EU nationals and any other non-Maltese nationals are entitled to purchase only one residential property in Malta or Gozo, unless the second property purchase is in a Special Designated Area (these currently include Portomaso, Tigne’ Point project, Cottonera Waterfont, and Chambray in Gozo) where one may acquire any number of properties and does not require any permit from the government to purchase, even if buying as a second home. The purchase of any property is subject to the acquiring of an Acquisition of Immovable Property Permit (AIP Permit) from the Ministry of Finance, which is normally issued within three months, subject to the conditions listed below:

The purchase price must be at least Lm34, 158 in the case of an apartment, maisonette, or penthouse, and Lm56, 930 in the case of any other type of property, and Proof that the funds for the purchase of the property have originated from abroad.
In the case of EU citizens who will be residing in Malta permanently, there is no minimum purchase value requirement. However, this only applies if the citizen does not own another property within the EU or if he/she already resides permanently on the Island for a period of five years. EU citizens residing permanently in Malta for a continuous period of five years may acquire a second property.

PROCEDURE FOR BUYING PROPERTY IN MALTA

Once the immovable property has been selected, and the price as well as any special conditions duly negotiated and agreed upon, an appointment is set to sign the Preliminary Agreement, also commonly known as the Konvenium. This is essentially an agreement binding both the purchaser and the vendor to conclude the transaction within an established date subject to a set of conditions as listed below:

• The agreed selling price
• Temporary or perpetual ground rent, if applicable
• Any works to be complete by the seller, if any
• Any items (movable) included in the selling price, if any
• Any other particular terms as requested and agreed upon from either party, e.g. subject to bank loan or permits
• Conditions of payment (at times scheduled with works) as requested by the vendor
• Term of the Konvenium, which is normally valid for three months unless otherwise stated.
• The Konvenium is written by a Notary Public, normally chosen by the purchaser.

All the above mentioned points will be drawn up and attached to form an integral part of this important document, as the case may be.

At the time of the signing of the Konvenium, a sum equivalent to 10% of the final selling price, as is usually the norm, is paid to the vendor as a deposit on account. It is very important to ensure that this payment is in fact recognised by both parties as being a deposit and never termed as earnest which is not as binding to either party, as it does not oblige either one to appear on the final deed of purchase. This deposit is binding and should the purchaser not appears for the final deed of sale without a valid reason at law, the sum is forfeited by way of liquidated damages in favour of the vendor.

Once the Konvenium is completed and duly signed by all parties concerned, the Notary Public has a period of 21 days to register this document at which time he is required to effect payment of 1% stamp duty to the Commissioner of Inland Revenue. This sum is therefore to be paid at the time of the signing of the Konvenium by the purchaser as part of the total sum due. During these 21 days, the Notary Public carries out the necessary searches to verify the legal title and to ensure that there are no outstanding debts or hypothecs on the property. The purchaser in the meantime has to complete all the special requirements, such as organise the bank loan, check on building permits, etc., as agreed upon with the seller and stipulated in the Konvenium. The vendor on the other hand will complete all special requirements, such as completing the building, finishing works, etc., as agreed upon with the buyer and stipulated in the Konvenium.

Once all of the above has been completed by all parties concerned, a date is set for the actual signing of the final deed of sale. The preparation of this document lies upon the Notary Public who will keep track of and ensure that the actual term of the Konvenium does not lapse. The date of expiry of the Konvenium determines the final date by which both parties have to meet to sign the final deed. However, if both parties are satisfied and know that all is in order, the document can be signed at any time within the Konvenium.

The Notary public will advise the purchaser and vendor of the day on which to meet to sign the final deed. In the case where a bank loan is involved the parties will be asked to meet at the bank’s legal office, otherwise at the office of the Notary Public. The contract is read out and as long as all the parties are satisfied that all is in order, it is signed. Balance due, that is total selling price less previously paid deposit, is paid by the purchaser to the vendor. Also the remaining balance due to the Commissioner of Inland revenue has to be settled by the purchaser.

