Buying property in Malta

The property market in Malta is seductive; not only are there some unique and beautiful homes but for the last 8 years, average prices have tended to rise. Q4 of 2016 saw a surge of 13.8% which the Central Bank put down to the Individual Investor Programme, and the fact that first time buyers have a partial exemption from stamp duty.

Not sure about buying property yet? Read more about renting property in Malta.

What you need to know before purchasing property

  • Estate Agent vs Private Sale

Private sales are popular in Malta, as estate agents take a cut of up to 5% from the seller. While an agent can help you find a dream property, it’s perfectly possible to find a home on your own and a private sale might mean a reduced price.

  • Notaries

To buy in Malta, you’ll need a notary. They will check the title, ensure that the property does not have any legal issues that prevent its sale and give you a report. www.notariesofmalta.org is the official notary website and has useful information relating to property purchases, including a billing calculator. The notary is a public officer and should be independent; find one yourself rather than taking a recommendation from the seller or estate agent.

  • Ground Rent

Ground rent is due when another person owns the ground that the building is standing on. In this case, you’ll pay an annual fee to the owner of the ground, as well as a ‘recognition fee’ of 1 years’ ground rent when you buy (i.e. in year one, you’ll pay the ground rent twice). Talk to your notary or a lawyer if you intend to buy a property with ground rent, to ensure you understand your rights and obligations.

How does the buying process work?

  • Promise of Sale Agreements (Konvenju)

In Malta, it all starts with a promise – that’s a written contract which lays out the terms of the sale and specifies when it must be completed by.. Here’s how it works;

The seller (if jointly owned, all owners should be present) should provide photo ID such as a passport or ID card, a plan of the property, details of the building permit including a block plan and evidence of ownership (the ‘contract of acquisition’). They should also agree to provide any information requested by your notary, and give you an Energy Performance Certificate (EPC) for the property.

The buyer will need to provide photo ID too, a ‘deposit on account’ or ‘earnest money’, which is usually 10% of the sale price (the percentage might be higher for foreigners), and 20% of the Duty of Documents so that the notary can register the sale within 21 days. You will also need to pay a portion of the stamp duty. Buyers should get a copy of the contract. All payments should be made to the notary, including the deposit, who will then pay the seller in due time.

If either party can’t be physically present, they’ll need to give someone else power of attorney. If the seller lives outside Malta, they will have to provide a tax registration number.

Make sure that it’s clear what fixtures, fittings and furniture are included in the sale at this point. Once you sign this agreement, you are obliged to buy and the seller is obliged to sell, according to the terms and conditions of the contract. The promise of sale is usually valid for three months although the duration is negotiable. Both parties can withdraw, but the buyer would lose the earnest money, while the seller would be obliged to pay the buyer double the earnest money (again, this depends on the terms and conditions – for example, if there is something wrong with the title or the notary discovers a legal problem with the property, you should not have to proceed with the sale, unless the discrepancy is rectified within an agreed time period). The ‘deposit on account’ is more binding – check with your notary or lawyer and be sure that you are very clear about your obligations before you sign on the dotted line.

  • What’s next?

Before final completion of the sale, make sure that the seller has paid all the utility bills and can provide you with receipts. Your notary should now make the appropriate legal searches and supply you with a property title report. You will need to proceed with your financing from the bank and arrange for insurances - house and life insurance are mandatory in order for a bank to issue a home loan. If the seller is not Maltese or lives abroad, the Notary will need to get a tax clearance. Foreign buyers may need a special permit from the Minister of Finance – that also applies to EU citizens who do not intend to have the property as their main residence. Foreigners can, however, buy freely in Special Designated Areas; these include Portomaso in St. Julian’s, Cottonera Development, Tigné Point, Madliena Village, Smartcity, Ta’Monita in Marsascala, Fort Chambray in Gozo and Kempinski Residences in Gozo.

  • Final Deed of Sale

The Final Deed of Sale is usually signed at the bank, if you have a loan, or the notary’s office if not. On the day, you’ll pay the rest of the purchase price to the seller as well as the rest of the stamp duty to the Inland Revenue and the notary and registration fees. And then…. the keys are yours! All that remains is for your notary to register the property sale at the Land Registry within 15 days.

How much will it all cost?

  • Stamp Duty

Stamp duty is a tax which is paid to the government when you purchase a property. Normally, it is 5% of the purchase price. To help first time buyers (both foreign and local), the government has exempted them from stamp duty on the first €150,000, potentially saving them €5250. EU citizens who intend to live in the property, pay 3.5% stamp duty on the first €150,000. Also, for 2017 (and possibly beyond), stamp duty on residential properties in Gozo is 2%.

  • Duty on Documents

You’ll pay 1% of the purchase price on this tax.

  • Notary Fees

Between 1 and 3% of the purchase price.

  • Bank Fees

There are also some bank fees involved, amounting to approximately €800. Some banks reimburse a portion of these fees on final contract.

  • Architect Fees

In order to apply for a bank loan, you would need the property given the go ahead by an architect. They typically carry out a site inspection and fill in a few forms required by the bank. There are no standard fees for architects so it is advised to shop around before committing to one architect.

If you're still not ready to make this commitment, perhaps you would prefer to rent a house in Malta.

Useful Information

Notary bill calculator
Banks in Malta
Regions of Malta

FAQs

Are apartments furnished or unfurnished?

The majority of apartments are furnished but it is possible find unfurnished places, or you can agree with the landlord to have the furniture removed. There’s usually plenty of choice when it comes to renting.

Can I bargain on the price?

If you’re taking the apartment for a year, landlords might reduce the rent. It’s always worth asking.

How expensive is it to live in Malta?

There’s no doubt that prices are going up in Malta, but most foreigners will still find it reasonable to live here, especially compared to European capital cities. For a list of prices in Malta click here.

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