Buying a house in Malta

property in Malta
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Updated 2023-01-29 12:10

Malta's real estate market has been flourishing over the past few years. In fact, foreign nationals have become so interested in buying real estate in Malta that the market has changed dramatically in recent years. Thanks to attractive prices and low tax rates, as well as minimally restrictive provisions, expats can enjoy a relatively seamless process for buying property in Malta.

Whether you have chosen to invest in Malta, it's worth it! You are likely to enjoy a rich, peaceful, dynamic, and friendly environment and lifestyle.

Benefits of buying a property in Malta

The beauty of the landscape, the temperate climate, the sunshine 300 days a year, the very low crime rate, the excellent health facilities, the tax system, and the friendliness of the people are the main factors that encourage expatriates to buy property in Malta.

Malta's real estate market is dense and fiscally advantageous, both for individuals and companies. It attracts many foreigners, taxes are low, and there is no property tax or council tax.

Buying a property at a certain price could help you get Maltese citizenship under strict investment conditions. This is the Maltese Citizenship by Naturalization for Exceptional Services by Direct Investment program. To know more about it, see our article “Malta Citizenship by investment | From Malta Individual Investor Programme (IPP) to Maltese Exceptional Investment Naturalization (MEIN)”. If the investment conditions are too strict for you, buying a property in Malta can let you benefit from the Global Residence Programme (GRP) in Malta, which is a special tax status. For more information, see our article “Resident and work permit for Malta”.

The property market in Malta

Small houses, flats, character houses, luxury villas: the Maltese property market can cater to all needs. On Malta and Gozo, there are areas set aside for luxury commercial and residential properties with high-end facilities and amenities, and owners can take advantage of exemptions set out in Maltese legislation.

While the property market is falling in some countries, this is not the case in Malta. Investors appreciate, for example, the fact that it is possible to buy a property through a company or a trust. This allows the investors to use the retained earnings within the company directly. If there are no individual shareholders to pay out, the companies can use the unpaid profits without incurring additional tax on the dividends. This mechanism is also used for asset protection.

It is quite common in Malta for properties to be acquired in trust, as Malta's trust jurisdiction is respected. Thanks to the Maltese Trust and Trustees Act, trusts allow purchasers to be assured that the property is maintained and managed in the best interests of the beneficiaries while optimizing the investment.

Expat-friendly regions in Malta

Malta is divided into three main islands, two of which are particularly attractive to foreigners.

Malta, which is the main island, is the country's economic and cultural center. Some popular areas in Malta include Valletta, which is the capital city, Sliema, Saint Julian's, Marsaskala, Marsaxlokk, Birkirkara, Saint Paul's Bay, and Mellieħa.

The luxury areas are located on the island of Malta at Portomaso, Fort Chambray, Cottonera, Fort Cambridge (located on the Tigné peninsula of Sliema), Marsascala (Ta' Monita Residence), Madliena Village, Manoel Island (future project) and on the island of Gozo at San Lawrenz (Kempinski Residence).

Gozo, the second largest island, is much less developed than Malta and holds a rich rural and cultural atmosphere. Note that Gozo is very popular with retirees, especially Victoria, the capital city, which is also known as Rabat (not to be mistaken with Rabat in Morocco).

Marsalforn and Xlendi are other ideal regions for investing in real estate property in Gozo.

As with most real estate transactions around the world, it is best to be there in person to determine where you would prefer to invest according to your preferences.

Finding a property to buy in Malta

To find the house or flat you have always wanted, you can check the classified ads on specialized websites (there are many, for example, Propertymarket.com.mt), read local newspapers, use word-of-mouth and visit estate agents. If you are not taking up residence in Malta, however, you can only buy in an SDA (Special Designated Area), unless you ask for an Acquisition of Immovable Property Permit (AIP) (see below).

Searching online can be a great starting point during your property search in Malta. However, not all online listings are up-to-date, so don't get your heart set on anything you see online.

Being in Malta makes your property search much easier as you can seek the help of a real estate agency. Make sure to list your criteria and expectations when it comes to the types of property (swimming pool, garden, proximity to schools, etc.), as well as your budget.

Estate agents take a commission, but they protect your interests by ensuring that the transaction is carried out in the best possible way and that there are no loopholes in the contracts and documents.

Feel free to visit several real estate agencies to explore even more options. Here are some well-known real estate agencies in Malta and Gozo: Alliance Real Estate, RE/MAX, Simon Mamo Real Estate, Dhalia Real Estate, Benestates, Zanzi Homes and Frank Salt.

Investing in property in a foreign country can be tricky. You need to know the market, the laws, the areas, etc. There are different types of properties in Malta:

  • Character houses. Those were built more than 100 years ago and are usually located in typical Maltese villages.
  • Luxury properties. This is a market for the most demanding (and wealthy): private swimming pool, exceptional views, sumptuous decorations, etc.
  • Second homes. They allow you to reside in Malta for a few months a year without being a resident and have a particularly advantageous tax regime. It is possible to rent them out when you are not living there.
  • Flats. From studios to penthouses, there is something for every budget and taste.
  • Rental investments. Renting is a common practice in Malta, and you, too, can become a landlord with the aim of renting the property.
  • Commercial premises. They have an excellent return, two to three times higher than rental accommodation.
  • Offices. They are intended for entrepreneurs and professionals.
  • Boutique hotels. These are small hotels with generally between 10 and 30 rooms, an investment with great potential.
  • New buildings. Malta is a small archipelago, and the environment is protected in many places. It is now becoming more difficult to find building land due to lack of space, but there are still opportunities.

