A Comprehensive Guide to Buying a Property in Malta for UK Citizens
Purchasing real estate in Malta is a simple and safe process. After seeing the property options available with a real estate company in Malta, the next step is obviously deciding on which one to buy.
With your heart set on your new property of choice, you will then have to engage in signing a Promise of Sale or preliminary agreement as the first official step towards owning it. This will bind both parties contractually to the purchase and sale as agreed upon.
The Promise of Sale is in most cases valid for three months or as agreed upon by both the parties involved and at this time a 10% deposit is usually paid to the agent or a Notary. It will be the responsibility of the Notary to then further, right up to the time of signing the final Deed of Sale, do the necessary due diligence checks to confirm that everything is in order regarding the property and all parties involved.
The Notary will also apply for all permits such as AIP (Acquisition of Immovable Property) if needed and if anything from the purchaser’s side causes cancellation of the sale, the 10% deposit will be favoured to the vendor. All contracts are done in English although there are a lot of Latin terminology and phrases, so if you do not understand the meaning of these, make sure to ask your Notary to explain this to you as you will have to sign at some stage that you have understood everything as stated in the particular contract.
When your permits have all been approved and the title of the property is unquestionable, you will be asked to sign the Contract of Sale or Deed of Sale. At this stage you will have to pay the balance of the purchase price, plus stamp duty and all other sundries. When this is all done and the property is registered in your name, you become the rightful owner.
- Stamp Duty of 5%
- A 1-3% notarial fee (estimate)
- €600 for searches and registration fees
- €233 for an AIP Permit (where needed)
Should you make use of the services of a real estate agency in Malta to find and buy your property, the commission fees are paid by the vendor.
The AIP Permit Explained
Every person who has not been living in Malta for 5 years continuously or more needs to buy a property, if outside a Designated Area, by means of obtaining an AIP Permit. With an AIP Permit you are only allowed to buy one property which you are also not allowed to rent out. If a property is located within one of the Designated Areas, you can purchase more than one and it can also be rented out without the need to apply for an AIP permit.
Although the purchasing of property by Maltese Citizens is not curbed, non-residents as said need to obtain an AIP permit. No permit is needed by buying in a Special Designated Area or by:
- An EU Citizen that has been resident for more than 5 years
- A non-EU resident who have lived in Malta for more than 5 years
- An EU Citizen who purchases a property as their primary residence
- An EU Citizen who purchases a property for investment purposes
- In the case where one of the spouses is an EU Citizen and the other not, both people can benefit from the examples mentioned above as long as the property is intended to be their main residence
- If a property is to be used for business activity or to be rented out, this needs to be reflected in the Contract of Purchase
More conditions of the AIP Permit
There is a minimum value for the purchase of properties under AIP which is periodically updated, but this currently stands at €137,000 for apartments and maisonettes and €236,600 for villas, townhouses and other property. Costs may vary in the South of Malta and on Gozo. Ask your Notary for the latest figures that apply. Also note that in the case of purchasing a shell apartment under that amount will be allowed if after finishing it, it needs to be valued by an Architect for an amount exceeding the minimum required.
Should you want to buy another property outside one of the Special Designated Areas, it will be required that you sell the property you currently own first.
Buying a Property in Malta as a Group other than a Commercial Partnership
A body of persons may freely acquire a property as long as it is required for the purpose it has been set up and as long as it is controlled by members or citizens of another EU Member State who have resided in Malta for 5 continuous years or more.
Buying a Property as a Group as a Commercial Partnership
The commercial partnership needs to be established and operating from an EU Member State (incl. Malta) for the purpose it has been set up if 75% of the share capital is held by a person/s who is/are an EU Member Citizen/s and who also has resided in Malta for more than 5 continuous years. Any other body of persons will require a permit.
A permit will only be granted in the latter case if the property is to be used as an industrial or tourism project or as a contributor to the development of the economy of Malta. Purchasing properties of historical interest may be refused.
Energy Compliance Certificates
As a buyer, it is very important that you to get handed the Energy Compliance Certificate of the property on the date of entering the Contract of Sale.
During the whole process of purchasing a property, it is most important to always communicate clearly with your agent and Notary regarding conditions, processes, and the progress of the entire transaction, as will they, with you.
Buying a property in Malta can be an exciting experience. However, it also comes with some hurdles, especially if you are not familiar with the process. If you want to make the buying process less of a hassle, contact a local real estate agency like Frank Salt. Since 1969, we have been making the property buying experience in Malta hassle free.