In Malta and Gozo you will find amazing countryside and beautiful beaches. Its real estate ranges from traditional townhouses to newer and modern developments. You can choose to live anywhere along the coast, in a quiet town or village or in laid-back Gozo.
Analysis on the Maltese Property Market
The Maltese islands are a cultural and economic centre. A prominent tourist destination. A desired location for commercial or private investment. Investors are after favourable investments. Malta offers commercial and real estate profitable investments. A variety of tax benefits and the possibility of obtaining EU residency.
Travel to the islands is a pleasure. Direct flights connect Malta with mainland Europe. Many airlines operate from Malta to European destinations. With a great deal of flights daily to major European cities. These flights take place all-year round. Besides Malta has direct flights to North Africa and the Middle East.
International buyers can buy their residential property anywhere on the islands. But for investment purposes foreigners can only buy property in Special Designated Areas (SDAs). English is one of Malta’s official languages. This facilitates the real estate purchase process for international buyers.
This island has attracted retirees. But not only! Over the last few years the island started captivating expats. They have found work here. Malta has high end industries. Such as iGaming, IT companies, pharmaceuticals, film production, financial services amongst others. The cost of living in Malta is low when compared to the UK, USA and other EU countries. Malta has good living standards and low taxation rates. It has a favourable tax regime for expats. Besides, the country is safe and has political stability.
There is a high demand for property on the small Mediterranean island. It has been soaring these past few years. Home ownership makes up 80% of the purchased property. Real estate prices vary according to the location and the type of property bought. Properties located in Valletta, Sliema and St. Julians come with an exorbitant price-tag. Same as houses sell at a higher price than apartments. The real estate market has a great selection of property available for sale. From villas, traditional Maltese townhouses to designer finished outstanding apartments and penthouses.
Malta has a dynamic but secure real estate market. Real estate in Malta provides consistent year on year capital growth. Buying property in Malta is a solid and secure investment. You are guaranteed a warm Mediterranean climate, business incentives and tax benefits. You can opt to buy property in Malta under the Citizenship by Naturalization Scheme. You and your immediate family members will get Maltese passports through your investment.
In the past few years, the property market saw a steady and significant growth. One of the main factors for this large growth is the constant stream of foreign workers. Who look for property to rent out. Demand for buy-to-let property surged overnight. Being short in supply this led property prices to soar. A major cause for this exponential market growth is because of international buyers. Who seek residency in Malta due to its Citizenship by Naturalization Scheme. Another factor is driven by a government incentive to exempt the payment stamp duty for first-time buyers. Aside from the fact that the real estate sector received a boost through the change in building policies.
The real estate market is still experiencing growth. You will get a good return on your investment should you decide to sell the property you bought. Besides, the rental market provides a high rate of return on investment. During an economic downturn real estate prices never came crashing down. But there was only a slight correction in the market.
On average the yearly capital growth of property in Malta is between 5% to 10%. Whilst on average rental income returns are between 5% to 10% per annum. Gross rental income is taxed at a final withholding tax of 15%.
Property maintenance costs are reasonable. On average a three bedroom apartment incurs utility costs of around €120 per month. Building insurance premium is another €80 per annum. In Malta there is no annual property tax.
In recent years, the Maltese real estate market has strengthened in its value. The real estate market in Malta and Gozo is stable and profitable. In fact, buying property on the islands is deemed to be one of the safest real estate transactions in Europe.
Malta’s Diverse Property Market
Malta has a diverse property market. Buyers are spoilt for choice when it comes to buy property. A vast selection of property is up for sale. From apartments, maisonettes, townhouses, houses of character, terraced houses, villas and penthouses. Recent years saw traditional Maltese architecture combined with modern high specification designs.
The majority of the property available for sale are apartments. These are either from new developments or need some renovation works. Today, new project developments combine a high design finish and high end technology. Properties are bought either in shell form, finished or finished and furnished. In general, property sold furnished tends to be a resale.
The are three main ways to find the property you like. Engage an estate agent. Through online adverts and social media pages. This way there is direct contact between the owner and prospective buyer. By visiting the neighbourhood which interests you. Walking along the streets and noting properties which have a ‘For Sale’ on their façade.
