Malta’s developers are at odds over the removal of a tax incentive for Gozo property purchases, as announced in the budget.
Prominent property developer Joseph Portelli, a Gozitan, described the plan to raise the stamp duty back to five per cent on properties outside an urban conservation area (UCA) as “not good news” for the island.
The Malta Developers Association, however, said it agreed with the move and praised the government for encouraging renovations and purchases in UCAs instead.
“Whereas before, incentives were needed to encourage property sales in Gozo, today it seems that is no longer the case,” said the association’s president Michael Stivala.
“It is good the government has decided to focus its efforts on incentivising the sale of properties in UCAs and the renovation of vacant ones."
Portelli said the stamp duty scheme had been a success, noting that only his ventures in Sliema and St Julian’s performed better than those in Gozo.
The revised rate was “not good news for Gozo, but at the same time I understand the government,” he said.
He added that the lack of Gozitans on the MDA was “not healthy” as there was no one to “fight for the island’s rights”.
The five per cent stamp duty on Gozo properties brings it back in line with the rest of the country. The sale and purchase of properties inside UCAs will remain tax-free.
Gozo property buyers have benefitted from a reduced stamp duty since 2017 as a way to encourage economic growth on the island. However, the government has recently been facing criticism for allowing rampant construction on the island.
Finance Minister Clyde Caruana announced during his budget speech that the measure would not be extended into next year. He gave little reason for the decision, saying only that it was part of the government's strategy to preserve Gozo as "an island of villages".
The Gozo Regional Development Strategy promised greater protection to the island's heritage and distinctive characteristics.
The Gozo Business Chamber also reacted positively to the measure, saying the two per cent stamp duty had “incentivised the wrong type of property development on the island”.
“It was necessary when introduced but was never tweaked to align itself to the new realities... it should not be a simple question of removing it but replacing it with the right type of incentives,” a chamber spokesperson said.
Such incentives should be aimed at encouraging upmarket developments and rescuing dilapidated vacant properties, he said. This more positive type of development would be aligned to Gozo’s socio-economic priorities.
In August, the Gozo Tourism Association urged the government to remove all fiscal incentives on the sale of buildings and land for development into apartments.