4 First Time Buyer Schemes – 2021 Budget

When’s the right time to invest in a property? This is certainly a favourite hot topic.

The fallout of the COVID-19 pandemic requires wise financial decision-making. But whichever way you look at it, property for sale in Malta is among the surest of investments to make – especially if this is your first major investment.

If you’re in Malta, the upcoming summer period is turning out to be the perfect time to be a first-time buyer on the island.

For prospective homeowners, getting a foot on the property ladder is a daunting task. What helps, though, is that there are schemes and financial incentives available to help you purchase your first home. This puts you – as a first time buyer – in an advantageous position in the real estate sector in Malta.

Here’s why now’s the time for you to step across the threshold and buy a property in Malta as your first home.

1. First time buyers’ scheme

In Malta, we’re lucky that the government has been innovative when it comes to supporting prospective homeowners. And the top of the 2021 budget list is its first-time buyers’ initiative.

Since day one, the First-Time Buyers’ Scheme has been a success and for a couple of good reasons:

• An improved tax scheme from €175,000 to €200,000,
• No stamp duty on their first €200,000 of the property’s value, 
• 1.5% stamp duty is applied for anything over €175,000 and below €400,000; and
• For the first €400,000, income tax on capital gains is lowered at 5%; and  
• An improved duty free on the first €250,000 property donated by parents to first-buyer children. Any value over €250,000 will be subject to duty rate at 3.5%.  

2. Malta’s economic regeneration plan

On 8 June 2020, the Maltese government announced its Economic Regeneration Plan to relaunch Malta’s economy following the COVID-19 pandemic.

While in lockdown over the past few months, many prospective first-time buyers put their property dreams on hold. Nobody really knew what the financial impact of COVID-19 would be and it was no time for unsure investments.

Malta’s Economic Regeneration Plan can now set people’s minds at ease.

Besides making property purchasing more affordable, the initiative has also made 2020 an opportune time for first-time property investors in Malta.

So, if you’re looking for your first home, listen up.

Taxation on buying and selling property is being reduced until March 2021. For properties worth below €400,000, stamp duty is being reduced from 5% to 1.5%.

What does this mean for first-time buyers? It means you’ll pay no stamp duty on the first €175,000. Then, you’ll pay the reduced rate of 1.5% on any value above €175,000 and below €400,000.

What’s more, even if you’ve already signed a promise of sale, you’ll benefit from these new measures.

And if you’re a seller, you may want to keep your eyes peeled too. Under the new post-COVID19 measures, you’ll benefit from a reduced rate of income tax on the sale of your property – from 8% down to 5%. 

3. The home deposit scheme

If you’ve got your eye on a new house or flat and the First-Time Buyers’ Scheme isn’t incentive enough, the Home Deposit Scheme might be just what you need.

The scheme is another incentive of the Maltese government’s recent initiatives to stimulate the real estate sector in Malta. And it comes in the form of a bank home loan for first-time buyers.

The financial incentive is available to the first 300 successful applicants only – so quick thinking and action is crucial.

Here’s what you need to know: It’s a government loan covering the 10% deposit (or up to €17,500) payable upon signing a promise-of-sale agreement.

• It’s available to first-time buyers only.
• To be eligible, the first-time buyer must be between 21 and 39 years old.
• The loan is repayable over 25 years.

The loan also comes with conditions related to income and marital status. It is open to:

• Single persons aged between 21 and 30 with a gross income between €19,000 and €25,000.
• Single persons aged between 31 and 39 with a gross income between €25,000 and €35,000.
• Couples aged between 21 and 39 with a gross income between €19,000 and €35,000.

Importantly, you need to also consider your capital assets. If they exceed €17,500, then you won’t be eligible for the loan – even if you meet all other assessment criteria.

The Home Deposit Scheme is being made available via two banks in Malta: APS Bank and Bank of Valletta. Read more about first-time buyer bank incentives available.   

4. Advice for first time buyers

Success in real estate hinges on finding the right property – which is especially true if this is your first home.

RE/MAX Malta has developed Malta’s most comprehensive database of for-sale first time buyers properties in Malta and Gozo specifically aimed at simplifying the purchasing procedure. For first-time buyers, this is a great place to start.

With the guidance of our RE/MAX associates, the search for your first home in Malta is made simple. We filter through properties for you (and with you) to make your search easier.

First time buyers program

Our estate agents, thanks to our first time buyer program, are trained to bring all factors into the equation so you can avoid as much stress as possible. This includes property features, budget, governmental incentives, upkeep, your daily needs and, of course, location to reduce any mistakes and extra expenses.

We’ll also focus your attention on factors that you may not have considered yet. We can advise you on bank loans, notary’s fees, utility bills and other hidden expenses. Especially as a first-time buyer, we want you to understand the full picture and to feel completely at ease and excited about your first investment in property. This also applies to second-time buyers. 

If you’re looking for your first home in Malta or Gozo, get in touch with RE/MAX Malta to learn more about the opportunities open to you.