International buyers do engage estate agents. As they may not be familiar with the local market. Estate agents provide advice about the process of buying property on the island. Apart from showing properties available in their portfolio. Whether you will be using the services of an estate agent or not its best to start any search over the internet. Various online websites list properties for sale.
Keep a watchful eye when buying property on plan. This usually comes cheaper. But the property is still under construction. It will take time to deliver the acquired property. Instances do arise when the final result differs from the plan. Effect all payments with a bank guarantee. Keep all receipts and proof of payment. You might need these to execute the bank guarantee. Should construction is not completed. Or the construction is not finished within the stipulated time frame. Ensure that the preliminary agreement states that the developers are obliged to return the advance payments made inclusive of interest.
If you buy property in shell form consider the extra costs to be incurred to finish the property and furnish it. Same applies to properties which need renovation. Get quotes for the required works before moving ahead with the purchase. To make sure you remain within budget.
Types of Property for Sale in Malta
The Maltese real estate market has a large amount of apartments for sale. You can chose from an apartment situated in a large complex or in smaller blocks. Apartments in larger complexes come with open spaces and a common pool. Apartments are the most economical purchase. By and large apartments are the most popular choice when it comes to buying real estate.
You can buy a maisonette which forms part of apartment complex. Maisonettes provide privacy in that you have a private entrance. But everything is still on one floor, same as an apartment. Though since its situated at ground level you get a small yard and outdoor area.
If you are looking for a larger property then have a look at villas and bungalows. These are often detached or semi-detached. Come with a large outdoor area including a BBQ area and pool with big gardens. Villas have exorbitant prices due to lack of land. The plot of land on which the villa is constructed is big and the house is sizeable.
If you want a unique property with a good deal of charm go for a townhouse or house of character. Located in the older and characteristic parts of every town and village. You will be purchasing a piece of Maltese culture. Townhouses have detailed limestone facades and wooden balconies. These houses can be renovated and finished with today’s modern amenities. Period houses are expensive as they are uncommon.
Houses of character can date back up to 400 years. You also need to consider the extra costs which you will incur to maintain an old property. A common feature is the thick stone walls and central courtyard. Houses of character are situated in narrow alleys. Once renovated they make lovely charming homes.
You can also buy real estate in Special Designated Areas (SDAs). Properties in SDAs are luxury modern high-specs developments. Prominent apartments constructed in high end locations. With high-end designs and with amenities on site. Such as pools, parking bays, seafront views, eateries, offices, shops. Properties located in SDAs make it easier for foreigners to purchase.
Malta has a couple of remarkable new developments in SDAs. Such as Tigne Point in Sliema. Pender Gardens and Mercury Towers in St. Julians. Vista Point and Fort Chambray in Gozo.
Where is the Best Place to Buy Property in Malta?
A significant factor in determining the location where to buy property depends on the individual’s requirements and circumstances. Your property search by and large will depend on your lifestyle preferences. If you are a retiree you might prefer a quiet place close to amenities. A family would consider proximity to school and amenities to be a priority. While the younger generation would consider an area close to bars, restaurants and nightlife.
The cost of real estate is based on the location and the type of property you want to buy. If space ranks high on your priority list than you need to look outside the populated towns.
The hub of the island’s life is St. Julian’s, Sliema and Ġzira. These are the busiest and the most sought after locations. For their cosmopolitan lifestyle and vicinity to the sea. These towns have a lively atmosphere and magnificent coastal scenery. There is a range of eateries and bars situated along the waterfront. These places are jam-packed with nightlife activities. All amenities you need are close by. Real estate in this area gives the highest rental return on property investment. This area is popular with buy-to-let investors. A one-bedroom apartment in this areas costs around €250,000. Whilst a two bedroom penthouse on average costs €700,000. A two-bedroom apartment on average rents out at €1,500 per month. Some properties on sale offer stunning sea views but come at impressive price tags. A two bedroom sea view penthouse on average sells at around €1,000,000.
