The suspension of the residence scheme for foreign property buyers was triggered by the case of a British cancer patient who received €500,000 worth of free treatment in Malta after buying a €100,000 property, The Times has learnt.

The elderly man was one of hundreds who took advantage of the Permanent Residency Scheme, which gave foreigners buying property worth more than €60,000 the option of obtaining residency. This, in turn, obliges them to pay tax here but also enjoy the benefits extended to Maltese citizens, including free health care.

A government official alerted the Finance Ministry about the case of this particular expat and the expensive treatment he was being given on the strength of his recently-acquired residency.

The information triggered a rethink of the system, which eventually led to the suspension of the scheme, to the dismay of the real estate industry, which, last year, saw 151 foreigners buying €35 million worth of property thanks to the scheme.

The industry is insisting the arrangement could have easily been modified to avoid similar scenarios without it being suspended, potentially closing the door to millions of euros in property sales.

Moreover, the case of the British expat was the only one the Chamber of Commerce, Industry and Enterprise had been informed of, real estate section president Ian Casolani said.

Government sources said the case highlighted the scheme’s loopholes and costs to the country, adding there were more, even if less sensational cases.

The sources said the scheme was never meant to incentivise the property market because the aim behind it was for wealthy non-EU residents to purchase property in Malta and invest more money here.

The Permanent Residency Scheme was suspended in December last year because of what Finance Minister Tonio Fenech described as “a level of incorrectness and abuse of the system”. More than three months later, real estate agents, developers, investors and potential buyers remain in the dark as to the scheme’s future, despite promises of a revised format being published “shortly”.

Mr Casolani agreed there were a number of loopholes that needed to be addressed but insisted that suspending the scheme was not the way to go about it. “We made a number of proposals to address these loopholes but have not heard anything from the government. No feedback whatsoever,” he said.

Among the proposals the Chamber of Commerce made, he said, was to increase the minimum rental figure from €4,100 to between €10,000 and €12,000 and to raise the minimum property price from the present €60,000.