Isabella Zammit, Friday, 15 November 2013
This article is part of a series of 8 articles about buying property in Malta. The other articles in the series cover the following topics:
Malta is a small island in the Mediterranean. It’s known for its warm weather and warm welcome. It’s a fantastic place to live if you want to
experience a more peaceful lifestyle, or you want a great holiday home to retreat to. Before you decide to move to Malta, here are some of the things
you should know.
Can Foreigners Own Property in Malta?
A lot of countries in the world have very strict laws on who can own property. If you come from a European Union country, it’s much easier to own
property in Malta. Firstly, if you want to buy commercial or industrial property, it can be quite hard due to restrictions on foreign ownership of
these types of properties. You need to own it together with a native Maltese resident.
Foreign nationals owning property must either make it a primary residence or a holiday residence which can only be used during part of the year. Due
to the small size of the island, they need these restrictions to avoid running out of inhabited properties.
There are other restrictions as well, but there’s not enough space to go into them fully here. Read a separate guide on the more detailed criteria
foreign nationals owning Maltese property.
What about Mortgages?
Mortgages are available to non-nationals. Major banks operating on the island have facilities. You will have to be prepared for more stringent checks
than you’re used to, though. Property buying is so strict it’s necessary for them to make sure you’re more than capable of paying for the mortgage,
regardless of the economic conditions.
The amount you’ll need to stump up as part of a deposit depends on how ‘risky’ you’re considered to be and the bank you use. At one point, you could
find mortgages with a 10% deposit. These days you might find a mortgage requiring up to a 50% deposit for those with negative credit histories. Most
mortgages hover around the 20% deposit mark.
You have to talk to the banks to get a better idea for how much you personally can expect to pay.
Employing a Lawyer
You need legal help if you’re going to go through the purchasing process. Practically everyone in Malta speaks fluent English. Legal documents are
written in English because English is also an official language, like Maltese.
Your lawyer will take responsibility for drawing up the title deeds and performing any necessary credit checks.
Your lawyer will be fluent in English and Maltese and will translate the contracts into English for you, if they are in Maltese. They’ll also act as
your translator, as many can speak other languages quite fluently, like Italian, so you aren’t stung by any unfair buying terms.
To find a good lawyer, it’s best to use a company which specialises in international property transactions in Malta. They might already have an
in the UK or elsewhere which you can visit.
The notary oversees the entire process and will also carry out checks on your status. They’ll make sure you have the money to pay for the house and
they’ll build up a record of where you come from. If you’re a foreign national and you won’t be using the property as your main residence, they’ll
have to apply to the Ministry of Finance on your behalf for permission.
You shouldn’t worry about this. As long as you meet the required financial requirements and demonstrate your ability to manage any repayments on a
mortgage, your application will be approved.
The Buying Process
The buying process is relatively simple and doesn’t take up too much time. It usually lasts for about three months from starting the process to
officially owning the property. Here’s a brief guide to it:
- The convenium is signed after you state your intention to buy the property, and your offer is accepted. This is the preliminary agreement and is
essentially a deposit.
- Your notary and lawyer will act on your behalf to perform credit checks and make any applications to the Ministry of Finance.
- Once everything has been checked out, you’ll pay the remaining balance on the asking price and the property will be transferred to you.
The convenium, or preliminary contract, is the first contract you sign. It basically commits you and the seller to transfer the property. At this
point, you can no longer back out of the sale unless something prevents you from making the purchase. Your application for a permit might be
for example, and this would render the contract invalid.
You’ll pay a total of 10 per cent of the total asking price of the property plus the Property Purchase Tax of 1 per cent of the total property price.
The final contract makes the property officially yours. You sign this contract after every check and inspection has returned positive. You’ll pay the
remaining 90 per cent balance on the asking price of the property plus another Property Purchase Tax of 4 per cent, to make a total of 5 per cent tax
over the two contracts.
You’ll also have to pay 1 per cent of the total property price to the notary. Any agency fees will be paid separately. These differ depending on the
firm you’ve used and how involved they were in the process.
In addition, as a foreign national you’ll need to pay 233 Euro, as of this writing, for the Acquisition of Immovable Property permit. The application
for this permit alone takes between 6 to 12 weeks and will be completed by the notary.