Background information

COVID-19 had a negative financial impact on several sectors in Malta. Through a tripartite agreement, a package of measures to save jobs and organisations was agreed upon and announced by the government on 24 March 2020. This package offered wage subsidies for sectors that were worst affected. During a 'mini budget' presentation on the 8 June 2020, government announced another package of measures. These measures aimed to support the property market and the construction industry.

Content of measure

In order to stimulate the property market, the government introduced the following measures:

• Reduction of stamp duty: The stamp duty rate on property purchases of less than €400,000 was reduced from 5% to 1.5% on contracts to be signed between 9 June and 31 March of next year.
• Reduction in sales tax: Tax for those selling property under development and tax on those contracts made after 1 June up to 31 March 31 2021 will be reduced from 8% to 5%.
• First time buyers scheme: Those who bought property before the scheme was introduced in 2013 will now be eligible for the scheme. The scheme allows buyers purchasing their first property to be exempt from paying stamp duty on the first €175,000 of the property’s price.
• Home Deposit Scheme: A government loan covering the 10% deposit (or up to €17,500) payable upon signing a promise-of-sale agreement is being offered to help people purchase a new home. This measure is limited to the first 300 applicants and is means tested depending on martial status, income and capital assets.

Use of measure

The Malta Developers Association (MDA) announced that June, July and August 2020 were record months for property sales since 2017. They stated that 4,088 promise of sale agreements were registered with a value of €860 million.

Citing the impact of these measures, the head of the MDA stated in June 2021 that the collective value of promises of sale had risen by €1.4 billion over the past twelve months. This was seen as beneficial to the country as the construction sector employed over 40,000 people.

NSO statistics revealed that during 2021, the government spent €138 million on COVID-19 real estate assistance programs.

The Minister of Finance announced in March 2022 that by the end of 2021 8,615 promise of sale agreements had been registered in terms of this scheme.

In September 2022, it was announced that more than 88,000 people benefited from the reductions in tax and stamp duty, saving €288 million. The measure was extended until the end of June 2023. The government stated that an additional 5,600 promises-of-sale are expected to benefit from this extension.

Target groups

Workers	Businesses	Citizens
Self-employed	Sector specific set of companies	Applies to all citizens

Actors and funding

Actors	Funding
National government Employers' organisations	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Agreed (outcome) incl. social partner initiative
Form	Direct consultation outside a formal body	Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

• Only employers' organisations
• Main level of involvement: Unknown

Involvement

Through a tripartite agreement, a package of measures to save jobs and organisations was agreed on 24 March 2020. This was the third and most significant package of measures announced by the government. Following this agreement, social partners remained in direct contact with the government highlighting their proposals of what they felt was still necessary to save the Maltese economy and jobs. In the case of measures for the construction and property market, this involvement was often through proposals submitted by the Malta Developer's Association (MDA).

In view of this, on the 8 June 2020 the government announced a 'mini budget' to help the Maltese economy to recover from the effects of the COVID-19 pandemic. This was the fourth package of measures announced by the government. With the exception of the government loan for first time buyers, the current measures formed part of this package. The loan was announced prior to COVID-19 (Budget October 2019) and was implemented in June 2020.

Views and reactions

The Malta Developer's Association (MDA) stated that it was pleased that its suggestions had been taken up by government. It highlighted in July and August 2020 that following these measures, the property market prospered thanks to the government measures.

Newspaper interviews however indicated that estate agent business owners felt that the first time buyer's measure should be raised to €200,000 to reflect the cost of property.

While announcing the extension of the measure whereby a reduction in stamp duty on property is to remain in force, the MDA and Government stated that the two entities were in regular contact and the extension was the result of such consultation.

Sectors and occupations

This case is not occupation-specific.

Sources

• 23 September 2020: Further new COVID-19 measures Malta (covid19.maltaenterprise.com)
• 16 June 2021: Times of Malta - Reduced property tax incentives extended to end of the year (timesofmalta.com)
• 21 March 2022: Times of Malta - Tax reduction scheme on property transfers extended to September (timesofmalta.com)
• 22 April 2022: Times of Malta - Deficit for 2021 reached 8% of GDP - the highest in the EU (timesofmalta.com)
• 09 September 2022: Times of Malta - Tax reduction scheme on property transfers extended to June (timesofmalta.com)