Property Malta

In this section:

Conditions for buying Immovable property in Malta
Acquisition by bodies of persons
Applying for a Permit to buy Immovable Property
Immovable Property – Acquisition by non-European Residents
Persons who may acquire immovable property without a permit


Conditions for buying Immovable property in Malta

Citizens of all European Union member states, including therefore Maltese Citizens who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition, may freely acquire immovable property without the necessity of obtaining a permit under Chapter 246 of the Laws of Malta.

Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years, may only purchase their primary residence or any immovable property required for their business activities or supply of services without the necessity of obtaining a permit under Chapter 246 of the Laws of Malta.

Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years, require a permit under Chapter 246 of the Laws of Malta to acquire immovable property for secondary residence purposes.

Individuals who are not citizens of a European Member state may not acquire any immovable property unless they are granted a permit in terms of Chapter 246 of the Laws of Malta.

There are defined zones in Malta, referred to as special designated areas, where there are absolutely no restrictions to acquisition. There is also no restriction on acquisition through inheritance and there are also several other special exemptions. Different rules apply to the acquisition by bodies of persons.

The following table illustrates the position for physical person (individuals):

Acquisition by bodies of persons

A body of persons, other than a commercial partnership, established in and operating from an 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 an 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 and at least 75% of its share capital is held by a person (or persons) who is a European Union Member state citizen

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.

Applying for a Permit to buy Immovable Property

All applicants need to:

• Fill the AIP application form completely.
• Produce a copy of the promise of sale or preliminary agreement of the immovable property being acquired, if entered into.

First-time applicants need to:

• Produce two passport-size photographs of non-resident applicants.
• Produce a photocopy of the passport showing applicant's particulars.

Applicants who already owned Immovable Property need to:

• Produce copy of deed of sale of previous immovable property.
• Give reasons for the transfer of the previous immovable property and acquisition of the new immovable property.

Limited liability companies who apply for a permit need to:

• Produce Memorandum and Articles of Association of the company.
• Give details of shareholding directors.
• Produce evidence showing that the purpose of the company is for the development of the economy of Malta.

When the application is approved, the applicant or mandatory will be informed by a notice. The applicant will then be issued with a permit against a payment of €232.94. The applicant may then enter into a contractual agreement to buy the immovable property.

Negotiations with the European Union

Malta is now a full member of the European Union. During pre-accession negotiations, Malta successfully reached an agreement with the EU regarding the acquisition of immovable property. As a result of this agreement, the situation regarding AIP will be retained on a permanent basis even after membership even though EU law allows EU citizens to purchase property in any EU country without restrictions.

During negotiations, the EU agreed that considering the limited number of residences in Malta and the limited land available for construction, which can only cover the basic needs of the present residents, Malta may maintain restrictions, on a non-discriminatory basis, on the right of EU citizens, who have not legally resided in Malta for at least five years, to acquire and hold secondary residences.

This means that EU citizens seeking to buy a secondary house in Malta will still need to apply for authorisation and satisfy conditions as is now. They will also not be entitled to buy more than one property unless they reside in Malta for at least five years.

The five-year period as a residence requirement was the balance that was struck between the two diametrically opposed positions in Maltese and EU law. Under Maltese law, foreigners can never have full rights to buy property in Malta unless they obtain Maltese nationality. Under EU law, EU citizens would have full rights to buy as much property in Malta as they like without any need to reside in Malta.

Instead, Malta agreed to give equal rights to EU citizens to buy property freely in Malta only if they first resided here for a period of five years. In practice, this means that only those EU citizens who settle in Malta permanently can do so.

This was done in order to eliminate the possibility of foreigners freely buying as much property in Malta as they like. More important, Malta wanted to reduce the possibility of an increase in property prices because of EU membership.

Immovable Property – Acquisition by non-European Residents

In accordance to the Act, "non-resident person" means and includes:

(a) Any individual who is not a citizen of Malta or of another Member State; or

(b) A citizen of Malta or of another Member

State, even in either case, if in possession of a valid residence permit, who has not been resident in Malta for a minimum continuous period of five years at any time preceding the date of acquisition; or

(c) Anybody or other association of persons, and any authority, institution, organization, fund, trust, firm and any other entity whatsoever, whether corporate or not, if:

(i) It is constituted, formed, established, incorporated or registered in, or under the laws of, a state other than Malta or another Member State; or

(ii) It has its registered address, principal place of residence or of business in a state other than Malta or another Member State; or

(iii) twenty-five per cent or more of its share or other capital is owned by a non-resident

person or is registered in the name of a company licensed to act as a nominee company; or

(iv) It is in any manner and whether directly or indirectly controlled by one or more nonresident persons; .primary residence. Means the dwelling house in which an

individual habitually resides in, or intends to habitually reside in, as his principal place of abode, whether in Malta or elsewhere; .resident of Malta. Means an individual who is:

(a) A citizen of Malta or another Member State who has been resident in Malta for a minimum continuous period of five years at any time preceding the date of

acquisition;

(b) The spouse, of whatever nationality and wherever resident, of a citizen of Malta or another Member State where such spouses are acquiring together on the

same deed; "residence permit" means a residence permit issued in terms of the Immigration Act; "secondary residence purposes" means purposes other than for primary residence or for any of the purposes listed in article 3(2) (b) or (3); "special designated area" means a zone described in the First Schedule and such other zone as the Minister may from time to time by order in the Gazette add to such schedule; "the Treaty" has the same meaning as is assigned to it in article 2 of the European Union Act, 2003.

