizenship status and pointed out that the Census makes a distinction between three citizenship categories: Maltese, non-Maltese and mixed households consisting of both Maltese and non-Maltese persons.
In light of this, the Housing Authority said that 2021 Census found that the homeownership rate for Maltese households stood at 85% compared to 80% in 2011, at a time when the foreign population amounted to slightly less than 5% of the total population. It pointed out that on the contrary, the 2021 Census found that the homeownership of non-Maltese households stood at just 45%, confirming the prevalence of rental accommodation for this group, which mostly consisted of foreign workers. It added that, “as expected”, mixed citizenship households “stand somewhere in between”, with a homeownership rate of 72%.
The Housing Authority said that the report is the first in a 3-part series that documents the main categories of the Authority’s schemes and that subsequent reports will focus on those schemes that provide financial assistance to improve rental affordability and those that are intended to increase buyers’ purchasing power and make the property more habitable.
