Sliema, St Julian’s preferred choices for Malta’s new IIP citizens

When the Central Bank published a report on the increase in property prices, it unsurprisingly flagged the Individual Investor Programme as one of the schemes feeding the demand for property.

A report by the IIP Regulator, tabled in parliament last week by the Justice Minister, showed that the sale of 27 properties alone in 11 months amounted to over €28 million. Unsurprisingly, Sliema and St Julian’s were confirmed as the most popular locations among foreigners seeking to purchase or lease property as per requirements to buy Maltese citizenship.

Out of 134 properties, a report prepared by IIP Regulator Carmel De Gabriele found that a total of 95 properties were purchased or leased in Sliema and St Julian’s between July 2015 and June 2016.

The value of purchased properties – which included two in Valletta, and one each in Mellieha, Swieqi, Ta’ Xbiex and Sannat in Gozo – averaged €1.05 million.

The IIP has proven to be a solid source of revenue for the government: since the launch of the IIP until June, over €54 million were deposited in the National Development and Social Fund; over €23 million were deposited in the consolidated fund whilst Identity Malta Agency (IMA) received some €7 million.

IIP concessionaires Henley & Partners received €5.8 million.

Between June 2015 and July 2016 alone, contributions collected by IMA amounted to €166,550,000, which equates to approximately 1.81% of the GDP relative to the same period.

A total of 241 applications for Maltese citizenship were approved in 11 months, and 52 were rejected between June 2015 and July 2016

In terms of investments in government stocks, the amount invested in stocks during this period totalled over €20 million – add the €6.4 million generated prior to July 2015, and the total reaches €26,733,764.

The 52-page report delves into various aspects of the IIP, and goes as far as launching investigations into cases flagged by the media – as it did with a MaltaToday report on ‘letterbox millionaires’ – and summarising interviews with staff at Identity Malta and accredited agents.

The highly detailed report follows the management of the IIP between July 2015 and June 2016, and is the first to be drafted by De Gabriele since taking up the post of regulator in February from his predecessor, Godwin Grima.

In his foreword, De Gabriele also noted that recommendations put forward by Grima in the previous report were “still under consideration” by the government.

During the period under review, the Regulator noted a regular inflow of applications – 450 in all – as well as a substantial increase in the applications brought to fruition. 

A total of 241 applications for Maltese citizenship were approved in 11 months, and 52 were rejected.

On average, the number of applications received per month ranged between 34 and 44. The number of dependants amounted to 1,186 – on average, each application contained one main applicant and three dependants.

According to De Gabriele, the findings were “a clear indication of the enormous success of the programme, in just under 30 months of its official launching”.

Prior to applying for Maltese citizenship, the majority of main applicants, 391, only had one citizenship. But 55 main applicants already had two different citizenships; four others had three citizenships.

80% of the applicants opted to lease, with the rest of the 20% purchasing a property. Sliema and its immediate environs remained the most popular areas, although more property was leased when compared to purchased property.

In the case of leased property, the rental value for the duration of the five-year contract is projected to be over €13 million, averaging €125,346.14 per contract, the Regulator said.

As at end June 2016, the number of accredited agents stood at 132. With a number of European countries following in Malta’s footsteps and launching their own citizenship programmes, agents told the Regulator that they were not “overly worried” about this. 

“Many did not feel that such other schemes posed any significant threat, claiming that although these might be faster, cheaper and less stringent, Malta’s IIP has a more competitive edge since it enjoys a better reputation and was significantly boosted by the fact that it is the only scheme endorsed by the EU,” the Regulator said.

80% of the applicants opted to lease, with the rest of the 20% purchasing a property

A few agents, the report adds, commented negatively on the scheme, claiming that the problems which they were encountering – at every level of the process – were becoming progressively worse up to the point of questioning the feasibility of continuing to participate.

Some agents also complained that the concessionaire would always be at an advantage “because top government officials always seemed to participate in their related activities” – one of whom is Prime Minister Joseph Muscat.

A number of agents also criticised “what they consider to be a certain degree of bureaucracy”, complaining that IMA’s response to any external criticism “was to swamp the processes with even more paperwork”.

Staff at Identity Malta told the Office of the Regulator that the agency was struggling to cope with frequent staff turnover and with a lack of human resources.