Changes Malta’s 2020 Budget will bring to local households and house-hunters

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Finance Minister Edward Scicluna unveiled the budget for Malta in 2020 just days ago, featuring new programmes, extensions of old grants, and a slew of changes to established schemes. There’s plenty of local agencies that have published point-by-point summaries of what the budget will bring to our island, so we have instead focused on our energies on pinpointing the policies that will be affecting local homeowners directly, households with special needs – be that from children, seniors, or anyone with a disability, as well as house hunters in Malta looking for a new (or their first) home.

Reactions have ranged from disappointment to applause, with some labelling the budget as dry and recycled; while others expressing delight at the changes it promises. To give you an overview, we picked up some key reactions to the changes from local institutions, NGOs and lobbies and listed them at the end of this article.

First, let’s start with policies affecting all local homeowners in one way or another.

Policies affecting all local homeowners in one way or another

Table of Contents

You’ll be getting one extra day of leave

We’re assuming this refers to a solid majority of Maltese homeowners. An additional day of vacation leave shall be added to the current leave entitlement of employees. That’s one more day to binge Netflix on the sofa, or if you’re feeling a little more adventurous, go on an impromptu trip.

In reaction to this one, the Malta Employers’ Association reaffirmed its position against the increase in optional leave, complaining that Malta already has among the highest allocation of leave days in the world.

Home Automation will get easier

It is expected that an educational campaign on AI shall be introduced, along with study grants to students seeking to specialise in AI, the establishment of an AI Innovation Hub, the commencement of a pilot project for the use of AI technology in public services as well as formulating a roadmap for the proper infrastructure for this technology. Further investment towards a pilot project utilising the IoT shall be made, along with the allocation of funds to MITA to support its work towards cyber security

Less vehicle pollution will be finding its way into your home, but we don’t know when

The budget and finance minister both underline a ‘commitment’ to phase out the importation and, eventually, the widespread use of vehicles propelled by pollutive engines. What this will actually include, and how it will be done, seems to be still undecided.

Curious? Check out our article on home automation in Malta here. 

Your household will be using less plastic (and that’s a good thing)

The importation and manufacture of plastic plates, straws, cutlery and bags shall be banned from 1 January 2021, while trade in such products shall be prohibited outright starting from 1 January 2022.

Why it’s a good thing: Warnings of pollution seemed like sentimental exaggerations 5 decades ago; nowadays, plastic is laying waste to marine life and turning our sea and sands into islands of trash.

Here’s some other changes you can do to your home to reduce waste.

Grant on the purchase of renewable energy battery
storage

With effect from next year, a grant of 25% on the purchase of renewable energy battery storage shall be introduced in order to promote the use of renewable energy resources. This grant, capped at €1,000, is available to individuals who have already installed solar panels and who are no longer benefiting from the
feed-in tariff scheme.

Getting a bicycle, electric bike or a motorcycle will be easier

Grant on purchase of bicycles, electric bikes and motorcycles in order to promote alternative means of transport and a healthy lifestyle, the existing grant of up to €400 on the purchase of motorcycles, scooters and electric bikes shall be extended for another year. The grant scheme on the purchase price of bicycles and electric bicycles (pedelec bicycles), equivalent to a full VAT refund, shall also be extended for another year.

You’ll be getting a small one-off payment to help cover the increase in cost of milk and bread

€35 one-off payment to families (€15 for singles) to cover milk and bread price increases. Next year’s cost of living allowance calculations will not be affected by this payment.

Next up we’re focusing on policies, schemes and grants…

For locals looking to buy, restore, rent or sell

Scheme to help people restoring property will be extended

The scheme for the restoration of one’s home shall extend into 2020.

Government will land a hand to assist with down payments

Loans of up to €17,500 shall be granted to assist qualifying buyers with initial down payments. Interest accruing on such loans shall be borne by the government. The loan shall be repaid over 15 years

Duty exemption for first-time buyers will be extended and increased

The duty exemption currently available for first-time home buyers on the first €150,000 shall immediately increase to €175,000 – resulting in additional savings of up to €1,250 – and shall continue to apply during 2020.

Second-time buyers are also getting a reduction in duty

Individuals who sell their first residential property to acquire another residential property are currently eligible to a refund of stamp duty of up to €3,000 (or €5,000 in the case of disabled persons) provided that such persons do not concurrently own any other property. This measure is being extended to qualifying acquisitions made during 2020.

Final tax on transfer of a promise sale changed

With effect from 1 January 2020, the first €100,000 of profit derived on the transfer of any right acquired through a promise of sale agreement shall be subject to a final tax at a reduced rate of 15%.

Extension of reduced rates for acquisition of property in an Urban Conservation Area (UCA)

Presently, acquisitions of property situated in an UCA are subject to a reduced rate of stamp duty of 2.5%, as opposed to the standard rate of 5%. The reduced rate shall extend into 2020

Duty on acquisition of property in Gozo extended

Individuals who acquire residential property in Gozo are presently subject to a reduced rate of stamp duty of 2%, as opposed to the standard rate of 5%. The reduced rate shall extend into 2020.