Do you need an acquisition permit?

The acquisition permit, known as the Acquisition of Immovable Property Permit (AIP), is a particular feature in real estate transactions in Malta.

Although buying a property in the country is rather easy, you should be aware of the following:

  • European nationals who have lived in Malta continuously for five years have the same rights as Maltese nationals when it comes to buying a property; that is, they do not require an acquisition permit.
  • European expats who want to buy a property as primary residence do not need AIP as well.
  • European nationals who have not lived in Malta continuously for the last five years and want to buy property for secondary residence purposes shall apply for AIP.
  • Non-European nationals, regardless of the length of their stay in Malta, have to apply for an acquisition permit for both a primary and a secondary residence.

You are therefore advised to seek all relevant information from competent authorities or a reputable real estate agency.

Useful address:

Office of the Commissioner for Revenue

Capital Transfer Duty Department

46, Monti di Pietà Buildings, Merchants Street, Valletta

Email: capitaltransfers.cfr@gov.mt

Phone: 356 2296 2296 / 356 2122 0481 / 356 2299 8000

Procedures for buying property in Malta

You will make an offer or discuss the sale price with the owner, preferably in the real estate agent's presence, following a satisfactory visit to the premises.

Thereafter, you will sign a promise of sale agreement, or Convenium (Konvenju), which is a legal document containing details of the sale, including:

  • The amount deposited, which is typically 10% of the total sale price.
  • 1% of the total sum of the stamp duty as a provision. The total sum is 5%. The balance will be due on the signing of the final deed.
  • Conditions pertaining to the whole payment.

The whole transaction, as well as the title deed, will be checked by a notary (to determine whether the property has ever been mortgaged or is bound by debts).

A final sale date will then be established (either at the bank or before the notary) when you will sign the Final Deed. You will then be able to transfer the total payment to the seller and pay the stamp tax to the Office of the Commissioner for Revenue, as well as any other fees to the notary or agent.

Regarding agency fees, these are shared both by the buyer and the seller and amount to about 5% of the property's value. There are also notary fees, which start at 1% of the property's total value.

Good to know:

The official languages of Malta are Maltese and English. If you don't speak well either, you will need to seek help from an official translator or find a lawyer speaking your language. This is essential to avoid signing anything you might not be sure about.

Property prices in Malta

As for the budget, it really depends on you, your savings and the kindness of your banker. It is quite possible to find a very attractive little character house for sale in a typical village for around €425,000. In the cities, property prices are higher, especially in popular areas such as St Julian's or Sliema. For a luxury property, prices soar happily, sometimes reaching dizzying heights: 5 million euros and more... Regarding the flats in Malta, a three-bedroom apartment with a sea view in Sliema costs around €900,000 - €1,300,000. You can find cheaper prices (around €300,000) for smaller flats or apartments without sea views. In the villages, flats cost between €150,000 and €800,000 (for big flats in popular areas).

In Gozo, property prices are cheaper. You can find a townhouse or a terraced house for around €200,000, although prices are usually between €400,000 and €600,000. If you want to buy a flat in Gozo, expect to pay €150,000 - €220,000.

If the property you are looking to purchase is a new construction, you will also need to plan for a new kitchen, as the kitchen is not included in the price in Malta. If you are buying an older property, you may need to set aside some money to install heating and air conditioning.

Getting a loan to buy property in Malta

As a foreigner, you might find that some banks are reluctant to give you a loan to buy property in Malta. Fortunately, some banks do accept lending to foreigners.

Expats wishing to get a loan can typically anticipate a maximum Loan-to-Value (LTV) of 80%. You may be able to borrow up to 90% of the property price in exceptional circumstances. Note that the LTV percentage will be grounded upon the lower of either the purchase price of the property OR the valuation of the property. Maltese banks usually offer a minimum loan of €25,000. Loans cannot exceed €1,000,000. The borrower must be at least 18. The maximum age of the borrower at the full term of the loan is 65.

To apply for a loan to buy property in Malta, you need to follow this procedure:

  • Having a bank account in Malta;
  • Asking the permission from the Central Bank of Malta;
  • Buying life insurance;
  • Filling out the application form;
  • Producing the following documents: the preliminary agreement of the purchase of the property, your ID document, proof of your address, and proof of income (if you are employed or self-employed).

Good to know:

The income you are hoping to get in the future from the rent of your new property in Malta is not counted in your income. Besides, when you apply for a loan in Malta, the amount of money you need to pay for your debts (including the mortgage) each month cannot exceed 35% of your income.

Useful links:

Housing Authority

Office of the Commissioner for Revenue

Government of Malta - Buying property in Malta

Holprop

Chetcuti Cauchi advocates

Propertymarket.com.mt

Malta Homes

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.