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A new set of regulations came into force a few months ago allowing individuals or entities to obtain a 50-year temporary emphyteutical concession for Government-owned commercial properties. The process to apply can be intricate, as numerous documents are required to meet the eligibility criteria outlined by the Legal Notice. At Valletta Legal, we can guide you through applying, completing the appropriate application forms, and liaise with the Lands Authority.
Applicants must hold the property under one of the following titles:
1. a valid emphyteutical concession recognized by the Authority,
2. a valid commercial lease granted by the Authority,
3. an ongoing operations agreement with a tenant authorising him to operate a commercial property,
4. a valid title of a casa bottega recognized by the Authority prior to these regulations.
Conversely, not all forms of titles granted by the over leased governmental properties are eligible for this scheme, with the following being excluded: kiosks, boathouses, scheduled properties, properties not fully owned or registered by government, and properties originally disposed of by a Special Resolution of the House of Representatives.
Special conditions accompany these concessions. For example, if an application involves merging more than one property into a single tenement without prior consent from the Authority, it will be treated as one property and must include a sworn declaration signed by all involved parties. Additionally, illegal occupation of adjacent government-owned property results in a fine of €500 per square metre. Applications lacking valid development permission or infringing third-party rights will also be refused.
The term of the new emphyteutical concession is of 50 years to be calculated from the date of publication of the deed. For properties larger than 1500m2, approval from the House of Representatives by way of a special resolution is required.
Importantly, once approved by the Authority – there will be an increase in the value of the ground rent. The new ground rent is to be calculated at the rate of 2% of the freehold value of the property, payable one year in advance, starting from the signing date of the deed. The rent is determined by valuations conducted by experts appointed by the Authority, with the costs borne by the applicant. However, if in the unlikely instance where it is found that the new ground rent is lower than the previous concession, the higher rate will apply in the new deed.
Subject to the Authority’s approval, applicants may opt to transfer outright the remainder of their temporary emphyteutical concession to third parties, subject to a recognition fee (laudemium) equivalent to one year’s ground rent. Applicants may not transfer the property by title of subemphyteusis but may opt to lease the property to third parties with the Authority’s prior authorisation in writing, and subject to a one-time fee of 50% of the new ground rent.
The Authority will impose a number of conditions upon the applicant, in relation to the new grant, which must be adhered to throughout the term of the concession. Amongst these conditions, the applicant must accept that the property is granted in its current state and condition (tale quale), excluding all warranties and subject to any latent defects; the Authority can conduct random inspections; existing encroachment concessions remain at the Authority’s discretion; and new concessions are subject to existing servitudes. These concessions cannot be redeemed or converted to a title perpetual emphyteusis, and the current title will cease upon the grant.
For a successful application, applicants must meet all requirements and pay the administrative fees mentioned including an initial and non-refundable submission fee of €1,500. Once submitted, applications cannot be changed unless due to a causa mortis declaration transferring property rights to a new applicant.
For further information, kindly contact Valletta Legal on +35621228340
