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A Guide on Buying Property in Malta as a Foreign National

buying property in Malta as a foreign national

Buying Property as a Foreignor in Malta

Malta has emerged as a prominent beacon of opportunity for investors and discerning homebuyers, thereby proving that it is far more than just a place to live. The strategic location of this island nation, bridging the continents of Europe and Africa, not only ensures its significance on the global map but it has also proven and amplified its appeal as an excellent real estate investment destination. The Maltese real estate market, characterised by its robustness and resilience, presents a wide array of properties ranging from luxurious seafront villas to charming traditional townhouses, catering to a spectrum of preferences and budgets. Coupled with attractive residency programs and a stable, growing economy, buying real estate in Malta is not merely a purchase; it’s a prudent lifestyle investment. We look at the conditions surrounding the purchase of property by non-residents, the process and what you can expect when you think it is time take this important step.

PURCHASING PROPERTY IN MALTA AS A NON-RESIDENT REQUIRES AN AIP PERMIT

Acquiring property in Malta is a dream come true for many investors, not only because of the location, but also because the property market on the islands delivers good return on investments in the long term. Buying property in Malta is an uncomplicated process, but foreigners that have lived in Malta for 5 years or less or are simply interested in buying a holiday home, need to acquire an AIP permit when buying a property.

Explanation of the AIP Permit

Individuals who have not resided in Malta continuously for at least five years need an AIP (Acquisition of Immovable Property) Permit to buy a property outside a Special Designated Area. This permit allows you to purchase only one property, which cannot be rented out. However, within Special Designated Areas, you can buy multiple properties and rent them out without needing an AIP permit.

Though Maltese citizens face no restrictions, non-residents and non-EU nationals require an AIP permit, except in the following cases:

  • EU citizens residing in Malta for over five years.
  • Non-EU residents living in Malta for more than five years.
  • EU citizens buying a primary residence.
  • EU citizens buying property for investment.
  • Any person who has been granted long-term residency status in Malta.

In cases where one spouse is an EU citizen, both can benefit as outlined above if the property is their main residence.

Properties intended for business use or rental must reflect this in the Contract of Purchase.

Special note: Non-EU nationals and non-residents must obtain an AIP permit and are limited to buying a single property for use as a primary residence or holiday home, which cannot be rented out. However, under certain conditions set by Malta’s Tourism Authority, it may be possible to rent out the property. As said, no AIP permit is needed for purchases in Special Designated Areas, where multiple properties can be bought and rented out by non-residents.

How long does it take for an AIP permit to be issued?

After your application has been submitted and approval has been granted, AIP permits are issued within 35 days and cost €233.

There is a minimum purchase value that applies to all foreign buyers

The minimum purchase value for AIP properties is periodically updated; currently, it stands at €153,019 for apartments and maisonettes and €264,298 for Villas, townhouses and any other property. These values may differ in Southern Malta and Gozo. Consult your Notary for the latest applicable figures. Note that purchasing a shell apartment below these values is permissible, provided it is valued above the minimum requirement after completion.

To buy another property that is located outside Special Designated Areas, you must first sell your current property.

If you are a foreigner buying property in Malta, it’s always wise to have a local, qualified estate agent by your side from a reputable company. They will assist not only in finding your dream home but also in navigating the entire process: from initial viewings to ownership. Agents liaise with buyers, sellers, notaries, banks, handle the legal processes, deal with the deeds office and more, ensuring a smooth and hassle-free experience.

buying property in Malta as a foreigner

THE PURCHASING PROCESS IN BRIEF: WHAT YOU CAN EXPECT

We look in a nutshell what the process entails. All of the steps will be explained in more detail later in this guide:

  • With your heart set on a particular property, the first formal step is to sign a Promise of Sale or preliminary agreement. This legally binds both parties to the agreed purchase and sale.
  • Typically valid for three months or as mutually agreed, a 10% deposit is usually paid to the agent or a notary at this time.
  • The notary is then responsible for conducting due diligence checks up until the final Deed of Sale, ensuring everything is in order with the property and all parties involved.
  • They will also apply for necessary permits such as AIP (Acquisition of Immovable Property) when required.
  • If the sale is cancelled by the the purchaser, the 10% deposit may be awarded to the vendor.
  • All contracts are in English, though they often contain Latin terms. If you’re unfamiliar with some of the terminology, ask your notary for clear, simple explanation on any of these.
  • When permits are approved and the property title is clear, you’ll sign the Contract of Sale or Deed of Sale, pay the balance of the purchase price, stamp duty, and any other sundries.
  • Once complete and the property is registered in your name, you become the legal owner.

