It would be contradictory if the better off generations, strongly assisted by the State in the past, opposed or resisted any form of State intervention aimed at helping the younger ones.
by Kurt Xerri
Illustration: Nastia Finkel
[dropcap]T[/dropcap]he State’s role in society has hardly ever been questioned more than it is being now. Its legitimacy in intervening in social and economic matters is threatened by a pervading libertarian mentality that likens the State to a parasite feeding on individual liberty and economic security. This is most certainly the case in matters touching upon the institute of private property, a concept that in Malta, as in other Southern European States, has an immense meaning.
[beautifulquote align=”left” cite=””]The low social welfare spending has reduced the individuals’ reliance on the State and lead, instead, to the development of atomised welfare systems centered around the extended family.[/beautifulquote]
The strong resistance to public interference with private property, however, does not have its roots in the recently elaborated neoliberal views that look at the State with violent antipathy. It goes back to the very conception which individuals, especially those in long-colonised States such as Malta, have of the State itself. The low social welfare spending by such countries has, in fact, reduced the individuals’ reliance on the State and lead, instead, to the development of miniature, atomised welfare systems centered around the extended family.
Such a relationship between the State and private individuals is clearly present in Malta.
Individuals are made to look after their own welfare through the use of their family’s patrimony, which is often conserved and distributed amongst members through processes of intergenerational sharing. The family is, therefore, rendered responsible for the fulfilment of the core needs of its younger units, with the full endorsement by the State. The compromise is evident in the fiscal advantages that the State, for instance, grants in both inter vivos and causa mortis transfers of immovable property between members of the same family, thereby favouring such kinds of internal conveyances.
The basis of our welfare system has hardly been altered over the years.
The resistance to public intervention in private property is, therefore, founded on much more than an irresistibly selfish urge to hold on to one’s assets, but a ‘survival instinct’ based on the awareness that one’s social welfare, together with that of his or her family’s, depends on the accumulation of private wealth.
[beautifulquote align=”left” cite=””]Very often the impulse of indebting oneself further in order to purchase another immovable asset is intended to create a supplementary pension fund.[/beautifulquote]
Take the case of a middle-aged person or couple who decides to invest in secondary property. Very often the impulse of indebting oneself further in order to purchase another immovable asset is not the thrill of re-entering the property game but rather the sagacity (għaqal) of creating a supplementary pension fund through the rental income generated by that unit, with the further consideration of granting the use of that dwelling to one’s own descendants.
Yet, an element that one cannot take for granted is the State’s own contribution in the creation of this private wealth. For decades, particularly between the immediate post-independence years and the early 1990s, the government itself had enabled this asset-building process through the concession of various plots of land along with the sale of units originally intended for social housing. In fact, it is these households with government-facilitated access to the property market that, eventually, found themselves in a better position to buy secondary or tertiary residences.
Moreover, one has to consider whether this model is still sufficiently appropriate for today’s increasingly complex and highly differentiated society that is witnessing the transitioning of both the traditional model of the family as well as the role of religious institutions, the two pillars upon which this arrangement rested. Indeed, what we are experiencing is an inverse process wherein prospective entrants into the property market are finding less or insufficient support.
This state of affairs was exacerbated by the rapid demographic changes and consequent upswing in property prices, which, has cut both ways in Maltese society. Whilst the average household wealth has certainly experienced a positive growth, several low- to middle-income categories, regardless of age, were definitely priced out of the ownership market, hence out of the informal asset-relying welfare cycle described above.
So, back to the State. How must it conceive private property in this day and age?
[beautifulquote align=”left” cite=””]We are experiencing an inverse process wherein prospective entrants into the property market are finding less or insufficient support.[/beautifulquote]
It is clear that within this welfare system, with the individual as its basic unit, intervention in the property market must be made to fit in the larger scheme of private financial planning. Hence, no drastic intervention will conform to the current state of affairs. Nevertheless, it must necessarily take into account the generational divide between those households who over time acquired multiple residences and those who, today, might end up owning none. In fact, as things are looking at the moment, the younger generation’s reliance on the private rented sector is expected to grow significantly in the coming years.
In this sense, it would be contradictory if the better off generations, strongly assisted by the State in the past, opposed or resisted any form of State intervention aimed at helping the younger ones. At the root of this quandary lies a much deeper challenge of viewing the property market through the various prisms of an increasingly diverse society and, ultimately, that of finding a compromise between the needs and interests of the various groups within the Maltese community.
Prejudiced, subjective and generalising attitudes towards the function of private property will hardly lead us to the right policy choices. It is only through dialogue and good sense that we can solve the complex dilemmas of our time.
This article is dedicated to the memory of Charles Miceli, an objective and compassionate political analyst, as well as a genuinely committed believer in the well-being of all.
‘Prejudiced, subjective and generalising attitudes towards the function of private property will hardly lead us to the right policy choices.’ – quoting back at you. With all due respect, do not generalise. My father and mother were both professionals, my father was a teacher and my mother was a nurse. My father was not employed on graduation, my mother had to leave her job once she got married in the 70s. The government at the time not only did not give them the land on which they built our house, but not even the sustenance to buy it. Tal-plot tal-gvern were a later generation. They worked hard and managed to get onto the property ladder, even if their parents were hard-working labourers and farmers and lived in rent all their life. We had a good example, as their kids. What we have we have bought and worked hard for – no plot tal-gvern either. So while I am all for the government identifying schemes to help those who are facing hardship, please do not punish me for saving for my future.
There is a dire need for social housing, more than there has been for the past 25 years. But it has to be given in a fair and transparent manner, and we have to break this notion that what you have once been given, you can never loose. Social housing should be for those in need with the clear understanding that, one day, your dwelling will have to revert back to the government to be given to somebody else in need. Also, I believe it would be beneficial if a tax was introduced on “second properties”. As done in many countries, government would levy a tax on the rental value of a person or households second property – irrespective of how whether the owner declares a rental income or not. This will incentivise owners to rent out their properties and it would generate income to pay for incentives such as social housing and it would render irrelevant under-declaration of rental income.