Purchasing procedures to follow
It is of utmost importance that you, as a purchaser, know your rights and limitations when taking the step to buy a property. At Frank Salt Real Estate our trained staff will guide you through the purchasing procedure, and will tell you all you need to know.
The first step in the purchasing procedure is to get to know your needs and requirements. This will probably necessitate a meeting or at least a telephone call to discuss the various options that can be made available to you. At this stage we suggest that you start off by carrying out a quick property search on our site – this should give you some idea of what is available on the market at the present moment. However please remember that only a selection of the properties on our database are represented on our website.
Prior to searching for property
It would be a good idea if you considered the following:
- Where would you prefer to live?
- What type of property would you like?
- What size should it be to best accommodate your needs for the foreseeable future?
- Would you prefer a more modern home or one with traditional character?
- What services and amenities do you require? (Schools, transport etc)
- What is your budget and how will you finance your purchase?
Especially if you are a first time buyer, it may be hard for you to answer some of these questions as you are probably not familiar with current property prices and values and what you can really afford. Because of our long experience in this field, we can guide you on proper current market values of properties (which may differ from, for example, architects’ valuations on structural value), and we can show you the properties which would best fit your requirements and budget.
The more information you give us from the outset, the better we will be able to assist you to find what you are looking for.
Once we have found the property you were looking for, we will do our utmost to negotiate the best price possible for you, and a date and time is set for the signing of the ‘promise of sale’ or convenium with your notary.
Before signing the convenium
Be sure to confirm the following before signing the convenium:
- The agreed price
- If the property is Freehold (no Ground Rent) or if there is Temporary or Perpetual Ground Rent
- What fixtures, fittings and pieces of furniture are included in the price?
- How is payment going to be effected (Do you need to apply for a loan?)
- Are there any works to be completed by the owner?
- What are the Terms of the promise of sale (Subject to loan, permit etc)?
- The Deposit, on account – Usually the deposit on account is the equivalent of 10% of the agreed purchase price, paid as a sign of goodwill by the purchaser and of their intention to appear on the final deed of purchase. Please note that ‘earnest’ (not deposit on account) is less binding as neither party can oblige the other to appear on the final deed of purchase. The penalty is limited to the sum of the earnest.
- When will the final deed be signed? A promise of sale agreement unless otherwise agreed, is valid for three months.
The deposit is forfeited in favour of the vendor if the purchaser does not appear on the final deed without a valid reason at law.
During the period between the convenium and the final deed (the contract), there are a number of things which must be done.
- The Notary (employed by the purchaser) will, within 3 weeks of signing the promise of sale agreement, register the said agreement with the Commissioner of Inland Revenue and pay 1% of the sale price on account of Duty due by the purchaser on the final deed of sale.
- The Notary will also carry out researches on the property and verifies clear legal title, assuring that there are no outstanding debts, hypothecs or liens on the property.
- The purchaser must honour all the conditions mentioned in the promise of sale agreement eg. Bank application for loan in good time, ascertaining that the property is covered by a building permit etc.
- The vendor in turn must honour all the conditions that are mentioned in the promise of sale, which apply to him or her eg. Completion of works agreed upon etc.At Frank Salt Real Estate we actively follow up these procedures to ensure a smooth, final transaction of the property.
Final step in the purchasing procedure
Once all the above steps have been completed, all parties get together to sign the final deed. Normally, the procedure is as follows:
- If a bank loan is required for the purchase, the final deed is signed at the bank.
- The contract of purchase is read out and if all is in order all the parties concerned sign it.
- The balance due, i.e. the purchase price less the deposit already paid when the convenium was signed, is paid to the vendor.
- The parties concerned pay all outstanding payments concerning the purchase. Eg. The vendor may settle any outstanding amount due to a bank as the final part of a loan settlement, as well as Capital Gains tax which may be due on the property, and the estate agent’s fee if applicable. The purchaser will pay Stamp Duty, notarial fees and searches etc.
- Keys to the property are passed on to the purchaser.
- The notary public registers the contract at the public registry (and the land registry if applicable).
Stamp Duty on the purchase price must be paid as to 1% on signing of the preliminary agreement and the balance on signing of the final contract, together with the notarial fees and cost of searches.
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 and 5% on the remaining value.
For any other property purchase, Stamp Duty is charged at 5% on the total value of the property. No Stamp Duty is charged on the value of the movable property (furniture and fittings) being transferred with the immovable property.
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 giving 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.
It is important to note that this is general information, and certain cases may require further assistance and knowledge for the transaction to go smoothly. At Frank Salt Real Estate Ltd we attend and oversee these procedures on a daily basis and strongly advise that a professional real estate agency and a competent notary public are a necessity to avoid mistakes, misunderstandings and erroneous decisions.
Please feel free to contact us for any information you may require, and for our assistance in finding you the property you are looking for. Our database is filled with thousands of properties, one of which is sure to be the one you would love to own!
Remember, you are under no obligation whatsoever should you choose to use our services… Simply call us and let us do the work for you!