Buying Property in Malta
Buying a property in Malta is safe and simple. 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 clear title and the issue of any relative permits to purchase, if necessary. 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. This deposit will be forfeited in favour of the vendor should the purchaser fail to complete the final deed of transfer for no valid legal reason.
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 the application for a permit to purchase, to the Ministry of Finance, if such permit is necessary.
Once the relative permit has 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 and Stamp Duty plus legal expenses are paid on the signing of the contract when vacant possession to the property is handed to the purchaser.
Expenses related to the acquisition of property include:
- 5% stamp duty (currently 2% for Gozo until end 2018)
- 1% to 3% notarial fee (approximate)
- €600 searches and registration fees (approximate)
- €233 AIP permit fee (where applicable)
These costs are the liability of the purchaser, whilst agency fees are borne by the vendor.
Conditions for Buying a Property
Non-residents may freely purchase property in Malta, subject to obtaining an AIP permit if such permit is necessary. An AIP permit will not be required to purchase properties in Special Designated Areas and, in the case of EU citizens who :
- Have been resident in Malta for at least five continuous years;
- Intend to purchase a property which is to serve as their primary residence; or
- Who intend to purchase a property for investment purposes.
Where one of the spouses is an EU citizen and the other spouse is a non-EU citizen, both can benefit from the exemption outlined above and acquire property without the necessity of obtaining an AIP permit, provided the acquisition is being made to serve as their primary residence.
Also exempted is the acquisition of immovable property by an EU national for the conduct of one’s business activity or for the supply of services by such person. In such a case, a declaration reflecting the purchaser’s intention for the acquisition should be inserted in the relative contract of purchase. This also applies when the purchaser intends to buy the property as a rental investment.
Where the purchase requires an AIP permit, the property must satisfy a certain minimum value which changes periodically and which currently stands as follows: €110,469 for apartments and maisonettes and €184,064 for villas, townhouses and other property. These values are index-linked and thus may be subject to revision annually.
The property purchased has to be used solely as a residence by the applicant and his family. This condition will be waived once the applicant obtains the relative permit to rent the property. (Refer to Letting Your Property)
The above-mentioned individuals may only own one property in Malta and Gozo (except in special designated areas where one may purchase more than one property). Once these applicants have purchased a property in Malta and wish to acquire another one after having sold the first one, they may do so after obtaining permission from the Ministry of Finance. Applications for permission to acquire another property are normally favourably considered. Permission will be granted subject to the first property being sold.
Citizens of all European Union member states, who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition, may freely acquire more than one immovable property without the necessity of obtaining a permit.
EU citizens, who have NOT resided in Malta for at least five years, but have the intention of purchasing their primary residence i.e. take up residence in Malta, do not require a permit. Nor do they require such a permit to purchase immovable property required for their business activities or supply of services.
Individuals who are NOT citizens of a European Member State may acquire immovable property after they obtain the relative permit (AIP permit) in terms of Chapter 246 of the Laws of Malta from the Ministry of Finance unless they acquire property located in a Special Designated Area.
When purchasing a property in a Special Designation Area, no restrictions whatsoever apply. Foreigners (EU and non-EU) may purchase any number of units within such developments without the need for an AIP permit, hence such purchases are not governed by any of the above-mentioned conditions.
Acquisition of Property by a Group of Persons
A body of persons, other than a commercial partnership, established in and operating from a European Union member state may freely acquire immovable property that is required for the purpose for which it has been set up as long as it is directly controlled by citizens of a European Union member state who have resided in Malta continuously for five years.
A commercial partnership established in and operating from a European Union member state (therefore including Malta) may freely acquire immovable property that is required for the purpose for which it has been set up as long as such partnership is controlled by and at least 75% of its share capital is held by a person (or persons) who is a European Union member state citizen and who has resided in Malta continuously for five years.
Any other body of persons will require a permit, which is only granted if the property is required for an industrial or touristic project or as a contributor to the development of the economy of Malta. Permission may be refused for the purchasing of a property, which is considered to be of historical interest.
Mortgage facilities are available for the purchase of property from all banks in Malta, subject to status. (Refer to Obtaining bank loans in Malta).
All you need to know about Energy Performance Certificates
Property owners must ensure that when buildings are constructed, sold or rented out, an EPC (Energy Performance Certificate) is shown to the prospective new buyer or tenant and handed over to the buyer or new tenant on the date of entering the contract of promise of sale or rent agreement.
An EPC is a requirement of the EU Directive, namely the Energy Performance of Buildings Directive (EPBD) and Maltese Law, specifically the Energy Performance of Buildings Regulations (EPBR) of 2012 (LN376/2012).
The Energy Performance Certificates inform potential buyers about the energy performance of a building unit and gives recommendations for cost-effective improvement to a better energy efficiency class. An EPC rates the home’s performance in terms of energy and it is similar to the energy label on electrical appliances.
An EPC is carried out by an Energy Performance of Buildings (EPB) assessor who is registered with the Building Regulation Office (BRO) which is the office responsible for the implementation of the EPBD in Malta.
The EPB assessor inspects the property and assesses the building. The assessor then calculates the energy use rating of the building and issues a registered EPC. A list of registered assessors is available on www.epc.gov.mt. The BRO charges a €75 registration fee for each certificate registration. There is no set fee for an EPC as it is up to the assessor to set the price.
An EPC is valid for 10 years from the date it is issued. The same EPC still holds if the property is placed on the market within those 10 years provided there are no substantial changes to the building which could affect its energy performance.
An EPC assesses the geometry, construction and finishing material of the building such as double/triple glazing, ventilation, insulation and shading elements. It also takes into account lighting, hot water systems, air-conditioning and renewable energy systems like, for example, PV panels.
The assessor then proceeds to give recommendations for an energy efficient building. Recommendations are worked out specifically for each building and officially given to the building owner in the certificate. The owner is not, however, obliged to implement any of the recommendations set out by the assessor.
An owner who fails to produce the EPC to the BRO, when requested to do so, may incur a fine ranging from €500 to €5,000.