Housing minister under fire from developers, Opposition MP over affordable housing plans

Updated at 5:25pm with Housing Minister Roderick Galdes reply

Housing Minister Roderick Galdes has come under fire from the Malta Development Association over the initiative to use public land for affordable housing projects.

The MDA criticised the minister for granting public land “for free under the pretext of affordable housing”, in a strongly-worded statement on Wednesday.

The association expressed serious concern at how an expression of interest was issued in the middle of summer with only a few weeks’ notice for interested parties to design and build apartment blocks on government plots.

The association said it disagreed with the idea that developers “should be granted public land for free to build social housing and profit from it”.

Galdes has defended the scheme, insisting that the government will "not let the market dictate matters in affordable housing".

"The government and the church have come up with a project that will offer affordable accomodation... this project will lead to the construction of more than 260 houses with prices that are around 30% below market price and from which Maltese and Gozitan families, including many young people, will benefit," Galdes said in a Facebook post. He added: "This shows the need for us to continue moving forward with this project."

The MDA was critical of the government-church initiative for the construction of apartments on public land and which will be sold below market prices. Developers will be expected to build the apartments and sell them at 30% below market price. The association said this will give rise to speculation.

“If Minister Galdes has given up on executing such projects through public contracts awarded in an open and transparent process, then he should reform the system and not open the door to abuse by giving away public land,” the MDA said.

It added that neither the minister nor “the agency”, presumably a reference to the Foundation for Affordable Housing, has the resources to monitor the quality of the works being carried out.

“This call will undermine the trust of those willing to invest their money in the property sector, as they will face unfair competition—including advantages from economies of scale and negotiating power—afforded only to a select few,” the MDA said, accusing Galdes of destabilising the value of properties by giving away land for free.

Expressions of interest for several plots of land owned by the government were issued in late July and the deadline for submissions is 14 August.

The MDA said other European countries use systems such as fiscal incentives and public-private partnerships for buyers, which allow part of their projects to be offered for sale or rent at below-market rates.

The association said the minister is only “thinking in the very short term”, without considering the consequences for the industry as a whole or the risks to the banking sector. It added that the chosen model also incentivises workers not to declare their full income.

The MDA encouraged the government to continue strengthening existing schemes that are functioning well and to abandon this project, which it said was launched without consultation and “will open the floodgates to abuse from sellers and buyers”.

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Opposition MP agrees with MDA, says scheme benefits 'chosen developers'

Meanwhile, Opposition MP Albert Buttigieg said he agreed with the MDA, adding that the affordable housing scheme would leave the chosen developers with a hefty profit because the land would have been given to them for free.

"This is a crafty way of cheating because everyone knows that the land that will be given away costs much more than 30% of the expense [to build the flats]. This means that the profit the developer will be making will be much higher because they would have got the land for free! I would not be surprised if these developers have already been chosen," Buttigieg said in a Facebook post.

The PN MP said it would have been better had the government built these apartments itself and subsidise the selling price, similar to what used to happen in the past. "Now, the chosen developers will rake up a good percentage of profit instead of this going to first time buyers," he added.