The vast majority of private properties being leased out by the government, whose rent cost some €22 million in taxpayer funds in 2022, were acquired from 2018, according to a preliminary report published by the National Audit Office on Monday.

The report shows how 76% of private properties surveyed started being leased out between 2018 and 2022, the latest year audited by the office. The NAO highlighted over 20 leases in the period, noting a “steady increase in the number of leased private properties” and “extensions to original contracts.”

In an NAO statement issued on Monday alongside the report, Auditor General Charles Deguara noted how, despite the “increasing” leases of private property, some 4,000 state-owned buildings remain unutilised.

Deguara said this was due to “a range of operational issues” at the Lands Authority, charged with administering them.

Tabulated data gathered by the National Audit Office shows a distinct spike in government rentals of private property since 2015 – Photo: National Audit Office

Most properties were rented out from the private sector, from either companies or individuals, accounting for 213 or 82% of leases. Another 11% were leased from church institutions.

While “The majority of the leases pertained to different individuals,” with only a few companies or persons leasing out more than one property to government entities, almost half of all leases were not supported by documentation showing their need.

The office also published data showing ministries’ breach of recently introduced property procurement regulations, “raising governance concerns,” since these are designed to “ensure that the Government gets the best value for money.”

Minister Clint Camilleri’s Ministry for Gozo was the worst offender, with six lease agreements failing to adhere to regulations, amounting to some €700,000.

Camilleri has recently had the Planning Authority added to his portfolio in a cabinet reshuffle.

The NAO also highlighted three leases which “had significantly higher cost per square metre than the average.”

These were a property rented at €938 per square metre for the Department of Justice, another at €897 per square metre for the Malta Crafts Foundation, and another at €657 per square metre for the Malta Fiscal Advisory Council.

Private properties leased through direct orders in 2022. For each category, the NAO highlighted the first three ministries in Red, Orange and Yellow, respectively – Photo: NAO

The Shift has reported extensively on high-cost rental contracts entered into by the government to lease private property.

Last year, Environment Minister Miriam Dalli’s Project Green, then led by its former CEO Steve Ellul, paid €400,000 per year for its offices.

Transport Malta’s renting from the General Workers’ Union of the A3 Towers in Paola costs some €490,000 a year under a lease agreement that began in August 2014.

State company Gozo Channel, which has been running at a significant loss for many years, has spent millions on additional construction work to be carried out at a property it leased from a private party in 2019 despite remaining vacant.

Meanwhile, the premises of the Malta Business Registry (MBR) are being rented by the government at an even higher rate, with the Auditor General having described the €2 million per year being paid for the Zejtun premises as “prohibitive” in 2021.