MDA files judicial protest against Foundation for Affordable Housing scheme

The Malta Development Association has lodged a judicial protest against the government’s plan to build and sell housing below market prices, claiming it will lead to speculation, distort the property market and potentially break laws on state aid. 

The protest refers to a joint project by the Foundation for Affordable Housing, a joint venture between the government and the Archdiocese of Malta, to build 260 new housing units and sell them at 30 per cent below market price. The project is spearheaded by Housing Minister Roderick Galdes. 

The apartments will be available to people who cannot afford a property on the market but do not qualify for social housing. 

“The association is seriously concerned about the scheme, which while being promoted by the government as a social initiative, in reality will be denying individuals and families who are most in need from access to public land,” the MDA states.

The MDA added that the scheme could give rise to the exploitation of public land by some developers while excluding others, as well as negatively impacting the property market. 

It claimed that, unlike some other Housing Authority schemes, developers would essentially be getting the land for free. 

“It will be the chosen developer who will transfer the beneficial ownership and make a substantial profit,” the MDA states.  

“While it is true that the chosen bidder will have to incur the expenses of the development, the fact that they will not be paying for the land means that, even if they transfer the beneficial ownership at a price cheaper than the market, they will still make a substantial profit and have certainty that they will find a buyer for the property.” 

The MDA said that a more effective way to offer affordable housing to those who need it would be for contractors to get paid a fair price for their work, with the Foundation then transferring the property to the eligible persons, thus limiting the risk of speculation. 

The association also criticised the call for tenders, claiming that the two-month bidding period was too short when considering the scale and complexity of the required bids, especially since it started in the height of summer when many families were away on holiday. 

“Many companies, including MDA members, which would have been interested in participating, would have been working with reduced staff. It would also have been much harder to find service providers and consultants who would be prepared to take part in such a difficult endeavour, especially one that has to be completed in such a short time.” 

The association said this lent weight to suspicions that the call might have been intended to benefit “specific individuals or entities.” 

“It is immensely difficult, if not impossible, to prepare offers as expected by the Foundation in such a restricted amount of time.” 

Quoting EU case law, the association said the scheme could also breach rules on state aid. 

The MDA called on the ministry and the Foundation to immediately suspend the scheme and the bidding process, so that the aim of affordable housing could be truly achieved, “without discrimination, lack of transparency and potential breaches of the law.”