MDA launches blistering attack on affordable housing scheme

Developers could pocket profit margins more than double the market average under Malta’s new Government-Church affordable housing scheme, the Malta Development Association (MDA) has claimed in an explosive letter to the Prime Minister and Archbishop.

The association warned that the Foundation for Affordable Housing’s plan – which will offer apartments 30 per cent below market value on public land provided for free – will see developers earn margins of 33 per cent instead of the typical 15 per cent.

“This is not affordable housing. This is unaffordable speculation disguised as a social policy,” the MDA wrote.

The MDA’s analysis claims that giving developers Joint Office-owned land for free will push profit margins from the usual 15 per cent to 33 per cent – even after a 30 per cent discount to buyers. It said the discount should be closer to 48 per cent if the full value of the free land were passed on.

The association also alleged the scheme was launched “in the middle of the summer recess” to avoid scrutiny and appears to “bypass or sidestep established public procurement procedures.”

Another key point of criticism was the scheme’s potential to “undermine” existing property values, potentially leading rising property prices to cool off.

“Some will probably find it ironic that it is us, who represent real estate developers, who are putting forward these points. We find it to be consistent with our constant call for a level playing field,” said the association.

The letter concluded by urging the Prime Minister and the Archbishop to halt the scheme until “fundamental issues” are addressed.

Foundation for Affordable Housing: ‘We want to extend the market, not distort it’

In an article published on BusinessNow.mt earlier on Monday (today), Foundation for Affordable Housing CEO Jake Azzopardi had anticipated some of the MDA’s objections.

“It’s a Best Price to Quality Ratio model, judged independently with heavy weight on sustainability, aesthetic value, and price,” he wrote.

“A bolder investment in a sustainable product with higher aesthetic value is expected from bidders considering the initial capital outlay typically required to acquire land is being deferred until the sale of apartments, for them to get the temporary title which cannot at any point be redeemed by the contractor.”

Dr Azzopardi added: “The scheme is tailored to the unique structure of our market and our national culture, which places enormous value on homeownership. It is built on four principles: collaboration with the people who build homes, price containment not escalation, long-term sustainability, and a certain, affordable pathway to homeownership.”