IIP agents annoyed they must back up property values with architects’ declarations

Identity Malta, the agency responsible for the sale of Maltese citizenship through the Individual Investor Programme (IIP), has set up a compliance unit to investigate potential abuses after a MaltaToday investigation found properties registered to new citizens appeared to fall below the threshold of prices.

Last June, MaltaToday ran a story titled “Letterbox millionaires – Not all Malta’s golden passport buyers are buying €350,000 property”, which article made reference to a number of IIP citizens whose properties were clearly not falling either within the €350,000 acquisition mark or the €16,000 annual lease value.

In an investigation carried out by the Regulator of the IIP, it turned out that in the 13 cases selected by MaltaToday, 11 had leased their premises and in six of these cases the lease value was “nearly equal to the threshold” save for a €200 difference.

The regulator said this statistic implied the figure had been rounded upwards so that the rental would be in line with the IIP rules, or that the applicants had specifically selected a property that did not significantly exceed the minimum €16,000 threshold.

But in continuing market research, the regulator found that lease values in specific towns like Naxxar, Qawra, Zejtun and Birzebbugia – where IIP applicants identified by MaltaToday leased their property – did not reflect real market prices. In the case of Zejtun, the regulator said: “One might be led to understand that the rental price of this apartment might have been lower than that which was eventually agreed with the lessee. Coincidentally the lessor in both the Zejtun and Birzebbuga cases was the same person.”

Subsequent to MaltaToday’s report, Identity Malta started to request accredited agents to provide a qualified architect’s declaration to confirm the values of the properties being leased and purchased

But subsequent to MaltaToday’s report, Identity Malta started to request accredited agents to provide a qualified architect’s declaration to confirm the values of the properties being leased and purchased; and has set up a Compliance Unit tasked with monitoring and investigating potential abuses.

This development has apparently annoyed the IIP’s own accredited agents, who told the regulator that the introduction of an architect’s evaluation was “not feasible”.

“They claim that architects are not qualified to give an evaluation of leased properties and that a more qualified authenticator should be found. Some suggested that the evaluation could be provided – in the form of a declaration – by themselves or by the estate agents submitting also photographic evidence in the process.”

The IIP agents contacted by the regulator even admitted that some of the properties purchased or leased by their clients might actually cost less, because there were not enough properties on the market to be leased out at €1,350 per month and so they were pushing up the prices of places that cost less.

“In this regard they remarked that if a client was willing to pay more for a property whose value is less, why were they (the agents) obliged to intervene?”

But the regulator noted that this assertion was incorrect, finding 2,152 properties on the online database of one of the main estate agents being leased at €1,000-€1,500.