What is the Process of Buying Property in Malta?
When buying a property in Malta there are a number of formalities and procedures that need to be followed. The requirements for purchasing a property in Malta are dependent on the type of property you buy and where it is located.
The requirements generally include the following;
- A Promise of Sale is signed between the Buyer and Seller once the price and conditions have been agreed between the two parties. The agreement which is drawn in the English language and generally valid for 3 or 6 months, binds both parties to the agreed terms of the property purchase. The signing of the Final deed is subject to clear title and the issuance of the relevant permits as applicable.
- Generally, a deposit of 10% of the total price is to be paid on the Promise of Sale (POS) which is generally held by a Notary, together with 1% stamp duty which is to be paid to the Malta Government / Inland Revenue Department This deposit will be forfeited in favour of the Seller should the Purchaser fail to complete the final deed for no valid legal reason.
- Stamp Duty equivalent to 5% of the total price is to be paid on the final contract (of which 1% would is paid at the POS stage).
- Payment of Notarial Fees ranging between 1% and 3% including Searches Fees. The Notary is responsible for drawing up the property contract (representing the buyer) whilst also ensuring clear title to the property.
- An EPC (energy performance) certificate would need to be applied for.
All of the above are handled by the Purchaser, whilst the Agency Fee is taken care of by the Seller.
Furthermore, Due Diligence is to be carried out on both the Buyer and Seller, while ensuring proof of funds for the property purchase is from legitimate activities.
AIP Permits – Conditions for Buying Property in Malta.
Individuals who are not Maltese Nationals may be subject to certain restrictions on the property that they purchase. Foreign Nationals wishing to buy property in Malta are restricted to purchasing one residential property (after being granted an Acquisition of Immovable Property (AIP) permit) which must be used for their own occupancy, with the exception of properties bought in Lifestyle Developments or an SDA.
Properties in an SDA can be leased out without restrictions and there is no limit to the number of properties one can own in an SDA. These properties generally offer a higher rate on the return of investment due to the developments prime location, residential amenities, landscaped gardens, and overall ambiance, making them a popular choice for both local and foreign buyers.
In the case of EU nationals who intend to purchase a property which is to serve as their primary residence; who intend to purchase the property for investment purposes or have been resident in Malta for at least 5 continuous years will not require to apply for an AIP permit.
What changed recently?
As a way of introduction, the Acquisition of Immovable Property (AIP) section within the CTD (Capital Transfer Duty) Department is responsible for the processing of applications by non-residents to acquire immovable property in Malta.
Nowadays, as per the subsidiary legislation entitled the Malta Residence and Visa Programme Regulations, third-country nationals – non-EU/EEA/SWISS – who have been legally residing in Malta for at least five (5) years in a continuous manner, are now eligible to apply for the long-term residence status.
This status is of a permanent nature and a residence permit would be issued for a period of 5 years.
Hence, as a matter of fact, in the event of a successful application, the applicant, once provided with the long-term residence status, shall no longer require an AIP permit.
In addition, a successful applicant can also avail him/herself from all the incentives and reductions introduced by the local Government in relation to stamp duties as well as property tax.
What is the Property Tax/Stamp Duty in Malta?
Currently, there is no property tax in Malta. Stamp Duty is a transaction-based tax which is only payable on the transfer of the deed from one party to another. This is a one-time payment which equates to 5% duty of the purchase price.
The duty is calculated on the value of the consideration for the transfer of the property, or on the market value of the property, whichever is higher and is paid by the purchaser. A POS or better known as a Konvenju (Maltese Term) will not be considered valid unless a provisional payment equivalent of 20% of the total stamp duty fee is paid to the Commissioner for Inland Revenue within 21 days of the signing of the POS / Konvenju.
The Malta Government has recently introduced a reduced rate of Stamp Duty reduced to 3.5% on the first Eur150,000 , with 5% applying on the remaining value. Such reduced rate does not apply to persons who require a permit for the purposes of the Immovable Property (Acquisition by Non-Residents) Act (Cap. 246).
No Stamp Duty applies on the value of the movable property (i.e. on the furniture and fittings) being transferred with the immovable property.
Can a Home Loan be obtained in Malta?
It is possible to acquire a home loan in Malta from the majority of the local Maltese banks available on the island. You will be required to submit an Application as long as one can demonstrate a steady and regular income. A professional real estate agency such as Malta Sotheby’s International Realty would be able to support you and streamline the process with the chosen Bank. Maltese banks tend to offer flexible terms with reasonable interest rates.
Property & Tax Residency in Malta
Over the years Malta has successfully introduced a number of residency programmes aimed at attracting high net-worth individuals to become tax residents and citizens of Malta. The below is a summary of the property requirements in respect of the applicable programmes;
- Residence and Visa Programme Rules
- Global Residence Programme – GRP
- Residence Programme Rules – TRP
- Individual Investor Programme – IIP
- Ordinary Residence
- Invest in property worth €320,000 or €270,000 if in the South or Gozo
- Invest in property worth €275,000 or €220,000 if in the South or Gozo
- Invest in property worth €275,000 or €220 if in the South of Gozo
- Invest in property worth €350,000
- No minimum property threshold
- €12,000 per year or €10,000 if in the South or Gozo
- €9,600 per year or €8,750 if in the South or Gozo
- €16,000 per year
- No minimum property threshold
Buying Property in Malta
Whether you are interested in property investments for future generations or retirement, a commercial space to boost your business or an all-year-round buy to let investment, Malta is the ideal investment opportunity. Malta is the largest of an archipelago. It sits nestled in the beautiful Mediterranean, surrounded by blue seas and enjoys 300 days of sun. The islands strategic location, favourable climate and stable economy, make buying or renting a property in Malta the ideal investment.
Why Invest in Malta Property?Malta was granted an A+ credit rating by Fitch Ratings, Standard and Poor’s, Moody’s and Creditreform. This is despite the global economy taking a hit and several European countries having their credit ratings downgraded, following the 2020 Covid-19 Pandemic. Reports by expert’s project that Malta will continue to be one of the fastest-growing countries throughout Europe, showing strong economic growth going forward, making buying or renting a property in Malta a sound investment for local and international buyers alike.
The global perception of Malta is shifting, no longer just known for its natural beauty, unique traditions, and rich history; the island has attracted many foreign investments in recent years. Thanks to a stable economy and favorable business practices, international companies continue to relocate to the island’s shores – while non-EU nationals take advantage of the favorable residency and citizenship investment programmes available.
As a result, the property market has boomed alongside the countries rising GDP, and the demand for property in Malta is being addressed in innovative building projects across the island, with special care taken to preserve Maltese heritage.
Many historical properties are being restored to their former glory, which is proving very popular amongst local and foreign buyers. Projects of this nature are backed by the Planning Authority, through national budget incentives and government grant schemes to aid in the renovation projects. In addition, the government is committed to fostering property ownership by offering reduced taxes for first- and second-time buyers.
From seafront living in Special Designated Areas (SDA’s) to luxury skyscrapers with breath-taking views, or perhaps you prefer traditional structures with modern-day comforts, there is a beautiful property available at Malta Sotheby’s International Realty to suit any taste.