What property types are available in Malta and what are the typical locations?

Malta offers something for everyone and you will truly be spoilt for choice. You can choose from apartments, penthouses, terraced houses, farmhouses, townhouses, maisonettes, palaces (palazzo), bungalows and villas to studio apartments and more.

The home of your dreams can be located in a cosmopolitan setting, in the countryside, on a cliff edge or in a quiet and quaint alley in one of Malta or Gozo’s historic and ancient villages. Then there are yacht marina and harbour locations, hilltop citadels and even homes in UNESCO World Heritage Sites such as Valletta.

How do I start looking for property in Malta or Gozo?

Before you start your search, which is most likely conducted online while you are still abroad, deciding on a budget and location is crucial. Remember to reserve some funds for contingencies, as there are always additional costs on top of the property’s purchase price. To understand these costs in detail and if there are any savings to be had, consult with your appointed estate agent in Malta. Assess your current income and expenses to ensure you have sufficient funds for your new potential home.

Key upfront expenses to fathom in when buying property in Malta include:

  • A 10% deposit (based on the property’s sales price).
  • 1% of the stamp duty (with the remainder due on final contract signing).
  • An architect’s fees for inspection of the property (this is not mandatory but strongly advised).
  • The notary’s fees.
  • Search costs.
  • Home insurance.
  • Optional property contents insurance.
  • Mandatory life insurance costs (if you are applying for a mortgage).
  • Remodelling and upgrading costs, if applicable.
  • Sundries such as the setting up/connection of utilities.

Once you have a solid idea of all the costs involved, you will have a clear understanding of what you can afford to buy. Always clearly communicate your preferences, including the number of bedrooms, parking needs, renovation willingness, property type and proximity to essential services. Be realistic about your needs and priorities.

buying property in Malta as a foreigner

Why the appointment of a local Maltese estate agent is the secret to success

Selecting an estate agent with a good reputation is vital. Since 2021, all estate agents in Malta must be qualified, licensed, and registered. Local agents understand the properties, prices, locations and laws. This will ensure that you experience a problem-free buying process.

Frank Salt Real Estate, established over 55 years ago, has helped countless foreign buyers find a home in Malta. As the country’s largest and most trusted real estate group, we offer expertise, professionalism and a wide range of properties to suit all needs and budgets. Our agents will guide you through the legal process, negotiate the best deals and make your experience all the more rewarding.

Our property consultants will:
    • Organise viewings of the properties you have selected from the internet and also suggest some additional properties that may not be available or ones that may be brand new listings.
    • Deal on your behalf with the vendor.
    • Negotiate a price.
    • Complete all the paperwork on your behalf.
    • Organise an architect’s inspection of the property.
    • Deal with a notary of your choice on your behalf.
    • Apply for an AIP permit through the notary.
    • Organise all meetings,
    • and more.

This means that you do not even have to be in Malta when the whole purchasing process kicks off. You can also decide to give your agent or notary Power of Attorney so they can sign documents on your behalf which may be needed to speed the process up without the need for you to be in Malta each time something needs signing. In all cases, the documentation will be presented to you for approval beforehand.

Personally visit Malta to view your candidates

While some buyers may purchase properties sight unseen due to fear of missing out on their ideal home, this approach is not recommended. Always plan a trip to Malta to see the property and its surroundings and assess whether it suits your lifestyle. A personal on-site inspection of a property has saved many a buyer from potential disappointment. You should never solely rely on an agent’s choice, as ultimately, you are the one who will live in the home for years to come.

