The government is to establish the value of properties expropriated before 2003 as being that applicable on January 1, 2005, unless compensation would already have been determined, according to a Bill which went before Parliament yesterday.

The Bill amends the Land Acquisition (Public Purposes) Ordinance.

Justice and Home Affairs Minister Tonio Borg explained that the purpose of this Bill was to provide fairer compensation for expropriated properties and to regulate the value of land compulsorily taken possession of by the government before 2003.

The minister said expropriation sometimes could not be avoided, but it was important that only land needed for strictly public purposes was taken over.

In 2002 the law was amended so that, from then on, the amount of compensation was notified at the same time as the President's declaration of expropriation and the funds were duly deposited in a bank account. The landowner could withdraw those funds while also contesting the amount in court.

There was still a problem, however, with regard to the value of properties expropriated before March 5, 2003 over which no "notice to treat" had been issued and therefore no compensation value had been fixed.

It was now being laid down that the value of such properties would be that as on January 1, 2005 and interest would apply at five per cent from the date of the expropriation declaration issued by the President. Dr Borg said the Bill also better defined what was a building site and what was not, a situation which had an important bearing on the compensation price. The Bill now laid down that land would be deemed to be in a building area if it fell within the limits of a building scheme or a local plan. This amendment would only apply for new expropriations. In considering compensation, the government also had to consider the use or development which could be made on the site.

Dr Borg said the Bill also removed reference to the President of Malta in clause 33 of the principal act.

Joe Brincat (MLP) said he felt that all references to the President should be removed from the law since it was the government which was actually responsible for expropriations and compensations.

He also felt that the principal act should be clarified with regard to how one should challenge whether a public purpose existed for an expropriation. There should be a specific judicial review mechanism.

The Bill, he observed, established a cut-off point on the level of compensation for old expropriations. In other areas, such as with regard to old properties taken over under the laws of possession and use, the landowners were still being paid ridiculous amounts.

It was good that, since 1993, a new system was introduced for the prompt payment of compensation, but the Lands Department needed to settle the compensation for old expropriations as well.

Charles Buhagiar (MLP) said it was right that compensation criteria were being established on the basis of development areas, but there was still a problem that private architects were commissioned to assess values and there were wide disparities between their valuations.

Mr Buhagiar said the value of land was invariably set with an eye on the use that could be made of it. There had been cases of land for mixed use eventually becoming land for industrial and warehousing use, with the resultant appreciation in value. This could also lead to serious inconveniences for neighbouring residents, not least in noise, traffic and parking problems.

Mr Buhagiar laid on the table of the House a copy of a petition by scores of residents of Hal Mula, in Zebbug, highlighting their plight in this sense. The original petition had been sent to Mepa.

Another problem concerned what could be expropriated for public use. Back in the 1960s a large area of land had been expropriated for construction of the Freeport at Benghajsa. Unused land had been given back to its original owners after a court case. Then a new expropriation order was issued because the Freeport had decided to expand. It was highly questionable whether this could be done, especially as the Freeport was no longer government property. Mr Buhagiar criticised the government over the confused way how it had introduced the property tax.

How was the 12 per cent tax to be calculated, especially if a development took years to complete? There were too many unanswered questions, showing that the new system had solved nothing. Neither was it fair that the new rule applied to areas where foreigners could buy real estate at will. Most of these areas had been given out by the government on emphyteusis, meaning that the developers had not forked out any money to purchase the land. Paying 12 per cent instead of 35 per cent was simply playing the developers' game.

Stefan Buontempo (MLP) said both sides of the House agreed with the Bill because it meant justice would be done to both the government and the owners of expropriated land.

A perennial problem all over the world was how to evaluate a site that was not built up: the value was very subjective at best.

Dr Buontempo said the time had come for estate agency work to be regulated, because agents were encroaching on the work of architects in property valuation.

The government should also say what it intended doing with regard to hoteliers who were granted public land at cheap rates to build hotels but were now using those sites for apartments. These did not encourage tourism or employ people.

He called for action to remove injustices with regard to properties affected by possession and use procedures.

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