The capital city has outstanding architecture and a flourishing cultural scene. Property for sale in Valletta is sparse. Most of Valletta’s buildings were converted to boutique hotels. Or high-end apartments to cater for tourists. Though opportunities to buy an apartment in one of the old apartment blocks does arise from time to time.
You can look at Marsascala and Marsaxlokk if you want to buy property along the southern coast. In these towns you will be close to the beach. It is possible to buy properties with sea views at a lower price than the Sliema area. Marsascala has several new developments from which to choose. Along the northern coast you will find other seaside villages. The village of Mellieħa provides tranquillity and a laid-back atmosphere. The picturesque village has a beautiful beach and amazing country views. Located along the northern coast are the popular towns of Qawra, Buġġiba and St. Paul’s Bay.
When you head inland you will have a vast selection of properties for sale. From traditional Maltese townhouses, houses of character and terraced houses. Situated around Naxxar, Mosta, Żebbuġ and Siġġiewi. Due to their short supply these usually sell at high prices around €600,000. You will find countless apartments for sale at a range of prices. Such as a three bedroom apartment in Birkirkara costs €280,000. A similar one in Attard costs €350,000 and in Paola it costs €200,000. Properties situated inland are more spacious than those located along the coast.
If you prefer a peaceful place in Malta. Then Qrendi, Imqabba, Żurrieq have a quiet and traditional village atmosphere. Surrounded by amazing country views.
Gozo is seeing a constant growth in its real estate market. As people move from the hustle and bustle of Malta. It has a less urban atmosphere and its quieter. Real estate in Gozo is cheaper than in Malta.
Gozo is a popular destination with the Maltese. Those purchasing a second property as a summer or get away home. Its relaxed and tranquil lifestyle is the perfect way to relieve daily stress. Gozo’s most sought after locations are Marsalforn and Xlendi. In recent years some new developments have been constructed on the island. They provide modern and finished apartments with outstanding country and sea views.
The Process of Buying Property in Malta
The buying process in Malta is straightforward. Start searching for your desired home by viewing property online. Through real estate websites and social media. Your next step should be to engage an estate agent. To help you in your search. Once you choose a property to buy engage an architect and a notary. An architect will view the property and determines whether its structure is sound. The notary will provide independent legal advice Choose a notary you trust to avoid getting biased information. The notary carries out research in relation to the property.
The notary will draft the promise of sale. The seller and buyer agree to the terms of sale and purchase. The promise of sale is signed in the notary’s presence. The buyer pays a deposit equal to 10% of a the property value to the notary. At this stage the buyer pays 1% of the total purchase price as stamp duty due on acquisition. Stamp duty is like a tax on property acquisition.
The promise of sale stipulates the date when the final deed is to take place. It will be subject to certain conditions. Which include the approval of finance. Structural checks on the property by an architect. Searches on the legal title of the property. The final deed is drafted by the notary. If the searches do not find anything that could impede the acquisition. This is than signed.
On the day of signing the final deed the buyer pays the remaining property balance to the seller. The stamp duty and notary fees are to be settled. The notarial fee is ranges from 1% to 3%, than you need to add the cost of legal fees and searches. Stamp duty on the acquisition of property stands at 5% of the property’s value. This is to be paid by the buyer. But the government has launched a variety of schemes which provide for a reduced rate. The seller pays the estate agency fee which is of 1%. Once the buyer effects all payments the keys are handed over. The earliest this process can be concluded is around 3 months.
Maltese and EU citizens are entitled to a reduction on stamp duty. EU citizens must have resided in Malta for 5 continuous years to enjoy this benefit. The rate is 3.5% up the first €150,000 of the property value. Then 5% is charged on the excess value. This property is to be the individual’s sole and primary home. Another incentive for a rate reduction is for first-time buyers. Who buy the property as their sole residence. First-time buyers are exempt from stamp duty on the first €200,000 of the property value. Then 5% is charged on the excess value. If the buyer buys residential property in Gozo and in Maltese Urban Conversation Areas the stamp duty stands at 2%. Yet, non-EU nationals who need to get the Acquisition of Immovable Property (AIP) permit do not enjoy these reductions. They are still to pay 5% stamp duty.
