Purchasing Real Estate in Malta

The acquisition of immovable property in Malta may be subject to certain restrictions which apply to persons who are not a citizen of Malta or of any other Member State of the European Union and who have not resided in Malta for a minimum period of 5 years. In cases where such restrictions apply, buyers must apply for a permit to acquire immovable property, within the provisions of Chapter 246 of the Laws of Malta, namely the Immovable Property (Acquisition by Non-Residents) Act or, the “AIP Act”.

Citizens of all EU member states who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining an AIP permit for such acquisition.

Citizens of all EU member states who have not resided continuously in Malta for a minimum period of 5 years can purchase their primary residence or any immovable property required for their business activities or supply of services without an AIP permit. The acquisition of any other property (whether a secondary residence or other business property) by such persons will require an AIP permit.

Individuals who are not citizens of a European Member state may not acquire any immovable property unless they are granted a permit.

The provisions of the AIP Act do not apply to those areas specifically designated as “special designated areas”. These areas represent recently constructed developments intended to provide top-end residential properties. Such properties are also exempt from any restriction on acquisition through inheritance and there are also several other special exemptions.

The existing Special Designated Areas are the following:

• Portomaso Development, St. Julian’s, Malta
• Portomaso Extension I, St Julians, Malta
• Cottonera Development, Cottonera, Malta
• Manoel Island / Tigne Point, Tigne/ Gzira, Malta
• Tas-Sellum Residence, Mellieha, Malta
• Madliena Village Complex, Malta
• Smartcity, Malta
• Fort Cambridge Zone, Tignè, Malta
• Ta’ Monita Residence, Marsascala, Malta
• Pender Place and Mercury House Site, Malta
• Metropolis Plaza, Gzira, Malta
• Fort Chambray, Ghajnsielem, Gozo
• Kempinski Residences, San Lawrenz, Gozo

Companies and other bodies of persons are subject to a different set of rules. Where such company or body is established in and operating from an EU member state, such entity may freely acquire immovable property that is required for the purpose for which it has been set up provided that 75% of its share capital is held by a person (or persons) who is a citizen of an EU member state and who has resided in Malta continuously for a minimum period of 5 years.

Any other body of persons will require a permit which will only be granted if the property is required for an industrial or touristic project or as a contributor to the development of the economy of Malta.

The Acquisition Process

Where property is purchased, the acquisition process typically involves a preliminary agreement or “promise of sale” agreement (konvenju) which is signed by the respective parties, and in terms of which the parties mutually undertake to enter the final deed of sale, subject to the satisfaction of certain specific conditions which must be clearly stated in the preliminary agreement. The preliminary agreement must be registered with the Inland Revenue Department within 21 days of its execution, together with a payment equivalent to 20% of the duty on documents due on the purchase price on the final deed of sale, in order to remain valid after such 21-day period.

Where applicable, the purchaser’s obligation to purchase should be made conditional upon the issuance of an AIP permit and the obtaining of any finance necessary for the payment of the purchase price. A sum of 10% is usually paid on this preliminary deed, either by way of deposit on account of the price or by way of earnest, although the parties may make any other arrangement as they consider appropriate in this regard, The deposit is typically retained by the Notary Public responsible for the publication of the final deed of sale, by the vendor or by any other person/s nominated for this purpose by the parties in the preliminary agreement.

The preliminary agreement may be valid for any period of time agreed upon by, and between the parties, but would usually be for a period of between 3 to 6 months. During this time period, legal title in the property concerned is established through the necessary notarial searches and any financing or AIP formalities are duly followed-up in anticipation of the publication of the final deed of sale. Once such formalities are finalised, the final deed of sale is duly read by the notary public to the parties (or their legal representatives) and signed in his presence. All relevant duties and taxes must be paid to the notary public (who collects such funds on behalf of the Inland Revenue Department) at the same time as the publication of the final deed.

Renting Immovable Property in Malta

The rental of immovable property in Malta is subject to far less formality than the purchase process outlined above. The renting of a property would typically involve a written lease agreement setting out the general terms and conditions governing the rental of the property in question, namely a description of the property, the payment of rent, the warranty of all necessary permits by the landlord, where applicable, the provision of any security or damage deposit/s, the renewal of the lease period upon expiration and other matters of similar importance.

We will be happy to provide you with any guidance or support that you may require in the course of buying, leasing and/or selling any immovable property in Malta, whether for business and/or residential purposes.

For Relocation Services, including Managed Office Space, Real Estate Services and Residency Permits; kindly forward your query to relocation@csbgroup.com