What to consider?

The importance of “location, location, location” can’t be overstated. Consider a property’s proximity to transport, schools, shops, healthcare facilities; then there are the local demographics, possible noise levels and accessibility. If you are unfamiliar with Malta and its towns and villages, it is very important to schedule a personal visit first in order to come to grips with the different localities and lifestyles on offer. Living at the coast in a metropolitan area on Malta is very different to living in the countryside on Gozo for example. Once again, appointing a local agent will help you fast track finding the perfect home, as they know the islands best.

What kind of property is the best to buy in Malta: pre-loved or new?

Newly-built properties often appeal to foreign buyers for the simple reason that you know you get something that will require less maintenance and will be under guarantee for some years. You can often save up to 10% when purchasing off-plan and these projects are typically completed within 24 months. This also means that you will only pay the final and full settlement upon completion of the project, allowing you more time. More great news is that property developers in Malta are often more amenable to negotiating excellent deals, so if you’re able to wait after placing a deposit, this could be a good option.

With pre-owned properties, commonly referred to as resales, the advantage is that you know what you’re purchasing. You can physically inspect the property, identify any defects, and ask questions of neighbours or tenants. Many prefer this method of buying, as it doesn’t require envisioning a property that only exists on paper: what you see is what you get.

I have a favourite and want to buy it. Now what?

Firstly, congratulations on finding your ideal property from a likely extensive range of options. Here’s what to do next:

  • Inform your appointed agent of your readiness to make an offer.
  • Choose a notary. If you are unsure who you should use, your agent can advise you accordingly.
  • Considering what your offer will be and discuss this with your agent.

What important considerations are there before putting in an offer?

  • Be clear-headed and avoid being impulsive.
  • Ensure the property meets all your needs.
  • Ask your agent if the price is realistic and what other similar properties in the area of similar size have sold for.
  • Find out how long the property has been on the market and if there’s been any previous interest or offers.
  • Get an architect for a final inspection of the property and if any regularisation will be needed.
  • Inform your agent as soon as possible whether your offer will be on condition of a home loan being granted and this should be explicitly stated as the primary condition in the Offer to Purchase Agreement.

NOW, IT’S TIME TO MAKE AN OFFER!

Submit this in writing to your agent, who will liaise with the vendor or their representatives on your behalf.

buying property in Malta as a foreigner

The offer has been accepted…what happens now?

So you made an offer and it was accepted by the vendor. Your next steps will be:

  • for your agent to set a date for the draft of the Promise Of Sale (Konvenju) via your appointed notary. This will be a legal, binding contract outlining the agreed terms between you and the seller.
  • This will also set a proposed date for the signing of the final contract.
  • The time between the signing of the initial Promise of Sale and the final contract. Signing allows time for experts to verify the property’s condition and for them to do due diligence.
  • As part of this first half of the process, you will be expected to pay a deposit and complete the required paperwork: this will amount to 10% of the purchase price.
  • The notary will conduct all necessary legal checks and handle all the paperwork to ensure the sale’s completion. This process can take several weeks to months.

NOTE: If feasible, request that the property be taken off the market to secure your purchase, especially if your offer depends on a bank loan. Understandably, sellers may hesitate if a loan is involved. Therefore, expedite your loan application with your chosen bank as swiftly as possible.

What do I need to know before I sign “The Promise of Sale (Konvenju)”?

Before signing the Konvenju, confirm the following:

  • The agreed price.
  • Whether the property is Freehold or has Temporary or Perpetual Ground Rent.
  • Which fixtures, fittings, and furniture are included in the price.
  • Payment requirements and stages (Do you need a loan?).
  • Any work to be completed by the owner.
  • Terms of the Promise of Sale (e.g., subject to loan approval, a permit, etc.)
  • The deposit amount (this is usually 10% of the agreed purchase price, paid as a sign of commitment by the purchaser).
  • The date for signing the final deed.
  • Additional conditions for properties in a block, such as air-conditioning installation, condominium obligations, delivery timeframes, etc.