In Malta there is no ownership or wealth tax. But a final withholding tax is charged on transfers of immovable property. This amounts to 8% on the property transfer value. You are exempt from the final withholding tax if the property was the seller’s home. For at least 3 consecutive years preceding the date of transfer. Besides the property needs to be sold within 12 months of moving out. Individuals who do not trade in immovable property and sell their property within 5 years after its acquisition. This will be taxed at 5% on the transfer value. No vat is payable on the transfer of immovable property.
Malta Citizenship by Naturalization Scheme
Malta Citizenship by Naturalization is a scheme aimed at Non-EU nationals. Wishing to move to Malta. It provides investors with a right to the Maltese passport and citizenship after 1 to 3 years. If they follow a couple of conditions. This scheme is aimed at high net worth individuals.
The person applying must make direct investment of at least €600,000 or €750,000. This depends on the residence period selected being that of 12 or 36 months. The higher the amount invested the lower the residence period required. The investor must buy real estate of €700,000 or enter a rental agreement of at least €16,000 per annum for 5 years. Provide a €10,000 donation to an approved organization in Malta.
Guidelines to Buying Property in Malta
EU citizens who resided in Malta for 5 years do not need an AIP permit to buy immovable property. Being it as their primary home or to carry out a business activity or for investment purposes. Besides, they can buy more than one property. EU citizens who resided in Malta for less than 5 years do not need an AIP permit to buy immovable property. It use being as their primary home or to carry out a business activity. Otherwise an AIP permit is required. Non-EU residents need an AIP permit to buy immovable property in Malta. Non-EU citizens are only allowed to buy one property. The AIP permit application needs to be done through the notary. This permit is issued by the Ministry of Finance within around 35 days. Property purchases in SDAs do not need this permit. Besides there is no limit on the number of properties which can be purchased in SDAs.
To get an AIP permit you need to complete a form. You need to attach a copy of the promise of sale. Submit 2 passport size photos, a photocopy of your passport and pay a fee of €233. Properties bought through an AIP permit cannot be rented out. The property can only be used as a home for the applicant and his family. The property must cost a certain amount.
Before buying property undertake the necessary due diligence. International buyers who need an AIP permit can buy any property. Property must at least cost €136,972 for apartments and maisonettes. Townhouses, terraced houses and any other property must at least cost €236,582. These amounts are revised on an annual basis.
Getting a home loan in Malta is easy. As long as you have a local bank account and proof of employment. You will undergo a means test by the bank to determine the loan amount that you can get. You need to take out life and home insurance premiums as a security again the home loan. Loan interest rate are favourable.
An expat can also get a home loan through a Maltese bank. You need to get permission from the Central Bank of Malta. Then open a Maltese bank account and keep it active. The bank may also request a copy of the promise of sale agreement.
When buying property in Malta check whether it is being sold as freehold or not. Certain properties have a ground rent which is covered by a contract. This annual fee is to be paid to the land owner. Ground rent can either be perpetual or temporary. The amount payable can be the same every year or increased by a certain amount after some years. You can free yourself of the ground rent if you pay 20 years worth of such rent.
You need to consult your architect if you intent to make changes to your property. Certain changes need the Planning Authority’s approval. The authority’s website lists instances where a permit is required.
In 2009, Malta made it mandatory to have Energy Performance Certificates (EPCs) for any property sold. The owner needs to provide this certificate before the sale. This is also necessary if you need to apply for permits with the Planning Authority. This certificate shows the dwelling’s energy efficient rating and carbon emissions.
Look out for schemes issued by the government during the annual budget. These have the intention to boost the property market. These schemes do help when purchasing real estate. Such a scheme is the Redemption of Ground Rent Scheme. This is aimed to convert temporary ground rent to permanent or redemption. There are certain conditions to abide with to enjoy this scheme. Grants to assist home owners in the renovation of their first home. The grant amount given depends on the applicant’s status and age. A higher amount is given if the buyer wants to renovate a property built before 1st January 1990.
