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The Maltese islands are a place of opportunity. Here you can achieve an ideal lifestyle- with picturesque scenery, a mild Mediterranean climate, and endless leisure & cultural activities. You can also achieve an ideal property investment. And whether you are seeking to relocate your family, your business, or enhance your financial portfolio- seeking expert advice will ensure you take action towards the right opportunity.
Investing in Maltese Property
The global perception of Malta is changing. No longer is Malta only known for its natural beauty and rich history, but it one of Europe’s fastest growing economies. The European Union’s statutes of stable currency and freedom of movement are attracting foreign investment and droves of esteem overseas companies are relocating to its shores. And now, recent government programmes also encourage non-EU nationals to partake in Malta’s residency and citizenship solutions. The positive result for Malta’s economy is clear- with the demand for property rising right alongside the island’s GDP. Investing in Malta could maximise your property investment potential in Malta– International agency Fitch Ratings confirmed Malta’s credit rating at A+ stable, while Moody’s and DBRS gave Malta an ‘A High’
The growing need for residential and commercial real estate is being addressed in innovative ways all across the island. From seafront lifestyle developments to luxury skyscraper towers, there is a new exciting project to suit any discerning taste. Throughout this development Malta’s heritage has not been neglected however, with an expanding number of historical character properties being restored to their former glory. These projects are aided by national budget incentives and the Planning Authority, who grant schemes to assist renovation projects. The government of Malta also remains motivated to support home ownership, offering reduced taxes for first and second-time buyers to increase affordability.
There are many stipulations on property ownership in Malta. For instance, foreign nationals can usually only purchase one property in Malta for their own occupancy, unless they purchase in a Lifestyle Development or Specially Designated Area (SDA). Once acquired, properties in an SDA can be leased out without restrictions, and consistently offer a high return on investment when rented due to the developments’ ambience of luxury, prime locations, and full range of resident amenities. It is critical to consider all factors and restrictions when beginning your property search. While the Maltese real estate sector is deemed as stable and enjoys appreciating values year after year, engaging the right real estate professional to assist can make all the difference. Local reputable real estate agencies such as Malta Sotheby’s International Realty (Malta SIR) can offer a seamless service in guiding you through the whole process. Malta Sotheby’s International Realty can identify the right opportunity for you while sharing our market knowledge and experience, so that you may rest assured that you are making the right investment and are prepared for the buying process in Malta.
Procedure when Buying Property in Malta
In general, the buying requirements are the following:
- Generally a deposit of 10% of the total property price is to be paid on Promise of Sale, together with 1% stamp duty. The Promise of Sale (POS) takes place before signing the final contract where the Buyer & Seller are agreeing and committing to the terms of the Sale, while the relevant searches are carried out by the Notary to ensure property is free from any charges.
- Stamp Duty equivalent to 5% of the total property price is paid on the final contract (of which 1% would have already been paid at POS stage). Exceptions:
- First time buyers are exempt from paying stamp duty on the first €175,000 of the property price (increased from the first €150,000 to €175,000 in 2020)
- Properties located in a UCA (Urban Conservation Area) are subject to a reduced rate of stamp duty of 2.5%
- Properties in Gozo are subject to a reduced stamp duty of 2%
- Notarial Fees
In addition, individuals who are not citizens of Malta may be subject to certain restrictions or be required to apply for a (AIP)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 favourable allowances.
Property Acquisition Tax in Malta
No property taxes are levied in Malta. Stamp duty is a transaction-based tax which is only taxed on the publication of a public deed when transferring immovable property from one party to another. The buyer is subject to a maximum 5% duty on the purchase price of the immovable property.
However, a promise of sale (POS) agreement (know in Maltese as “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 property, or on the market value of the property, whichever is higher.
Procedure when Renting Property in Malta
Renting is a favourable and convenient option in Malta for many people as the rental market offers various high-quality accommodation ranging from small apartments to large penthouses and villas situated across the island. You would easily be able to find desirable accommodation for both short and long lets ranging from a short-term holiday home to a lease of several years.
The rental market is more often subject to fluctuating time frames and special arrangements made between the landlord, the lessee, and the agency where applicable, and therefore more prone to variations within the market. These include but are not limited to;
- Initial security deposit – standard equivalent to 1-3 month rent but this is subject to negotiation
- Payment of monthly rent 1-3 months in advance – once again this is subject to negotiation
- Condominium & Maintenance Fees, although normally included in quoted monthly rental
- Deposit on Utilities (water & electricity)
- Agency Fee – 50% of 1 month’s rent paid by the Landlord and also the Lessee.
Property and Tax Residency
Malta has successfully put a number of programmes in place aimed at attracting high net-worth individuals to become tax residents and citizens of Malta. This includes certain requirements such as Investing in Malta through the purchase or renting of property. The below is a summary of the property requirements.
|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|
|Ordinary Residence||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 servicing the luxury residential and commercial real estate market throughout the Maltese Islands and is best in its class for representing unique high value properties. With more than 23,000 sales associates located in 1,000 offices worldwide, the Sotheby’s International Realty affiliate network is a global force committed to exceeding expectations. Offices in our global network have extensive real estate experience, an in-depth knowledge of the local market, and a dedication to delivering excellent client service with confidentially and discretion. At Malta Sotheby’s International Realty, we know that your home is a reflection of who you are- a definition of self-expression- and we aim to help you discover the very best of what Malta can offer.