Government unaware of market value of land and property it owns

NAO audit finds government is not aware of the market value of all the land and property it holds

File photo
File photo

Malta’s Lands Authority has no readily available reports giving the government a snapshot of the total number of government-owned properties, as well as those in use by third parties, and vacant properties.

The finding, established in an audit by the National Audit Office, shows that the only data available is the comprehensive micro-data in the Land and Estate Management Information System (LEMIS), but this restricts the Authority’s ability to manage the lands effectively.

Additionally, the NAO found that a significant number of former Church properties, transferred to government in terms of the Church-State agreement, were recorded with incorrect details and not being charged their rightful rents, resulting in loss of revenue to government.

While the Lands Authority says that it has a master report showing the total number of government-owned properties, it cannot confirm that all this property is inputted in LEMIS since a reconciliation was never carried out between the physical files and LEMIS.

“Government is not aware of the market value of all the land and property it holds... despite being the Government’s most valuable fixed asset, the property is not recorded in the Authority’s financial records, notwithstanding that the latter was granted the power to acquire, hold and dispose of any kind of property,” the NAO said.

In September 2021, the government introduced a revision of commercial leases and recognition of lessee’s heirs, replacing the revisions and recognitions previously based on market value, by a 5% annual increase to June 2028, when all leases will automatically expire.

This commercial rental value was estimated at €19 million in 2021, with €18.8 million being actually invoiced. But revenue collected came at just 69% of the budgeted amount – €13 million.

The NAO said that a number of former Church properties had been recorded in LEMIS with incorrect details, such as wrong identity card numbers and addresses, and so could not be invoiced.

The NAO said important documentation relating to properties are still kept in physical files at the Lands Authority, and although scanning is in process, the vast majority of records are still not digitalised. Copies of these documents, including contracts, are kept in separate files, referred to as white files. “However, both the main files and white files were kept in the same location. Hence in the event of any possible damage to the property, such as in case of a fire or flooding, all records will still be lost,” the NAO said.

The NAO also said the Authority does not do regular monitoring to ensure that the commercial contracts’ provisions are observed, “mainly that the tenants making use of property were the ones recognised with the Authority. Instances of abuse were either acted upon following reports from the public or in certain cases triggered by actions occasionally undertaken by the Authority.”

As at end-December 2021, substantial amounts were owed to the Lands Authority from mainly private individuals, for a historic amount of €56.3 million. 48% had been outstanding for over a year.