The expenses involved in acquiring property in Malta and Gozo are as follows:

• Ministry of Finance fee (Lm100) for the Acquisition of Immovable Property Permit (AIP Permit), applicable only for non-residents.
• Legal / notary fees between 1 – 1.5 %
• Duty on document or Transfer Tax 5% of the value of the property
• In the case where the property being purchased is to be the main residence and no other property results to be under the name of the vendor in question, then a special concession is made whereby the first Lm30,000 (thirty thousand Malta Lira) are subject to a discounted rate of 3.5% as duty. The remaining balance will be subject to the normal rate of 5%. This concession is only applicable to Maltese citizens. In all other cases, this cost is established at a fixed rate of 5% of the total selling price of the immovable property.

At the time of the signing of the final deed of sale, a provisional tax amounting to 7% of the total selling price is to be deposited by the vendor with the Notary Public to be passed on to the Commissioner of the Inland Revenue with the following exceptions:

If the immovable property has been the registered as the main residence of the vendor for a minimum of three years and is being sold within a year of when it is being vacated
A garage attached to or underlying the property being sold, even in cases where the property forms part of a block of flats
A garage of not more than 30sqm not attached but situated within 500 metres of the residential property and transferred through the same deed
This exemption is granted by the Department of Inland Revenue upon application prior to the signing of the final deed of sale.

The tax being paid at this time by the vendor is only a provisional tax. The definite amount due is calculated by computing the capital gains less a series of expenses sustained at the time of purchase as well as maintenance and inflation allowed, brokerage fees (limited to 5% of the selling price), and other eligible costs sustained during the time of ownership of the property in question. This sum is then added to all other incomes of the vendor for the current year and the income tax for that year is worked out. Rebates or additional payments are then received or to be deposited as the case may be.

NON_EU CITIZENS

Conditions / Concessions:

Non-EU citizens need to apply for an Application of Immovable Property (AIP). This is issued by the Ministry of Finance and is applied for by your Notary or Solicitor, and is granted in approximately three months.
The value of the property purchased by non-EU citizens must be above Lm37, 730 in the case of an apartment, maisonette, or penthouse, and Lm66, 198 in the case of a house
Documentary evidence proving that the funds for the purchase of property have originated from outside Malta, such as a bankers’ receipt
The property being purchased may only be used by the purchaser, his / her immediate family, or friends
Property with the facility of a communal / private swimming pool will be granted a permit to rent
The property being purchased may be transferred to a resident of Malta, EU citizen, or non-EU citizen after an attempt has been made to sell to a resident of Malta or EU citizen without success
Non-EU citizens may only own one property in Malta or Gozo at any given time, unless the properties are situated in a Special Designated Area.

RENTING A PROPERTY IN MALTA

In Malta there is a vast selection of property to rent or let located in various areas, suiting a wide variety of budgets as well as the style of life requirements of each person. There are no laws stopping foreigners from finding a rental home or property to let to take up as a residence with the exception of permanent residency. In this case the law stated that the rental amount of the chosen property must not be below the sum of Lm150 per month, and rented on a yearly basis.

Should a person be in Malta on a work assignment, it is most likely that the location of the workplace be within the Sliema, St. Julian’s, and Valletta areas. These towns are well serviced with most of the main requirements typically necessary for normal day-to-day living, such as shopping centres, supermarkets, beaches, restaurants, cinemas, and night life entertainment. Properties found in these areas range from modest (standard) apartments to townhouses, as well as the up-market seafront apartment overlooking the promenade and offering some of the most spectacular sea views. On the outskirts and more inland, property types include terraced house, more apartments and maisonettes, and also high quality villas and bungalows with or without a pool.

If the choice is to stay away from the typical hectic city life, a good alternative would be move and look at some of Malta’s old towns and villages, or further out still to the country where besides the types of properties already mentioned above, one could find some unique character houses and farmhouses with or without pool, typically renovated to modern day standards but still retaining their two, three, and sometimes even four hundred year old charm.