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Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case MT-2020-24/1173 Updated – measures in Malta

Measures to support the construction and property industries

Miżuri li jappoġġjaw l-industriji tal-kostruzzjoni u tal-proprjetà

Country Malta , applies nationwide
Time period Temporary, 08 June 2020 – 30 June 2022
Type Legislations or other statutory regulations
Category Promoting the economic, labour market and social recovery
– Support for spending, stimulus packages
Author Luke Anthony Fiorini (University of Malta) and Eurofound
Case created 23 September 2020 (updated 30 June 2021)

Background information

COVID-19 had a marked negative financial impact on several sectors in Malta. By means of a tripartite agreement, a package of measures to save jobs and organisations was agreed and announced by the Government on 24 March 2020. Amongst the measures in this package, wage subsidies were offered to sectors which were worst hit. During a 'mini budget' announced on the 8 June 2020, which aimed to regenerate Malta's economy, government announced another package of measures. Some of these measures aimed at supporting the property market, and in so doing also supported the construction industry, as the sale of properties slumped during the first few months of COVID-19.

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 June 9 and March 31 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 were not eligible, these 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: aimed at assisting those who are unable to afford a home loan deposit, a government loan covering the 10% deposit (or up to €17,500) payable upon signing a promise-of-sale agreement is being offered. This measure is limited to the first 300 applicants and is means tested depending on martial status, income and capital assets.

Updates

The following updates to this measure have been made after it came into effect.

16 June 2021

In view of its impact, the reduction in stamp duty measure was again extend whereby the scheme remained open to individuals who formed a 'convenium' (promise of sale) by December of 2021, and subsequently signed a final contract of sale by June 2022

15 October 2020

In mid-October 2020 it was announced that the 'First time buyers scheme' value of property exempt from paying stamp duty is to be extended from €175,000 to €200,000.

Use of measure

The Malta Developers Association (MDA) announced that according to its data, June, July and August 2020 were record months for property sales since 2017. They stated 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.

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

By means of a tripartite agreement, a package of measures to save jobs and organisations was agreed on 24 March 2020. This was the third but 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 was 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. Essentially, 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) but was implemented in June 2020.

Views and reactions

On announcement of the measures, the Malta Developer's Association (MDA) stated that it was pleased that its suggestions had been taken onboard by Government. It later also highlighted in July and August 2020 that following these measures the property market prospered and indicated that this was due to the Government measures that were instigated.

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.

Whilst 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

    • Economic area Sector (NACE level 2)
      F - Construction F41 Construction of buildings
      F42 Civil engineering
      F43 Specialised construction activities
      L - Real Estate Activities L68 Real estate activities

This case is not occupation-specific.

Sources

Citation

Eurofound (2020), Measures to support the construction and property industries, case MT-2020-24/1173 (measures in Malta), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.