A promise of sale agreement is typically valid for three months, a duration you should discuss with the vendor and the bank (if applying for a home loan).

The deposit is generally held by the notary until the final contract is signed and is forfeited to the vendor if the purchaser fails to appear at the final deed signing without a legally valid reason.

Once I have signed the Promise of Sale, what exactly will the Notary be doing?

A notary will:

  • Obtain responses from sellers on questions like land ownership and boundaries.
  • Check for any legal disputes involving the property.
  • Investigate the type of ground rent.
  • Confirm what fixtures and fittings are included.
  • Conduct property searches.
  • Verify any property guarantees.
  • Check planning permissions and building regulation certificates.
  • Ensure the seller is the actual property owner.
  • Prepare for transferring the title to your name.
  • Prepare for you to pay stamp duty tax on the property.

Some of the steps involved between signing the Promise of Sale and the Final Deed (The Contract):

  • The notary (hired by you, the purchaser) will register the agreement with the Commissioner of Inland Revenue within three weeks of signing, paying 1% of the sale price as duty due on the final deed of sale.
  • The notary will conduct thorough checks on the property, ensuring a clear legal title and no outstanding debts, hypothecs, or liens.
  • The purchaser must fulfil all conditions outlined in the promise of sale, such as timely loan applications and verifying building permits.
  • The vendor must also meet their promise of sale obligations, like completing agreed-upon works.
buying property in Malta as a foreigner

What to expect when it is time to conclude the deal:

Once the property is confirmed to be in good standing, the process moves to the final ownership transfer stage. You will:

  • Sign the Final Deed of Sale alongside the vendor in the presence of the notary and your agent
  • All fees and outstanding amounts need to be paid and receipts provided. This includes the remaining purchase price, notary fees and stamp duty.
  • The vendor covers the agent’s commission and any VAT on that commission.
  • Seek advice from a financial advisor or your notary regarding the total expenses involved, even in advance.

Taking Ownership

Once all payments have been made and both parties have fulfilled their respective obligations as outlined in the agreements or contracts, the property will legally be transferred into your name, and you will officially take ownership upon receiving the keys.

Costs estimations you can expect involved in the property transfer:

  • Stamp Duty is normally at 5%.
  • Notarial fees are estimated to be between 1-3%.
  • €600 for searches and registration.
  • €233 for an AIP Permit (where necessary).
  • Note that estate agency commission fees, if you used an agency to find and buy the property, are typically paid by the seller.

Energy Compliance Certificates (This applies to any person buying a property):

As a buyer, it’s crucial to receive the property’s Energy Compliance Certificate on the date of entering the Contract of Sale.

  • Property owners are required to present an EPC (Energy Performance Certificate) when selling or renting out a building. This is in line with the EU Directive (EPBD) and Maltese Law (Energy Performance of Buildings Regulations, LN376/2012).
  • The EPC informs potential buyers about 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.
  • Performed by a registered Energy Performance of Buildings (EPB) assessor, the EPC assessment includes the property’s geometry, construction, finishing materials, lighting, hot water systems, air-conditioning, and renewable energy systems. The assessor then issues a registered EPC, valid for ten years, provided no substantial changes are made to the building. Assessors set their own fees, and the BRO charges a €75 registration fee per certificate.
  • Failure to produce an EPC when requested by the BRO can result in fines between €500 and €5,000.
  • Throughout the property purchasing process, clear communication with your agent and Notary is essential to understand all conditions, processes, and progress of the transaction.

ARE YOU CONSIDERING MOVING TO MALTA PERMANENTLY?

If so, have a look at one of the Malta Residence Programmes. We will be able to assist you in finding the best option for you and your family.

What we can do for you?

Foreign buyers are our speciality at Frank Salt Real Estate. We have been assisting expats for more than 55 years in finding the perfect property to buy and we are there when you decide it is time to sell. We are Malta’s oldest and biggest family-owned and managed real estate company and with 16 branches nationwide, we are only a phone call away.

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