A leading estate agent believes financial incentives should be offered to help fill some of the available stock of empty housing.

But subsidising the property sector with taxpayer money is not the solution, according to a prominent economist.

Quicklets co-founder and CEO Steve Mercieca and economist and leading pollster Lawrence Zammit were asked to offer ways to tackle the 81,600 properties that are not occupied all the year round, as revealed by the latest census data from 2021.

Such properties are described as secondary homes, properties that are only seasonally used, or vacant dwellings. 

They represent more than a quarter of the entire housing stock, despite the islands seeing a record increase in the number of dwellings over the last decade.

Yet, according to Mercieca, there is still not enough stock to accommodate the demands of the market. 

“Although there are ‘many vacant’ properties, the reality is these are not habitable and not in a suitable condition to be rented out,” he said. 

“Currently there isn’t enough new stock to supply the demand. Built and vacant properties require massive investment that might not be available to the owners,” said Mercieca.

He added that many unused properties were likely to be the result of disagreement between shared beneficiaries of inheritances. 

“The reality is that government incentives to help redo these dwellings will help entice heirs to invest and rent them,” he said. 

Mercieca suggested measures including VAT refunds on works to vacant units and tax breaks for EU business owners wanting to migrate to Malta.

But Zammit disagrees with this approach, focusing instead on the need to change Malta’s economic model.

“We shouldn’t subsidise the property market... there’s no way we should spend taxpayer money on the sector,” said Zammit. 

Instead, the results of the recent census “confirm views that I’ve held for a long time... that this economic model based on construction and low-cost imported labour is unsustainable”.

When asked what could be done to address the number of unused properties, Zammit believes a first step should be limiting Malta’s population, which last year stood at over 540,000. 

“There are no short-term solutions, but we cannot have more people in the country... this will help self-correct the surplus,” he said, pointing to the potentially increased spending power of a smaller population. 

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“We have to move up the value chain. Once we do, people will pay more for certain things, yes, but they’ll earn more too... we need to consider changes to our lifestyle.

“Other countries have had issues with young people getting onto the property ladder and they successfully dealt with this through things like social housing schemes.”

More spending power would help the younger generation to get onto the housing ladder while a reduction in population would also help limit demand, Zammit said. 

"Currently, there isn’t enough new stock to supply the demand"

Last year, a paper published by the Housing Authority warned that young people were being priced out of the market, concluding that “housing, be it rental or purchase, is unlikely to be a realistic prospect for young people in Malta were it not for government intervention or family assistance, unless they marry or cohabit, or relocate to Gozo”.

Mercieca, however, is sceptical this approach can address the immediate issue of derelict properties, calling the country’s economic model and empty dwellings “two totally different things”.

On the country’s reliance on foreign workers, Mercieca questioned whether Maltese young people would be willing to fill the subsequent gaps left in the employment sector, for example in catering and hospitality.  

“This is the problem we have. Everyone wants all the comfort and convenience in the world and expects top service but cheap property prices. It’s not possible,” he said.  “We complain about construction and high property prices. Unless these dwellings are restored and used, the construction has to keep up. Otherwise, we’re going to be seeing a lot more room-sharing and bed rentals.

“I’m not saying this model works. I know the model is broken. Many workers earning money here are sending it out of Malta. But that conversation is much larger than this and not really connected to 82,000 empty dwellings.”

In a statement on Saturday, the Malta Developers Association played down the whole issue of vacant property. 

It said it was unfortunate the National Statistics Office was unable to provide figures for secondary, seasonal and vacant homes separately and that the market experience of developers and the public should be relied upon instead.

“It is a known fact that renting and buying existing property is becoming increasingly difficult. Thus, the idea of these dwellings being mostly vacant does not hold,” it said. 

Not only were “around 80 per cent” of the Maltese population homeowners, but many had also invested in a second and third property, the MDA said. 

“Vacant property is definitely less of a factor today than before, and in most cases, it is directly related to long-winded court disputes related to inheritance,” the association said.