Buyer's Guide To Malta
Once a property has been decided upon and price and conditions have been agreed, a convenium preliminary agreement is signed between the vendor and purchaser. This agreement binds both parties to purchase/sell the immovable property under the terms and conditions agreed upon. The signing of the final deed is, however, always subject to good title being proved and the issue of any relative permits to purchase. The agreements and contracts are written in English.
On signing the preliminary agreement, a sum equivalent to 10% of the price is lodged with the agent or notary public as stakeholder. This deposit will be forfeited in favour of the vendor should the purchaser fail to complete the final deed of transfer for no valid reason at law.
The agreement is usually valid for three months (term prescribed by law) or as mutually agreed by the parties. During the period between the signing of the preliminary agreement and the signing of the final deed of sale, a Notary Public engaged by the purchaser will carry out the necessary researches into the property to confirm good title, as well as submit all the necessary applications to purchase to the relative Government Departments.
Once all permits have been issued and researches have proved clear title to the property, the final contract of sale may be entered into - the deed of sale being drawn by purchaser's Notary. The balance of the purchase price plus legal expenses and stamp duty are paid on the signing of the contract when vacant possession to the property is handed to the purchaser.
Duty on documents 5%.
Fees 1% (approx.)
Searches & Registration Lm100 (approx.)
Ministry of Finance fee Lm100
N.B. The above expenses are the liability of the purchaser, while brokerage fees due to the estate agency are borne by the vendor.
In accordance with Act No. XXXVII of 1974, which regulates the acquisition of property in Malta by persons who are not ordinarily residents in Malta, the Notary Public instructed with effecting the transfer, will submit an application to the Ministry of Finance on behalf of the purchaser, to enable him to acquire the property.
Permission is usually granted within three months and is issued under the following terms and conditions:
The value of the property purchased must be above Lm 30,000 in the case of an apartment or maisonette and Lm50,000 in the case of a house. Properties in shell form or requiring renovation may be purchased at lower figures, provided that the estimated cost of completion works plus the purchase price reach the Lm30,000 and Lm50,000 thresholds.
Documentary evidence, satisfactory to the Ministry of Finance, must be produced prior to the signing of the final deed of sale, showing that the funds used for the acquisition of property have originated from an external source.
Property purchased should be for owner’s own residence or for use by immediate family members. In some cases, the property may be let to third parties.
The immovable property being purchased should be transferred on resale to a resident of Malta. (This condition is usually waived when efforts to resell the property to a Maltese national have proved unsuccessful).
Applicants may only own one property in Malta and Gozo (except in special designated areas where one may purchase more than one property). Once an applicant has purchased a property in Malta and wishes to acquire another one after having sold the first one, he may do so after obtaining permission from the Ministry of Finance. Applications for permission to acquire another property are normally considered. Permission will be granted subject to the first property being sold.
In terms of law, any individual who is not a citizen of Malta or who is not the spouse of a citizen of Malta is considered to be a non-resident. Moreover, any association or other body of persons, whether corporate or not, is also considered to be a non-resident if constituted in a foreign country or has its principal place of residence or business abroad. This also applies if 25% of its share capital is owned by non-residents or is directly or indirectly controlled by non-resident.
Permission may be refused for the purchasing of a property, which is considered to be of historical interest. This does not apply to most Farmhouses and Houses of Character, which are on the market for sale.
Mortgage facilities are available for the purchase of property by a non-resident or a non-Maltese citizen residing in Malta, subject to status.
Non-residents, temporary and permanent residents are allowed to sell their property at the prevailing market value. All the sale price including sales proceeds of movables may be repatriated anywhere abroad and in any currency.
Tax on capital gains may be charged on the sale of immovable property. This is based on the gains realised after taking into consideration the cost of purchase and sale, as well as any improvements carried out on the property. The tax is not charged on the sale of properties, which have been the owner's place of residence for the last three years.
There are no regulations governing letting property to foreigners.
Long Lets are usually entered into on a yearly basis with the option to renew the lease agreement for a further period.
There are no expenses relating to letting of property except for estate agents' fees amounting to one month's rent. The cost of this is shared equally between the lessor and lessee.