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Property in Malta has always been a good investment and a great idea for a place to live. Malta offers a vibrant lifestyle, rich culture, excellent weather and a reputation for hospitality.
Thanks to various initiatives taken by the authorities over the years, Malta offers various tax advantages directed at foreign businesses, professionals and retirees, making Malta a tempting destination. This in turn has contributed to an increase in demand for property rental, making Malta more attractive in terms of property investments, securing a moderate capital growth even in the worst of times.
Buying Property in Malta
Having selected the right property, agreed on the price and the terms and conditions of acquisition, one would then move to sign what we refer to as a Preliminary agreement. The process of purchasing a property in Malta is basically a three step procedure.
Step 1: Appointing a Notary Public to act on your behalf. Our trained staff can assist in recommending an established and reputable independent Notary able to assist the purchaser in the acquisition.
A Notary undertakes to provide a number of services, namely:
a) Drawing up of the Promise of Sale Agreement and registration thereof;
b) Examination of title of the Property in terms of L.N. 355/2012 (Examination of Title Regulations 2012) to verify clear legal title, confirming that there are no outstanding debts, hypotecs or liens on the property;
c) Publication, enrollment and registration of the public deed of transfer;
d) Anything reasonably required for attainment of the above purposes and ancillary thereto.
Notarial fees are regulated by law and largely depend on the property and the work associated with establishing its root of title. These can be estimated using the bill calculator available here
Step 2: Signing of a Preliminary agreement or Promise of Sale (otherwise known as ‘konvenju’). At this stage the buyer commits himself/herself to purchase the property in question and in turn the seller commits himself/herself to sell the property. A preliminary agreement is normally valid for a minimum three month period unless otherwise agreed between the two parties and in general a sum equivalent to 10% of the purchase price is paid by way of deposit on account of the price to secure the eventual transfer of the property. In most cases the deposit is held by the Notary on behalf of the buyer and transferred to the seller on final deed of sale once the root of title has been satisfactorily established.
Step 3: Deed of Sale. Once the Notary public has established the root of title and carried out the necessary public searches to confirm that the property is free and unencumbered, the Notary is now in a position to produce the final deed of sale to be signed by both parties in his/her presence. The balance due on the property i.e. purchase price less the deposit already paid on signing of the preliminary agreement is then paid to the vendor. At this stage transfer of ownership of the property has taken place and the notary will then register the contract of sale with the public registry for future reference and proof of title.
Non Maltese nationals require an AIP (Acquisition of immovable property by a non-resident) permit to be issued by the local authorities prior to purchasing a property in Malta. This permit seeks to ensure that the purchaser is a person of good standing and is obtained by the notary once the preliminary agreement has been signed. This restriction does not apply to properties located in areas termed Special Designated Areas or to EU citizens when purchasing property which is to serve as their primary residence.
Where one of the spouses is an EU citizen and the other spouse is a non-EU citizen, both can likewise benefit from the exemption outlined above and acquire property without the necessity of obtaining an AIP permit, provided the acquisition is being made to establish therein their primary residence.
Duties and taxes
When acquiring a property the purchaser is to settle stamp duty fees amounting up to a maximum of 5% of the purchase price. This fee is paid in two stages being:
a) An initial stamp duty amounting to 1% of the purchase price is paid to the Notary on signing of the preliminary agreement. This fee will be passed on to the Inland Revenue and a subsequent receipt will be issued confirming payment.
b) The remaining 4% of the purchase price is to be paid on the date of the final deed and handed over to the Notary for onward registration with the Inland Revenue. A full receipt will be issued by the IR Commissioner once the funds have cleared.
It is important to note that Stamp duty is only charged on Immovable Property. In the event that the property being sold includes furniture and fittings these may be quoted separately in the final deed of sale. No Stamp Duty is payable on any movable items (furniture and fittings) being transferred together with the immovable property.
When the property being purchased is to be used as purchaser's ordinary place of residence, stamp duty is charged at 3.5% on the first € 150,000 of the purchase price and 5% on any amount over €150,000. However, for any other property purchase, Stamp Duty is charged at 5% on the total value of the property.
If you require a bank loan in order to proceed with the purchase, then once the ‘Promise of Sale’ is signed you should visit the bank and take a copy of the ‘Promise of Sale’ together with any relevant documentation for the application to be processed. It is advisable to hold discussions regarding possible bank finance or home loans with the banks prior to the signing of the ‘Promise of Sale’. Belair Property has very strong connections with all the leading banks and our team can assist you with the obtaining of home loans when necessary. (Note: When a bank loan is being applied for, a clause in the ‘Promise of Sale’ is usually included, where the agreement is subject to bank finance being approved, usually for a limited number of weeks.)
Importation of Household Goods and Furniture
Individuals taking up residence in Malta may import their household goods and furniture into Malta free of VAT and import duties. Residents who are third country nationals may be required by the customs authorities to make a deposit or provide a bank guarantee for the amount of VAT/duty in question. This deposit is then refunded after a defined period.
Importing a Car
EU citizens may register a car in Malta without the payment of any tax provided that they can prove that they have transferred their residence to Malta and have owned the car for 24 months prior to it being brought into Malta. The car must be brought into Malta within 12 months of taking up residence.
Relocating to Malta
Global Residence Programme
Individual Investor Programme