Buying a house in Malta

The islands of Malta in the Mediterranean are an ideal holiday destination, as well as their natural beauty and the peaceful way of life in Malta they are English speaking, with a rich cultural heritage and offering a warm climate, beautiful sea.

Purchase of Malta Real Estate

Maltese law states that citizens from the European Member States can under Chapter 246 of the Laws of Malta obtain the permit required to purchase a secondary property in Malta.When you have chosen your property in Malta, a member of the European Union, you enter into a written agreement / contract (convenium) binding the seller to sell to the purchaser the property at the agreed price and within an agreed timescale. Usually a 10% deposit is paid by the purchaser at this time, and a copy of the convenium is attached to the AIP application form which is obtained from Capitol Transfer Duty Department of the Inland Revenue.Along with the completed form you have to enclose 2 passport photos and a photocopy of your passport showing all the details (As with all purchases abroad you should seek legal representation to assist you with your property purchase). In the meantime the Notary Public chosen by yourself will carry out searches to confirm title deed validity. The AIP section are obliged to issue the permit within 35 days provided that the application form has been completed correctly and your purchase can go ahead.The fee for this permit is Lm 100 A copy of the notarial deed (title deed) must be sent to the AIP section after its publication which normally takes about 3 months.

Maltese Law states that a non resident cannot purchase a flat/apartment property under the value of Lm34158 and Lm56930 for any other type of property and that the property can only be used for residential purposes. Should you be purchasing a property in Malta for investment purposes please note that the only properties legally permitted to be rented out to third parties are villas with a pool or top quality apartments.

Mortgages

The main banks in Malta are the HSBC, Lombard and the Bank of Valletta and mortgages of 90% are available to non residents of Malta to assist with property purchase. A larger deposit can affect the final interest rate charged by the bank.

Expenses

A Transfer tax of 5% is payable on the declared value of the property purchased.Legal fees anticipated between 1%-1.5%

These guidelines are meant for guidance only and describe a straightforward purchase scenario. However this information is not meant to replace proper legal advice, which we always insist you take.

Purchase of Property in Malta by Foreigners

Conditions for Purchasing Property in Malta

An AIP Permit for the Acquisition of Immovable Property will be granted subject to the following conditions:

1. Minimum value of property:

Villa or house: Lm50,000

Apartment, flat, maisonette: Lm 30,000

if in shell form / unconverted, finish costs included in total amount.

(Lm 1 = approx. Euro 2.41 = approx. USD 2.38)

2. Property of historical interest or situated in historical area cannot be bought.

Select an Architect to inspect property and decide whether of historical importance or not. (does not apply to Houses of Character or Farmhouses, which can be bought).

3. Property purchased must be destined:

• for personal residential use of applicant only(private guests may stay when the owner is present)
• for other purposes approved by Government,
• for an approved industrial or touristic project, or
• for any other project or purpose which is considered to contribute to the development of Maltese economy.

4. Documentary evidence of foreign origin of funds transferred to Maltese bank account, satisfactory to Central Bank of Malta, must be produced before signing the final contract.

5. Maximum property that can be purchased in Malta and Gozo: 1

Except in Special Designated Areas e.g. Portomaso (St Julians), Chambray (Gozo), Tigné, Manoel Island and Cottonera – property purchased by company or trust.

6. Resale of property is allowed only to Maltese resident.

Negotiations with the European Union

Malta is now a full member of the European Union. During pre-accession negotiations, Malta successfully reached an agreement with the EU regarding the acquisition of immovable property. As a result of this agreement, the situation regarding AIP will be retained on a permanent basis even after membership even though EU law allows EU citizens to purchase property in any EU country without restrictions.

During negotiations, the EU agreed that considering the limited number of residences in Malta and the limited land available for construction, which can only cover the basic needs of the present residents, Malta may maintain restrictions, on a non-discriminatory basis, on the right of EU citizens, who have not legally resided in Malta for at least five years, to acquire and hold secondary residences.This means that EU citizens seeking to buy a secondary house in Malta will still need to apply for authorisation and satisfy conditions as is now. They will also not be entitled to buy more than one property unless they reside in Malta for at least five years.The five-year period as a residence requirement was the balance that was struck between the two diametrically opposed positions in Maltese and EU law. Under Maltese law, foreigners can never have full rights to buy property in Malta unless they obtain Maltese nationality. Under EU law, EU citizens would have full rights to buy as much property in Malta as they like without any need to reside in Malta.

Instead, Malta agreed to give equal rights to EU citizens to buy property freely in Malta only if they first resided here for a period of five years. In practice, this means that only those EU citizens who settle in Malta permanently can do so.This was done in order to eliminate the possibility of foreigners freely buying as much property in Malta as they like. More important, Malta wanted to reduce the possibility of an increase in property prices because of EU membership.

Conditions for buying immovable property

Citizens of all European Union member states, including therefore Maltese Citizens, who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining a permit under Chapter 246 of the Laws of Malta.Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years may only purchase their primary residence or any immovable property required for their business activities or supply of services without the necessity of obtaining a permit under Chapter 246 of the Laws of Malta.Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years, require a permit under Chapter 246 of the Laws of Malta to acquire immovable property for secondary residence purposes.Individuals who are not citizens of a European Member state may not acquire any immovable property unless they are granted a permit in terms of Chapter 246 of the Laws of Malta.There are defined zones in Mata, referred to as special designated areas, where there are absolutely no restrictions to acquisition. There is also no restriction on acquisition through inheritance and there are also several other special exemptions. Different rules apply to the acquisition by bodies of persons. continue

Acquisition by bodies of persons:

A body of persons, other than a commercial partnership, established in and operating from an European Union member state may freely acquire immovable property that is required for the purpose for which it has been set up as long as it is directly controlled by citizens of a European Union member state who have resided in Malta continuously for five years. A commercial partnership established in and operating from an European Union member state (therefore including Malta) may freely acquire immovable property that is required for the purpose for which it has been set up and at least 75% of its share capital is held by a person (or persons) who is a European Union Member state citizen.Any other body of persons will require a permit which is only granted if the property is required for an industrial or touristic project or as a contributor to the development of the economy of Malta.
* A permit will not be granted if applicant has already acquired immovable property in Malta; other conditions also apply.

1 This presupposes a change of ordinary residence if the purchaser is not already a resident of Malta.

2 This would typically include holiday homes where there is no change of ordinary residence.

Please click here to download the Immovable Property (Acquisition by Non-Residents) Act. Text last updated on Thursday, April 29, 2004.

application form to acquire immovable property in Malta