Buying a Luxury Property In Malta

Introduction

Malta is such a small island that, had it not been for its very advantageous location right in between southern Europe and northern Africa, it could easily have been overlooked. This small island does have even more advantages to its credit. A Mediterranean climate and cuisine for one thing. A rather cosmopolitan take on life where locals speak more than their native Maltese language and where English speaking is second nature. Culture thrives, sports abound, art is alive and educational levels are high. Safety is Malta’s second name and foreigners find the possibility of having a safe stroll after sunset a boon, unheard of elsewhere. The fact that Malta consolidated its European stance thanks to its entry into the Euro-zone means it is truly another European country of note.

Why Malta As A Luxury Destination?

Why ever not? Being small does not mean the country is poor, nor is its potential limited. Indeed, the country’s economic prowess and financial progress over recent years has ascertained that the level of living on Malta remains high. Certainly high enough to accommodate the luxury-seeking percentage of visitors who routinely try out a stay on Malta. Whether they hop over for a quick tour as part of an expensive cruise package, or whether they visit to test the waters for eventual business involvement or retirement, the wealthy appreciate the resources in Malta, like the real estate in Malta, and most decide to stay, at least for some time every year.

Luxury Developments And SDA’s

The simplest way to learn more about a country is to live in it. Deciding to purchase a property on Malta has never been simpler for EU nationals, as well as for non-EU nationals. This thanks to what real estate people here call SDAs. These are Specially Designated Areas in which such foreigners interested in investing can enjoy very special benefits. In a nutshell, if you belong to this category of wealthy foreign buyers eyeing property here, you can enjoy acquisition rights identical to what Maltese nationals enjoy. This is no definite limit to the number of properties you are allowed to invest in and, you will be able to eventually also rent out such properties at your discretion.

At present there are a good dozen SDAs in Malta and Gozo which include luxury residential and commercial locations such as Smart City, Portomaso, Fort Cambridge, Fort Chambray and others.

Maltese Property Purchase Procedures

Property purchase is a pretty straightforward affair which is totally controlled and above board. As soon as you view a property that you may be interested in buying, you may enter a Promise of Sale agreement in the presence of your real estate agent, the seller and a notary of your trust. You will be required to pay a percentage (usually between 10% and 30%) of the property’s final price upon the signing of this promise of sale. The length of the period in between the signing of this document and the final deed of sale, will be agreed upon between yourself and the seller and may stretch between the usual minimum three months to a maximum of six months. Having said that, extensions are allowed as well as longer durations depending if the property you are buying is on plan, in shell or a project, as long as both parties agree to this, again signed for in the presence of the notary. 

Promise Of Sale

The Promise of Sale period is extremely important since it has to be time enough to allow the notary to carry out the notarial searches as required by law. These will ascertain several tenets, such as that the property is free to be passed on to a new owner, and that it is constructed according to specified guidelines, namely health and safety regulations.

Obtaining A Bank Loan

Obtaining a Bank Loan may be necessary for you as a foreign buyer, and your real estate agent in Malta will assist you in securing such loan during the period of the promise of sale. Non-residents on Malta purchasing a home need to speak to the bank from which they intend to borrow money to find out about specific loan conditions, but basically home loans can reach up to a maximum of 80% of the property’s final value and loan repayments must be repaid until pension age. This of course may change according to regulations and bank permitting.  You will need a number of important documents to submit with your home loan application, namely proof of income, A bankers reference, Architect’s valuation report, Bank statements, promise of sale agreement, passport, and other standard documentation:

Final Deed Of Sale

The final Deed of Sale is only carried out once the notary clears all paperwork and once any bank involved in the transaction is ascertained of all its researches and documentations. Once the deed of sale is signed between buyer and seller, in the presence of the property agent and notary, the notary will see that final payment is made and will proceed to register the deed as required by law.

Disbursements

Disbursements or rather money due to be paid to third parties from yourself as a buyer include notarial fees, fees for legal searches, government stamp duty and others:

• Government stamp duty – 1% is paid on the preliminary agreement and 4% upon the final deed; Total being 5% of the value of the property;
• Approximately 1% of the purchase price of the property is charged by the notary;
• Approximately €582 due as disbursement for the researches into title, liabilities amongst other – depending on the nature of the property and when it was built;
• €233 (if required) as a fee for an AIP permit ;
• Agency fees due are usually borne by the vendor;
• Legal fees, when applicable, to be paid by the party engaging such services.

Acquisition Of Immovable Property

The AIP Permit translates into the Acquisition of Immovable Property Permit and is basically related to the type of property you are buying, and its purpose. Primary residences, secondary residences, SDA properties, business properties – all are governed by a specific permit if you are a Non-Maltese or a Non-EU citizen who has not lived on Malta for five continuous years.

Capital Gains Tax

The Capital Gains Tax which may be referred to as CGT, of the amount of 8% is to be paid on a property sold.  If a property is  bought and owned as its a personal residence and is occupied for a minimum of three years and is sold shall be exempt from CGT.  There are other exceptions to the rule, depending on the type of owner (company and individual) and the number of years the property is owned.  

RE/MAX Collection Agents / Associates

Where in doubt, it is always advisable to ask for further information and clarification.  The first reliable source of such information will be your trusted RE/MAX Collection agent or associate. RE/MAX Collection agents are professionally trained and experienced agents that specialise in dealing with affluent customers.