Thanks to numerous tax advantages and a booming real estate market, acquiring a property in Malta is increasingly desirable to expatriates. Investing in real estate abroad is a good way to ensure rental income or simply to own a main residence while acquiring immovable assets.
The value of real estate in Malta has risen sharply in recent years, reaching a price of more than €4,000 per square meter. Investing in brick and mortar in Malta is therefore advantageous. However, the market is currently experiencing a drastic fall following the advent of Covid 19, making it the ideal time to invest!
Find advice from the Maltese government on purchasing real estate.
Types of property in Malta
If you want to invest in Malta, here is a list of the different types of residential properties:
These are the most common type. They can range between small studio apartments to 3-to-4-bedroom homes, up to Penthouses (rooftop terrace apartments). They are becoming more and more abundant on the island, thanks to various ongoing and future construction projects.
These are homes with their own entrance giving out to the street, unlike apartments. They can be detached or part of a block of houses. Some will have either a back yard or a small garden.
Houses of character
Many centuries-old buildings are available for sale and are among Malta’s oldest accommodations. Often built in Limestone – common to Malta – many are characterised by stone arches and the famous Bow Windows.
These are former farm buildings which have been redeveloped and renovated, mostly found in Gozo but also in the mainland countryside.
Luxurious villas and properties
Many prestigious properties can be acquired in Portomaso, Madliena or even Tigne Point. Often with a swimming pool or sea views, they afford excellent comfort.
Choosing your property
Real estate is much more expensive in Sliema, Saint Julian’s, and Gzira, because they are the most developed and sought-after areas. On the other hand, you will find more tranquillity in Gozo, the center of Malta or in the Northern and Southern regions of the island, where there is less demand and prices are more affordable.
Quality of accommodation
Look out for the quality of housing in Malta, which can leave much to be desired. It is common to have insulation problems during the winter with high indoor humidity, decaying facades, unstable foundations, and generally work that has been done without any quality control. Make sure that you have checked all of these things before buying.
Requisites for being a property owner in Malta
If you are an EU national, you can buy any kind of property on the island, even if you are not a resident of Malta.
For nationals of a country outside the EU, you will need a specific permit called Aquisition of Immovable Property (AIP), which is issued by the Ministry of Finance. It can obtained within 6 to 8 weeks.
Note: Specific areas, called “Specially Designated Areas,” such as Portomaso or Tigne Point, are not subject to obtaining an AIP for a real estate purchase.
Purchase of a secondary residence
A minimum purchase price may be applied if you are buying a secondary residence (also applicable to a purchase by a non-EU national): This is approximately €200,000 for a house or villa, and €120,000 for an apartment or maisonette. These figures may change and are only indicative.
Costs involved in purchasing a property in Malta
Annual fees on properties in Malta are relatively low. In addition, there is no property tax or housing tax. However, there are some fees.
“Stamp Duty”, or Transfer Fee
These fees can be up to 5% and are payable to the Commissioner of Inland Revenue. They may be reduced or even completely eliminated in certain cases: acquisition of the main residence, EU citizen etc.
Please note: For first time buyers, the first €150,000 of the property is not subject to this fee.
These will be between 1% and 3% of the value of the property.
Additional costs, such as “Searches and Registration fees” of approximately €600, and of course the AIP permit of approximately €230, may be added.
NB: Agency fees are at the seller’s expense (up to 5% of the selling price)
Steps to buying a property in Malta
“Konvenju”, or the Promise of Sale
The seller and the buyer sign a promise of sale agreement summarizing the details of the transaction. This agreement is valid for 3 months, during which the notary verifies all elements of the sale, the permits (including the AIP) and authorizations of both parties, the documents etc.
Upon signature of the agreement, the buyer must pay 1% of the transfer fee (if applicable) and a deposit of 10% of the value of the property, which will be retained by the notary or the agency for the duration of the agreement.
Note: If the buyer withdraws without valid or legal reason, the deposit will then be retained by the seller.
The Final Deed
Once the notary has completed all the necessary checks and has obtained the documents of both parties, the deed of sale can be signed. The buyer must therefore pay the remaining transfer costs, notary fees and, of course, the remaining amount of the property value.
More information about the different stages of the purchasing process can be found on the Maltese government website.
Buying a rental property in Malta
Investing in the rental business in Malta is advantageous, as rents are high, and demand remains very strong throughout the year.
Note: It is not permitted to purchase rental property for holders of an AIP license.
As regards to the tax rate, it is fixed at 15% for land income. On the other hand, you are entitled to a tax credit if you enter into a rental contract of 2 years or more for the accommodation. The amount varies from €200 to €500 depending on the size of the accommodation and the duration of the contract. This is part of the new leasing reform in Malta.
There is no VAT on long-term rents, only on short-term rents approved by the MTA (Malta Tourism Autority), which is set at 7%.
Where to buy your property?
To invest in real estate in Malta, you can deal directly with individuals or through an agency. We advise you to avoid dealing directly with individuals for better quality control.
Buying property in Malta: what to remember
Consider the location of the property you wish to acquire, but also the quality of the building and the surrounding environment. Malta’s real estate market is currently down, and prices are more accessible, although they should rise further in the future. If you’ve been planning on buying, now might be the time to seize the opportunity.
Please note that the information provided on this page is subject to change and that it is necessary for you to find up-to-date information by visiting various official Maltese websites.
Looking for a mortgage? Check out our banking In Malta page to find out about Malta’s financial institutions.
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