Buying Property in Malta for UK, USA and other non-Malta residents

GET IN TOUCH

Preliminary Agreement

  • Buying property in Malta is a safe and straightforward process.
  • Once a property has been selected and terms agreed upon, a preliminary agreement, also known as a promise of sale, is signed by both the vendor and purchaser.
  • This agreement binds both parties to the sale under the specified terms and is signed in front of a notary.
  • The promise of sale agreement essentially defines the purchaser and the vendor and the property being purchased and then states the terms under which the sale will happen such as the price and payment terms and any specific conditions agreed to by the parties.
  • A deposit on account of the price (generally 10% of the agreed sale price) is paid by the buyer and is usually held by the notary public. This deposit is forfeited to the vendor if the purchaser fails to complete the final deed without a valid legal reason. Once the promise of sale agreement has been signed, the vendor is bound to sign the final deed and cannot back out of the agreement unless the purchaser doesn’t honor the terms of the agreement.
  • The balance of the purchase price is due on the final deed.
  • The duration of the promise of sale is mutually agreed by the buyer and the vendor but would generally have a minimum term of 3 months during which time the notary would carry out searches on the vendor and the property to ensure a clear title.
  • On signing the promise of sale agreement, the buyer must pay 1% of the purchase price as provisional stamp duty. This is on account of the total stamp duty that is due on the value of the immovable. On the final deed, the remaining 4% stamp duty is paid. The notary is obliged to register the promise of sale.
  • Should there be a defect in title or should any of the conditions of the agreement not be satisfied, the agreement will fall through. The purchaser is entitled to a refund of the deposit and of the 1% stamp duty unless the purchaser does not proceed with the final deed capriciously.
  • The promise of sale agreement is generally in English.

scroll down to learn more.

Due Diligence and Permits

  • During the period between the preliminary agreement and the final deed, the purchaser’s Notary Public conducts necessary research to confirm clear title.

 

  • An architect is also engaged by the buyer to ensure that the property complies with building and sanitary law. If any defects in the permits are found, the vendor is obliged to rectify the permits by applying with the Planning Authority. Failure to do so could result in the agreement falling through and the purchaser claiming back the deposit.

 

  • Should a bank loan be involved, the purchaser would have a defined period of time within which they must confirm approval of the bank loan application.

 

  • In certain circumstances, an application for a permit to purchase is required and the application is submitted to the Ministry of Finance by the notary.

Final Deed

  • Once all the conditions of the agreement have been satisfied, the final contract of sale is signed in front of the notary public and title is transferred.

 

  • The balance of the purchase price, along with the remaining stamp duty is paid at this stage.

 

  • Once complete the property is registered in the buyer’s name..

 

  • Vacant possession of the property is handed to the purchaser as a condition of the final deed.

Typical Expenses

  • Stamp Duty: 5%
  • Notarial Fee: 1% to 2% (approximate)
  • AIP Permit Fee: €233 (where applicable)
  • These costs are the responsibility of the purchaser. Agency fees are borne by the vendor.

Other Requirements

  • Home Insurance (obligatory, if applying for a mortgage)
  • Life Insurance (obligatory, if applying for a mortgage)
  • Property content Insurance (not mandatory, but recommended)
  • Inspection of the property by an architect (this is not mandatory but strongly advised).
  • Energy Performance Certificate. The EPC highlights the energy performance of the property and provides recommendations for cost-effective improvements. Similar to appliance energy labels, it rates the property’s energy efficiency. This is to be provided by the vendor (obligatory)

Mortgage Facilities

Mortgages are available from all banks in Malta, covering up to 80% of the property’s value.

Loan repayments typically do not exceed 30% of an individual’s gross income and may be repaid over 40 years or up to the age of 65

Conditions under which a permit may be required for Buying Property in Malta

AIP Permit Requirements

  • UK, US, or third-country nationals need an AIP permit unless the property is in a Special Designated Area (SDA).
  • EU citizens do not require an AIP permit if any of the following are satisfied:
  • They have resided in Malta for at least five continuous years; or
  • They are purchasing property as their primary residence; or
  • They are purchasing property for investment purposes; or
  • They are using the property for business activities or services; or
  • They are purchasing a property within a Special Designated Area

Special Designated Areas (SDAs)

These are generally Lifestyle Developments in prime locations around Malta. Typically, they offer complimentary services such as controlled access , underground parking, a communal pool, shops and eateries on their grounds, etc.

The benefit of buying in an SDA is that  non EU nationals can purchase one or more properties in these designated areas without the requirement for an AIP permit and can also freely rent them out, thus generating investment returns without any restrictions

GET IN TOUCH.

frank salt real estate malta

Frank Salt Real Estate was established in 1969 and has become Malta’s oldest, biggest family-owned and managed real estate company. With branches in both Malta and Gozo, the company specialises in the sale and letting of residential and commercial properties but also offers property management and home interiors services.

 

With 20 branches and just under 200 professional real estate agents, the company offers the widest selection of properties for sale and to let in Malta and Gozo. Long and short-term letting options cater to the tourism, foreign and local markets. Malta’s leading real estate company also offers dedicated services for Property Management and Home Interiors Consultancy.