Clients for Malta’s citizenship scheme would be more inclined to rent property than to buy, something that Henley Estates is trying to influence, its managing partner Andrew Taylor said.
“Without Henley Estates’ influence, only five to 10 per cent of the clients would buy and the rest would just rent. Thanks to our long-standing relationship with the clients, we think we can change this ratio to 50/50,” he told The Times Business.
Henley Estates has been asking real estate agents to give them 80 per cent of the commission they would get from sales of properties to its clients – which is being rejected by most of the local firms as being too high given their cost structures, although he said that five had already signed up. Of the commission, 60 per cent would go to Henley and Partners and all the other intermediaries that brought the client to the scheme.
At the time, we were not aware that Henley and Partners would be taking over the citizenship scheme
Attempts are now under way by Identity Malta to find a solution but, in the meantime, the question in people’s minds remains: Why do we need to have Henley Estates as the middleman between Henley and Partners (from which it is independent) and local providers?
Mr Taylor shakes his head when faced with this question. He points out that Henley Estates came to Malta a year ago from Jersey because of changes to the legislation there which made it more favourable to come here. It opened an office just outside the Westin and started handling real estate requirements for clients in 10 countries.
“At the time, we were not aware that Henley and Partners would be taking over the citizenship scheme,” he vowed.
Henley Estates had to find a new model for Malta as in most of the countries where it supports citizenship schemes, particular developments are designated for its clients – something that would undoubtedly cause another political earthquake if it were proposed here. So whereas Henley Estates usually works directly with developers (except in Portugal), here they find themselves having to persuade clients to buy properties that they will not be able to sub-let, a concept they find quite bizarre, as it would result in many properties being left empty.
“It would definitely make more sense if there were a few good projects for clients to invest in. It would create a superb top level destination,” he said with a shrug.
In the meantime, however, developers are making contact with Henley Estates, which is asking for eight to 10 per cent as commission for any direct sales. “Since your article about the commission appeared [Times of Malta, March 4] we have had endless calls from locals who are asking to work directly with us, rather than the existing Maltese agents. This is the opposite of what we wanted to accomplish as we truly have good intentions to work and share our business with the local companies... to be successful together.”
Mr Taylor also warned that Henley Estates has long-term relationships with its clients and is determined to protect their interests.
“We are on our guard for unjustified price hikes,” he said. “We would spot any inflated prices very quickly and would simply boycott any developer or agent who tries it on.
The Malta Developers’ Association is also on the lookout for signs of abuse. Its president Sandro Chetcuti said: “If landlords and vendors abuse the situation, it would create an artificial price level which cannot be sustained. We have to keep our feet on the ground. Prices rise when demand rises but they have to rise by reasonable levels,” he said.
“We have to bear in mind that demand is not only rising because of the citizenship scheme but also because of other government initiatives like the first-time buyers’ stamp duty, the Global Residence Scheme and the flat tax on rentals.”
Mr Taylor seemed confident that local providers will eventually realise the value that they can add.
“Without a doubt, if a client asked Henley & Partners to refer them to another company they certainly would. In fact, as we know the real-estate market a bit better then Henley & Partners, they would probably ask us who else we could recommend and we would assist the client with finding another group to work with. If we are not the right company for a client, there is no hard feelings – that is their decision.
However, clients trust our brand and typically prefer to work with us rather than a group they are not familiar with – it is really their personal choice. That said, we are frequently recommended by past clients who were extremely happy with the service, so there is no second guessing most of the time.
“Keep in mind, our clients are all very wealthy and sophisticated people. They will do as they wish. Our clients can certainly just call up a local company and work directly with them, yet this very rarely happens as we provide an excellent and responsive service which affluent families expect.
“The selling commission rates in Malta are pretty much fixed regardless, so the client is not paying anything more or less when working with us, so it does not make financial sense to exclude us. It really comes down to the service level and if they are happy with our service,” he said.