The benefits of Malta, and its neighbouring island of Gozo, are various. Great weather, a low crime rate, political stability, a favourable tax regime and good healthcare have attracted tourists for decades. Friendly locals complete the picture, promising a laid-back lifestyle.
Popular buying locations
Properties with sea views command premium price tags in both Malta and Gozo. Due to the size of the islands, however, there is really no such thing as an area to avoid, although there is, of course, the usual choice between the tourist resorts and traditional villages.
Malta’s capital, Valletta, offers a wealth of history, but may perhaps be classed as a little too business-like for most buyers, given its reputation to become somewhat subdued at the end of the working day. If you are after more bustling areas, you should try Sliema or St Julian’s. These coastal destinations are Malta’s main resort towns and have a wide choice of entertainment places and activities.
Away from the resorts, you will find there are numerous sandy and rocky beaches around the Island, and the opportunity to get away from the crowds in the high season. Many of these beaches are near small villages of just a few hundred friendly inhabitants.
If, however, you are looking to get away from it all, consider idyllic Gozo - or the even smaller island of Comino. Both islands are greener and more tranquil than Malta itself, especially Comino, as it is home to only one resort hotel and is car free.
The buying process
When you identify a property that suits your needs, the first step would be to sign a preliminary agreement, known as a convenium, and pay ten (10) per cent of the agreed property price as deposit. Once a preliminary contract is signed and a deposit paid, you would have committed yourself to the purchase. This also secures commitment from the vendor. The life of a convenium is usually for a period of three months, during which time all necessary searches, including title and credit checks, are carried out.
It is during this period that the notary applies to the Ministry of Finance on your behalf for permission to acquire the property. Permission is needed if you already own a property in Malta or Gozo and the property is not your primary residence. Once permission is granted, all permits are issued and the title is declared clean, both parties sign a final contract and the remaining balance on the agreed price of the property is paid – along with the relevant fees and taxes – thereby completing the transaction. The entire process should not take more than three months from the date of signing the preliminary contract.
Legal issues
If you are considering buying a property in Malta, there are some legal restrictions you should be aware of. Firstly, you will have to pay over a certain price in order to get on to the property ladder. This restriction was introduced by the government in order to protect locals from being priced out of the market, and the thresholds currently stand at €99,000 in case of apartments and €165,024 for a house or villa. However, if the property in question requires conversion and restoration, you may acquire the property at a lower price than the mentioned benchmarks, providing the cost of renovation would make up for or exceed the difference.
As a foreign buyer you are also restricted to the purchase of just one property. However, in the case of Special Designated Areas (SDAs), you may purchase more than one property. If your property is located outside a SDA, you would be required to sell it before you would be in a position to buy another property in Malta or Gozo.
There are restrictions on the letting of a property as a holiday home. You would need to obtain a permit in order to let your property as a tourist residence, as well as declare your earnings to the tax authorities.
Finance
The process of acquiring finance for the purchase of property in Malta is a rather easy process, with leading banks such as Bank of Valletta and HSBC (Malta) used to dealing with overseas buyers. It is possible to borrow up to 90 per cent of the purchase price, although this would depend upon the loan amount required as well as your financial commitments at the time of application.
Once you would have secured a local mortgage, it would be possible to re-finance only if the purpose of such re-financing would be to make improvements to the acquired property.
Fees and taxes
All in all, you should budget around ten per cent of the purchase price to cover the initial costs of buying. These comprise stamp duty of five percent (5%), notary fees of one per cent (1%), searches and registration fees, the Ministry of Finance fee (if applicable), and legal fees of one per cent (1%).
Visas, residency and work permits
Malta became a member of the European Union on 1st of May 2004, consequently relaxing most restrictions on foreign buyers. Normally tourists are able to stay on the island for up to three months, but it would be possible to extend your period of stay. You would able to renew your stay at set intervals, but to acquire such extensions you must demonstrate to the local Authorities you can support yourself financially.
It would also be possible to acquire permanent residency by showing you have a minimum annual income of €23,300 (£18,600) or an existing capital of €349,400 (£279,120). The Maltese government is keen to attract permanent residents to the Maltese Islands and, in this regard, schemes exist to facilitate the application process.
New-build versus resale
There is an extensive choice of property available in Malta. Your choice of property type largely depends upon the way you intend to use the property. Older townhouses and villas are proving popular with retirees and émigrés seeking to relocate to the Islands for the lifestyle, security and idyllic properties. Farmhouses and houses of character, in need of renovation, are being snapped up by short-term investors interested in capitalising on Malta’s promising property market. Traditional properties, whether in need of restoration or otherwise, are difficult to come across due to a shortage of supply.
New-builds however are springing up by the day. This does not imply, however, that quality design and build are missing. Malta is home to some very up-market developments. These purpose-built resorts also tend to offer a wide range of facilities and amenities including bars, restaurants, spas and marinas.
Investment potential
Tourism accounts for more than one-third of Malta’s gross domestic product and this augurs well for investment in property on the Islands. If you intend renting out your property, you would need to apply for a permit from the relevant Authorities. However, given that property letting contributes towards the growth of the tourism industry, acquiring the necessary permit is in principle a formality. Past experience shows you should not have a problem renting out your property. Gross yields are currently estimated at between four and five per cent per annum, estimated on an average occupancy of 60 per cent.
Property prices appreciated significantly since Malta’s entry into the EU in 2004. Recent Government figures have indicated a sixteen (16) per cent rise in the year to March 2006. This growth rate slowed down in the months following the adoption of the Euro in January 2008.
Health and education
Malta has a comprehensive healthcare system with excellent medical facilities available both in government funded hospitals and in private hospitals and clinics. No vaccinations are required to enter Malta.
The education system is also held in esteem with schools following the English model. Attendance is compulsory between the ages of 5 and 16 years, and students in both the public and private sectors study for GCSEs and then A levels, with a pass rate at the latter qualifying them for entrance to either the University of Malta or a British equivalent.
Climate
Malta enjoys a Mediterranean climate, and while this means hot, dry summers, the flip side can be cool, wet winters. During January and February the average temperature is around 12 degrees Celsius.