Affordable housing foundation rejects MDA state aid claims

The Foundation for Affordable Housing has rejected Malta Developer Association (MDA) claims that its scheme to build housing for sale at below market rates constitutes state aid. 

The MDA had filed a formal complaint with the European Commission, alleging plans to develop apartment blocks for sale at 30 per cent below the market value amounted to “potential unlawful state aid”. 

The association asked the commission to investigate the state-church affordable housing scheme that it said granted "selective economic advantages" to certain projects, according to a copy of the letter published by MaltaToday. 

Responding to the claims, the foundation’s CEO Jake Azzopardi said the scheme “conforms fully to European State Aid regulations”. 

For a measure to constitute state aid, there should be evidence of state intervention, such as grants or preferential terms, recipients being granted a selective advantage, distortion of competition and the likelihood of affecting trade between EU states.

Exemptions are granted in specific circumstances and in line with certain policy objectives, the Commission notes on its website.

The MDA letter claimed all four criteria are satisfied by the housing scheme, while pledging to provide “detailed supporting documentation, factual information and market data” to support its claims.  

Rejecting the claims, Azzopardi said the scheme “is providing to a specific target market, ensures that buyers use their property as their primary residence, emanates from a legal entrustment, whilst the transfer of lands controls excessive profit”.  

“All four projects are open to an open public call in line with the rules of fair competition, in which numerous private developers participated”, he said, adding that applications to build the housing projects were in their final evaluation stages and that construction “may start later this year”. 

While the foundation had not yet received official communication from the commission, Azzopardi said it looked forward to sharing with the commission the “economic and social value this initiative will bring”. 

The CEO called the scheme a “great opportunity” to prove that Malta could provide affordable housing, with developers benefitting alongside society.   

“There are plenty of private developers who share with us this belief we hold firmly”, he said.  

Last week, it emerged that MDA secretary general Paul Attard and council members Anton Camilleri, known as Tal-Franċiż, and Pio Vassallo had resigned from the organisation.  

Sunday's MaltaToday report, citing industry sources, said the three were among the developers to have tendered for the affordable housing scheme and that they had left the association in protest at the European Commission complaint.  

The MDA has long voiced its opposition to the affordable housing scheme that is set to see 250 discounted residences built on plots of land across Fgura, Marsascala, St Julian’s and Kirkop.

Criticising the scheme last August, a month after it was announced by the prime minister, the association argued it risked destabilising the market while being unfair on those who bought property at the market rate, claims echoed in its recent complaint to the Commission.

The MDA also argued that the government should not give out public land to developers “for free under the pretext of affordable housing.”

The association filed a judicial protest against the scheme the following month, arguing, among other grievances, that selected developers would essentially be given land for free, and "who will transfer the beneficial ownership and make a substantial profit”.