Why buy a Holiday Home in Malta?
The Maltese archipelago is renowned the world over as a proverbial picture book of scenic venues, idyllic locations and historic architecture. As a result, the island group’s popularity as a holiday destination sees many thousands of tourists visiting the country for holidays year-round. Because Malta is also within easy reach to the rest of Europe and English is widely spoken as one of the national official languages, this all contributes to an unforgettable experience. A substantial number of visitors cannot forget the islands once back home and end up investigating buying and eventually purchasing a property here.
Some of the benefits of owning a holiday home in Malta:
- You do not have to pay premium prices for accommodation when visiting Malta,
- You can come and go at any time during the year and always have a place to stay,
- You can rent the property out (fulfilling some criteria) when you are not in residence,
- Your asset appreciates at an above average rate: according to globalcitizensolutions.com the Maltese real estate market is one of the best in Europe!
Further financial advantages are:
- A property that was owned as a sole or ordinary residence for more than three years is exempt from tax or taxation on capital gains
- Malta has no restrictions on the repatriation of capital
- Mortgages are available to non-residents as long as adequate guarantees are provided
- If you buy in a Special Designated Area, you can buy as many properties as you want and you can rent them out immediately
For those that buy properties in towns and villages outside Special Designated Areas, the acquisition of the required AIP permit for non-residents is fast and inexpensive.
The process of buying a holiday home in Malta briefly explained:
Purchasing real estate in Malta is a simple, uncomplicated process and it is very safe. After seeing the property options available with your local agent, 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.
Costs Involved (estimates)
- 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 an estate agency 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
There is a minimum value for the purchase of properties under AIP which is periodically updated, but this currently stands at € €143,410 for the purchase of a flat or maisonette and € €247,701 for the purchase of any other immovable property. Costs may vary in the South of Malta and on Gozo. Always 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 as long as 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.
Energy Compliance Certificates
It is very important that you, as a buyer, get handed the Energy Compliance Certificate of the property on the date of entering into the Contract of Sale.
Ask your agent for more information when you intend buying a property not as an individual but as a group other than a commercial partnership, as different criteria apply.
During the whole process of purchasing a property, it is most important to communicate clearly with your agent and Notary at all times regarding conditions, processes and the progress of the entire transaction, as will they, with you.