The construction industry remains one of Malta’s largest contributors to its economy, as per a recent study which KPMG was commissioned to undertake by the Malta Developers Association.
We are accustomed to a local property market wherein prices rise steadily and significantly from year to year. But, a word of caution – There is a limit to how long such a growth curve can be sustained and we must be aware of, and ready for the possibility of a deceleration.
One must always proceed with caution.
a foreword by Sandro Chetcuti, President of the Malta Developers Association
The MDA does not condone construction works which create undue inconvenience to the public. Accidents in which human lives are placed in danger – and third party properties damaged – are simply unacceptable.
The government is taking action to clean up the industry and I, for one, am glad about that. The Maltese public needs to be reassured that there will no longer be accidents as the ones which recently took place. The government, as you are aware, halted all excavation and demolition works and the law was swiftly amended within 10 days so that works could resume.
I know that many industry players were alarmed when works were halted, with many reporting their frustration as they had multiple sites in which works could not continue. We, as MDA have the good of the industry at heart and we enjoy nothing more than seeing people sustainably making money out of the industry. However we also have to abide by our responsibilities. And we agreed with the government’s directives because we too felt that this was good to our fellow citizens and ultimately to our industry.
We believe that when something is harming the industry, we have to be the first to report it and rectify the situation. That is our ethos. In fact the MDA instigated talks for the amendment of the legislation and contributed solidly towards the government’s decisions.
The government is taking action to clean up the industry and I, for one, am glad about that
I am aware that there are a lot of responsible players in our industry, which may have been negatively impacted by this action. There are a lot of contractors and masons who always work according to the required standards, but then, unfortunately, there are others who think that they can do anything. A lot of individuals entered the industry because they believed that they could make a quick buck, without having the necessary experience. Today we have reinforced our stand in ensuring that there is no place for amateurs within the industry.
We are aware that the amendments in the legislation might somewhat slow down the industry’s rhythm, but we would much rather move towards a path which prioritises professionalism over uncensored growth.
The MDA agrees with the government’s directives which had halted works whilst new legislation was being established.
The proposed changes will ensure that more caution is taken during excavation and demolition works, even as guarantees required by insurance companies for people who are building or demolishing property next to third parties have increased. The competent person who is on site when important decisions are being taken has to be technical and warranted in the field: an architect or a structured engineer who can follow the method statement set out by the project architect. In fact, the STO has to be approved by the lead architect and not nominated by the contractor as in the past, for greater peace of mind.
we would much rather move towards a path which prioritises professionalism over uncensored growth
The MDA has also been put in charge by the Building Regulation Office to set up a register for contractors and stone masons. Till today, we already have around 500 people registered. Through this exercise, we’ve also found out that there are numbers of industry workers who are not licensed yet, but who would like to become licensed and we are currently working on getting this actioned.
At the moment, the Minster and the Parliamentary Secretary are also working towards setting up a “Building Construction Authority” which in my opinion is also a step in the right direction.
Housing Affordability
The Malta Developers Association has always had social responsibility at heart, and this is something that we are very proud of. In fact, in the past we’ve made proposals not just to generate economic growth for the benefit of the members of our industry, but we’ve also come up with proposals to support people when purchasing property.
The MDA was the driving force behind the new legislative efforts which benefit first-time buyers, which was very successful. The current industry scenario makes it very difficult for young people and those who do not have a strong financial standing to get onto the property ladder.
Land has always been expensive in Malta due to its size. Adding to that, the cost of construction has gone up, especially with the recent amendments in the law. Let’s face it, you cannot have the cake and eat it. If you are going to improve the quality of construction and put the public’s mind at rest, it does come at a cost. Construction projects come at a hefty price tag – from applications and permits, to machinery, impact assessments, provision of parking amenities, consultants’ fees and labour as well as preservation of cultural heritage. When you look into it, conservatively speaking you have 50% of the project comprising solely of costs.
you cannot have the cake and eat it. If you are going to improve the quality of construction and put the public’s mind at rest, it does come at a cost
From a banking perspective, the Central Bank is also taking precautions to reduce speculation and reduce the exposure of people who might not be able to finance their debts, creating restrictions on how banks can lend money both for residential and commercial property purchasing.
There are costs to renting out high-end properties which are not being taken into consideration with this amendment.
I do not agree with all of the Central Bank’s proposals; however I do agree that one has to be in a solid financial position in order to be able to take on the commitment of purchasing property. At the end of the day, banks take certain precautions to make sure no one gets hurt.
Rental Reform
The rental reform is something that I am very concerned about. I have met many members of parliament from both sides and it is unfortunately clear that some of them still have not read the new amendment. The MDA had participated in a public consultation and provided feedback on the White Paper issued with regards to the reform. Sadly, the current reform does not represent what had been discussed.
My appeal is for the government and the cabinet to go back to the drawing board. I will be very clear and state that should this legislation come into force as it is currently being proposed, it will have one of the worst repercussions on the property market.
One of my primary concerns is that the rental reform should not have been handled by the Housing Authority but by the Ministry for Transport Infrastructure and Capital Projects. Rent is a property issue and not a social housing issue; not everyone who rents out property necessarily provides accommodation just for people who need affordable lodging.
not everyone who rents out property necessarily provides accommodation just for people who need affordable lodging
The proposed reform treats all rental properties equally and does not take into consideration whether the property is well kept, or whether it is finished to the best standards. There are costs to renting out certain properties, especially those at the high end, which are not being taken into consideration with this amendment.
Another concern is that the actual contract between the landlord and the tenant does not reflect what is actually being agreed upon, as well as the fact that the legislation applies only to private companies and does not apply to properties owned by government.
This legislation as it is being proposed will not solve any of the current problems, but will in turn cause more problems that will harm the property market.
The MDA today
Today, I can say that the Malta Developer’s Association is well established and consolidated. I am convinced that we are a very good team who is working to promote our policies. In fact we currently have a president for every section such as contractors, landlords, masons and developers.
As MDA, today we are a board that is constantly aware of what is happening in the industry at all times. Beyond statistics, we also know the market and know what is happening in real terms. We are aware that the construction industry today is completely different to that a couple of years ago and we are ready to grab each opportunity presented and mitigate the challenges.
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