A budget pledge to raise the stamp duty paid on Gozo properties outside of urban conservation areas has been postponed by a month.

The Gozo property scheme, which offers a reduced tax rate of 2% as opposed to 5% of the property value, was meant to be phased out by the end of the year.

This phasing out was promised as part of an effort to slow down the construction frenzy in Gozo.

However, it was quietly postponed on Friday, until the end of January.

Finance Minister Clyde Caruana told Times of Malta the decision was taken as a number of promise of sale agreements were still awaiting registration with Inland Revenue.

“So, in order to avoid unnecessary pressure, there was an extension by a month,” Caruana said.

The Gozo Business Chamber said this year that while the 2% tax rate had helped regenerate the stagnant property market in Gozo, the blanket measure was incentivising the development of large apartment blocks that were impacting communities.

This scheme, introduced in 2018, led to a doubling in the amount of property deeds registered in Gozo the following year.

The Gozo Regional Development Authority (GRDA) acknowledged the scheme increased property sales in Gozo but warned it could generate “unintended adverse consequences”, more so because it is open to all types of properties including apartments, irrespective of price, and does not distinguish between first or second-time buyers or other buyers.

It is also not tied to the buyer being based in Gozo, the GRDA said. It could, therefore, be “distorting the market by subsidising and encouraging haphazard and excessive holiday or buy-to-rent property development with possible repercussions to Gozo’s delicate environment and long-term economic consequences”.