PN’s Property Tax Reduction Would Help Tenants And Landlords, Developers’ Lobby Says
Proposals set out by the PN could incentivise Maltese landlords and tenants to find common ground on skyrocketing rent, Malta Developers Association Michael Stivala has said.
The proposal refers to a substantial reduction in the rates of tax for the rental of property, across three brackets.
However, there are questions as to whether the system will benefit landlords.
Properties rented out at €300 a month will not be taxed at all, while those rented out for between €301 and €600 will be taxed at 7.5%, and anything more expensive will be taxed at 15%, which is the current flat rate.
Lovin Malta reached out to Stivala, to hear his views as to whether this could stimulate the lowering of rents from the private sector.
“The MDA was the first association to reduce the tax on rental property from 35% to 15%. In 2014. The Government accepted our approval,” he began.
“The revenue of the government in 2014 was €5.7 Million, while in 2020 the revenue was €57.3 Million.”
“Our proposals, for both parties was for landlords who rent the residential property for five years and more and for rents of €600 per month – that they will have their tax reduced drastically.”
“This will help tenants in lower-income groups and incentivize landlords to go for longer-term rather than the yearly leases.”
Should the system come into force, a landlord renting out a property for €601 would incur a 15% tax, with a resultant income of €511 per month.
Should the same landlord rent out the same property for €500, he would incur a tax rate of 7.5%, with a resultant income of €463.
In this instance, the landlord would only benefit should the rental fee be reduced marginally. Perhaps just enough to switch from the 15% tax bracket to the 7.5% tax bracket. It could be by just €5.
And if this is done? The landlord could attain the greatest income: €551 per month.
The issue was raised during a PN press call on Friday, addressed by PN MP Ivan Bartolo and spokesperson David Agius.
“Our aim is to stimulate the private sector,” began Agius. “It’s not an approach where the government tells you what to do, but the government gives you the tools to find more affordable accommodation.”
“This is why the scheme has been devised, after substantial consultation at every level – to stimulate the market concerned with the rental of property, to provide accommodation with more affordable prices. And this is why the brackets are as they are.”
“We would like to remind everyone that in actual fact, every rent – whether it is €200 or €2000 per month is currently subject to the same rate of tax. What we are proposing is a fiscal system to incentivize people to provide them with more affordable rents.”
Do you think this proposal is enough to stimulate the private housing sector?