If inheriting real estate, stamp duty will remain at 3.5% unless property value is over €175,000

Individuals who inherit real estate in which they currently reside currently pay stamp duty at a rate of 3.5%, up to a maximum property value of €150,000. In this respect, the maximum property value eligible for the 3.5% rate shall increase to €175,000.

Acquisitions of ordinary residence will incur lower duty payables

Individuals buying their residential property, even if such individuals are not first-time buyers, shall benefit from a reduction in the duty payable.

Property rental subsidies extended and improved

The eligibility criteria for property rental subsidies introduced during 2019 shall be extended such that individuals earning annual income of not more than €19,000 (up from €14,500) and couples with two children earning annual income of not more than €32,000 (up from €28,600) can avail themselves of this subsidy, subject to other conditions being satisfied.

New social housing units will be made available

A €60 million investment is earmarked for the development of an additional 1,700 new units of social housing. The foregoing shall be in addition to another project consisting of more than 700 new units of social housing.

Maintenance of housing estates will be revisited

The Housing Authority shall continue its maintenance programme, which shall directly impact an additional 50 social housing blocks spread across multiple localities.

Construction sector will be regulated better

A dedicated authority shall be created to further supplement regulatory reforms to the construction sector. Local Councils shall be encouraged to implement various projects in their respective localities with the aim of improving the quality of life of residents.

For households with members who have special needs, such as children, people with disabilities, and senior citizens

Expecting a new addition to your household? Something extra is on its way.

A one-time bonus of €300 for each child born or adopted in 2020 shall be given to eligible families.

Buying equipment for family members with disabilities will get easier

In order to support persons with disabilities with purchasing any required specialised equipment, the available grant shall be increased to a maximum of €1,000 as from next year.

Pension for senior members of your house will see a small increase

Pensioners shall benefit from a weekly increase of €3.51 per week with effect from 2020. This increase is additional to the COLA, resulting in a total weekly increase of €7 for pensioners.

Increase in weekly allowance for people who suffer from disability

With effect from 2020, the weekly allowance payable to persons suffering from severe disabilities shall be increased to €161.40, bringing it on par with the net national minimum wage.

Same goes for the invalidity pension

With effect from 2020, the invalidity pension paid to qualifying pensioners shall also be increased to the net national minimum wage.

Are you caring after a sick child?

Parents of qualifying children suffering from rare ailments who have opted to cease work so as to take care of their ill children shall be accredited with a notional social security contribution equivalent to the contributions they would have paid had they not ceased to work. This notional social security contribution shall apply for a maximum of 8 years.

Buying equipment or apparatus for members of the household who have a disability will be easier

In order to support persons with disabilities with purchasing
any required specialised equipment, the available grant shall be
increased to a maximum of €1,000 as from next year.

Reactions

  • The move to ban plastic has been welcomed by local NGOs and environmental organisations, with Birdlife and other local groups highlighting these changes as amonsgt the best ingredients in the new budget.
  •  The Malta Employers’ Association reaffirms its position against the increase in optional leave, as Malta already has among the highest allocation of leave days in the world.
  • FORUM, a group of trade unions, state that the budget did not address problems like a lack of teachers, nurses and social workers, nor did it delve into the work-life balance directive, the introduction of family leave, and a change in the capping of pensions.
  • Various changes were welcomed by Malta Developers Association (MDA) who noted that ‘their requests’ have been implemented and that this will help Maltese buyers get their first home.
  • Various movements and commentators noted that a) the 17,500 no interest loan will not make any significant changes to what locals can afford on the property market and b) these measures are promoting high-risk undertakings from banks and government alike in order to artificially increase demand for the overdeveloped island.

MDA satisfied government adoptedits budget recommendationsThe Malta Developers Association (MDA) is highly satisfied…

Gepostet von Malta Developers Association am Dienstag, 15. Oktober 2019

  • The Malta Employers’ Association also claims that environmental incentives were too focused on construction, with less prominence given to other economic sectors.
  • Carmel Cacopardo, Chairperson at Alternattiva Demokratika, noted that it does not make sense for the Government ‘to declare the need to protect the environment but then dishes out incentives of all sorts to encourage the property market; nor does it make sense to keep to its programme of intensive development of the road infrastructure, or keep pushing for the development of a tunnel between Malta and Gozo, which only serves the free movement of more cars between the islands […] and will only serve to accelerate the environmental degradation of Gozo.’

BirdLife Malta welcomes a number of environmental initiatives announced yesterday in the Budget for 2020 but is…

Gepostet von BirdLife Malta am Dienstag, 15. Oktober 2019

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Our team at House.mt is always on the look-out for spaces, places, and things that are being built up, torn down, modernised, restored, or re-purposed – be it by a big team or a one-man(or woman)-army.

DO YOU HAVE A STORY, A PERSON, OR A PLACE IN MIND?

Send us a message on our Facebook page or via email, [email protected]

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