Persons who may acquire immovable property without a permit

(1)

(a) A resident of Malta may acquire by an act inter vivos immovable property in Malta by or under any title without the necessity of obtaining a permit under this Act;

(b) A citizen of Malta and a citizen of a Member State who in either case is not a resident of Malta may not, without the necessity of obtaining a permit under this Act, acquire immovable property for secondary residence purposes by an act inter vivos in Malta.

(2) For the purposes of this Act "immovable property for secondary residence purposes" shall exclude:

(a) Any immovable property which is to serve as the primary residence for the person acquiring the immovable property; or

(b) Such immovable property the acquisition of which is required for the carrying out of such person's business activities or the supply of services by such person.

(3) A person, other than a physical or a non-resident person, may acquire by an act inter vivos immovable property in Malta without the necessity of obtaining a permit under this Act where such immovable property is required for the purpose of carrying out the activity for which it has been set up.

Non-residents may not acquire immovable property

(1) Save as hereinafter provided, with effect from 30th May, 1974, a non-resident person may not acquire immovable property by or under any title, and in any manner, whatsoever, whether by act inter vivos or causa mortis, and including prescription, occupancy or accession; and any deed, will or other act purporting to transfer or transmit any immovable property to a non-resident person, any devolution or other event having the effect of transmitting immovable property and which but for the provisions of this Act would have transmitted such property in favor of a non-resident person, shall be null and void and be without effect for all purposes of law and in regard to all persons; and any transfer, payment or other thing made or done or given as part or in consequence of, or as ancillary to, anything which is prohibited as aforesaid shall likewise be null and without effect and, as and where appropriate, the subject matter thereof shall be returned, restored, refunded, canceled or otherwise dealt with accordingly.

(2) Subsection (1) of this section shall not apply to:

(a) The acquisition of a grave or a site for a grave by a nonresident person; and

(b) To the redemption by a non-resident person of any ground rent or other burthen encumbering any immovable property lawfully required by such non-resident person.

Local Clients

One of the many important decisions in your life is buying property and Dhalia walks you through each step, making the process as painless and stress-free as possible. Whether you are interested in buying a permanent or temporary residence in Malta or Gozo, our Agents are there to guide you and ensure that the experience runs as smoothly and as professionally as possible.

Before you start looking into property, there are a few factors to take into consideration such as:

• Size of property
• Type of property: modern or house of character
• Location: preferred areas
• Amenities Available: what type of services do you require? Transportation, Schools, Hospital etc
• Finance: how will you purchase the property?

Your assigned agent will help you find the right property for you and will guide you through all the stages of the process, offering advice and help with the negotiations, leaving all concerned parties satisfied.

Purchasing an immovable property

Once an agreement has been reached over an immovable property, the following factors should be confirmed before a promise of sale agreement is finalized:

• Price
• Ground rent
• Extras which are included in the price (furniture, kitchen and any other movable items)
• Payment terms (subject to bank loan)
• Works to be undertaken by the owner (building permit)
• Term of Promise of Sale Agreement: when the final deed can be signed, a promise of sales agreement without a term stated is valid for three months
• Deposit on account: It is normal practice for the sum equivalent to 10% of the purchase price to be paid as deposit on account as a sign of goodwill by the purchaser and their intention to appear on the final deed of purchase. Also 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. Certain property developers might request staggered payments.
• The purchaser, vendor and property in question must be identified clearly in the promise of sale agreement.

The next step is to appoint a Public Notary to draw up the Sale Agreement. The Term of Promise of Sale Agreement will contain all the relevant points upon which were previously agreed.

Promise of Sale Agreements have to be registered with the Inland Revenue department and a 1% provisional duty is payable on the contract value of the property being transferred. The provisional duty will be off-set against the final duty on the contract sale, or refunded should the deal fail to materialize.

It is important to be aware that the deposit is forfeited in favor of the vendor if the purchaser does not appear on the final deed without a valid reason at law.

During the term of the promise of Sale Agreement the notary and the parties involved must fulfil certain duties and obligations:

• The notary carries out the searches about the property and verifies legal title and assures them that there are no outstanding debts, hypotheses or liens on the property.
• The Purchaser must honor all his conditions contained in the promise of Sale Agreement such as bank loan applications and building permit applications within specified time frames.
• The vendor must honor all their conditions contained in the promise of Sale Agreement such as finishing or refurbishing works within specified time frames.

The Notary drafts the final deed, prepares it for signature and notifies the parties concerned. Once every condition of the promise of Sale Agreement is complete and all duties fulfilled, all parties get together to sign the final deed. The normal 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, that is, the purchase price less any deposits paid on account is paid to the vendor
• The parties concerned settle their relative expenses concerning the purchase
• Keys to the property are passed onto the purchaser
• The public notary registers the contract at the public registry