Investing in Maltese Property
Budgeting, location and a property type that support one’s lifestyle requirements are a few primary factors that should be taken into account when looking to acquire a property in Malta, however, most often there are other costs and processes involved which it is important to be aware of and consider before investing in a property.
Local reputable real estate agencies offer a professional and seamless service in walking their clients through this whole process, particularly through their extensive knowledge of the market and its requirements. For this reason, seeking expert advice ensures one takes action towards the right investment.
The Maltese real estate sector across all levels of the market is deemed to be stable and enjoys appreciating values year after year. The local population believe that property is a sound investment and therefore the market is extremely active.
Procedure when Buying Property
Generally, the buying requirements are the following:
- Deposit of 20% of the total price to be paid on the Promise of Sale (this takes place before signing the final contract),
- Stamp duty equivalent to 5% of the total price,
- Notarial Fees amounting between 2% and 2.5% plus Searches Fee,
- Health and Life Insurance,
- Agency Fee.
Additionally, individuals who are not citizens of Malta may be subject to certain restrictions or be required to apply for a permit to acquire immovable property. Interestingly, properties situated within special designated areas (SDAs), usually luxury lifestyle developments, are exempt from restrictions on acquisition and also enjoy other allowances.
Property Acquisition Tax
No property taxes are levied in Malta. Stamp duty is a transaction-based tax which falls due upon the publication of a public deed which transfers immovable property from one party to another. The buyer is subject to 5% duty on documents on the purchase price of the immovable property. Stamp duty is payable on the final deed of acquisition of the property. However, a promise of sale agreement (konvenju) is not valid unless a provisional payment equivalent to 20% of the stamp duty is paid to the Commissioner for Inland Revenue. Duty is calculated on the value of the consideration for the transfer of the immovable, or on the market value of the immovable, whichever is the higher.
Procedure when Renting Property
If renting appears to be the more convenient option, there is also a process that needs to be undertaken. The rental property market is also varied and offers high quality accommodation ranging from small apartments to large penthouses and villas situated across the island. One would easily be able to find a desirable accommodation both for a short (0-3 months) or longer let (6+ months).
The renting procedure may be more prone to variations particularly as it is more often subject to fluctuating time frames and special arrangements made between the landlord, the lessee, and the agency where applicable, such as the following;
- Initial Deposit – standard equivalent to 3 month rent but subject to negotiation,
- Renting 3 months in advance – once again subject to negotiation
- Condominium & Maintenance Fees, although normally included in quoted monthly rental
- Deposit on Utilities (water & electricity)
- Agency Fee
Obtaining a Home Loan in Malta
Should one decide to opt for a loan to purchase or finish a property, it helps to know that this may be obtained from the majority of the local banks. Once again, professional real estate agents would be able to help make this process more efficient.
Maltese banks tend to offer flexible schemes with reasonable interest rates and in general, the conditions would be the following;
- Repayment term that can go up to 40 years,
- Monthly repayments amounting to up to 30% of gross salary,
- Up to 90% loan financing of total purchase price or completion costs,
- Preferential interest rates for high value loans,
Bank Requirements and Documentation
When paying a visit to the bank with the intention of obtaining a home loan, the following documents would need to presented:
- Identification document
- Copy of preliminary agreement
- Recent pay slip and FS3
- Estimate of the property value
Property for Foreign Nationals
Foreign nationals are allowed to buy one property in Malta (subject to approval of prior authorisation), though in specially designated regions, additional properties may be purchased. Especially attractive properties are located in Sliema, on the eastern coast, which features several new penthouse developments and the Three Villages – home to a variety of exclusive resort homes.
Purchasing Property in Malta
- Local mortgage facilities are available up to 80% of the purchase price,
- Deeds and documents are read and published in the English language,
- No rates or local council taxes,
- Special concessions on the importation of personal effects and pets,
- No obstacles to the repatriation of funds (net of capital gains tax) subsequent to the sale of any property.
Property and Tax Residency
Malta has successfully put a number of programmes in pace aimed at attracting high net-worth individuals to become tax residents and citizens of Malta. The below are the property requirements in a nutshell.
Residence and Visa Programme Rules
|Invest in property worth €320,000 or €270,000 if in the South or Gozo||€12,000 per year or €10,000 if in the South or Gozo|
Global Residence Programme – GRP
|Invest in property worth €275,000 or €220,000 if in the South or Gozo||€9,600 per year or €8,750 if in the South or Gozo|
Residence Programme Rules – TRP
|Invest in property worth €275,000 or €220 if in the South of Gozo||€9,600 per year or €8,750 if in the South or Gozo|
Individual Investor Programme – IIP
|Invest in property worth €350,000||€16,000 per year|
|No minimum property threshold||No minimum property threshold|
The Luxury Real Estate Agent of Choice
Malta Sotheby’s International Realty (operated by CSB Real Estate) is focused on fully-servicing the high-end residential and commercial real estate market throughout the Maltese Islands. Our real estate professionals guide clients towards finding their ideal home and throughout the entire buying and selling process. The Malta SIR office can be found on 200, Tower Road in Sliema.