On 7 November 2024, I wrote an article about affordable housing for the Popolin. The proposal for affordable housing models emerged after intense on-the-ground campaigning for the MEP elections. Initially, the idea was to explore a model where the government sells units at a price of at least 30% below market value to create a sub-market counterbalancing speculative pricing. Over the past year, these policies have evolved as new challenges and opportunities arose. Policy in this area is dynamic, and approaches are frequently reassessed to better address emerging needs. While I do not support distorting the property market, I support targeted corrections to reduce speculation.
As I explained, policy on affordable housing continues to evolve, allowing for regular revisions and reassessments. Policymakers now revisit and reshape earlier approaches to reflect new realities. The EU is also currently re-examining affordable housing models, recognising the issue as EU-wide. This recognition comes partly due to the influence of platforms like Airbnb and Booking.com and changes in travel behaviours. These developments highlighted new challenges for the housing market, prompting updated policy responses. Furthermore, Malta’s policy of taxing rental income at 15% continues to encourage property investment. I hear from acquaintances who own multiple apartments and reinvest in property. Good luck to them. May they own another five or more apartments. While this spurs economic growth, it also drives prices higher, illustrating an evolving policy landscape needing ongoing adaptation.
The idea of affordable housing has evolved, and it makes more sense today to build units with an expression of interest that is given to those who offer the best pricing. Let’s say that an average apartment of one hundred square metres costs three hundred thousand euros. The costs must be apportioned between land, building, finishes and a profit for the developer; otherwise, we will not have anyone participating. Sixty per cent of the cost relates to the land, which, in this case, we must take the opportunity cost of it only, as the developer will not incur the cost of land. The rest of the forty per cent is made up of building, finishing, and a profit margin. In this case, it would cost around one hundred twenty thousand. This means that the government could issue an expression of interest around this price. Those building the apartment would still benefit from a profit of, say, around fifteen to twenty thousand euros, which is a decent amount. And if they are careful with costs without diluting the quality of the buildings, I am positive that they would earn more. However, the government can then sell the properties at around two hundred thousand, which is one hundred thousand less than the market, constituting around 33% less than purchasing property from the primary market. Like this, the government could help additional persons become homeowners, with conditionalities attached to these properties. Those purchasing from this market are obliged to sell with the same condition of 33% less than the market value after, say five to seven, years to ensure non-speculation and keep controls.
But you might ask, what shall the government do with the difference of eighty thousand euros? The money can either be explored to be used for Malita Plc, thereby ring‑fencing money to make it more profitable, or else use the same money to reinvest in additional affordable housing, or else split the money to allocate part of it to refurbish the social housing units, which were never refurbished since the 1980s. It had to be the PL government to refurbish them, using part EU funds from the ERDF and national funds to install elevators, as well as refurbish the facades. Besides, the government can explore with the EU the use of the EU Budget guarantees for developers to reduce the interest rate solely for these projects and perhaps earn additional profit to enter this market. It is a win-win situation. The idea is to provide decent profit for those building and developing, and a reasonable price to those who want to become homeowners, in tandem with the tax incentives introduced in the Budget 2026 to promote the fertility rate, which is the lowest in Malta relative to the other EU member states.
Another idea, which can be part of a wider concept, is to ask developers who are given a permit to build luxurious apartments, including additional floors, to invest money into Malita Plc or any other means of funding setup, so they go for affordable housing. If a mega project will yield millions to an investor, allocating an additional say ten million euros for affordable housing would bring some equity. It is fine to propose gardens and open spaces investment to the local council and affected communities. However, this is not enough. What we would need is additional millions to provide for others. Fine, those risking their capital and finding government assistance must reciprocate to society. I know many of them, even developers, who are ready to provide such funding to go for affordable housing, as ultimately, we need to have some sort of equity in this country. This must be a wider policy, not in the form of CSR but in the form of promoting ESG, especially the S.
We cannot have a situation in this country where a section of society has excesses, and others have nothing. The haves and have‑nots must not be promoted in Malta. It is true that the government is giving money to first‑time buyers in terms of one thousand euros a year over ten years, saving on the stamp duty tax, and equity sharing. However, this is not being felt by those purchasing property, and this is reflective of when we say that the economy is growing but is not serving its people. Because the trickle‑down economics is not being felt by those affected. And only the way I am proposing policies could be felt. Besides, the government must accelerate the idea and the policies I am speaking of because the wealth that was created over the past decade risks being lost in populist terminologies and narratives, primarily promoted by those who truly believe in exploiting the vulnerable.
