Buying real estate in Malta as a foreigner?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in Malta as a foreigner: a full guide

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Everything you need to know is included in our Malta Property Pack

Malta is a top pick for foreigners who want to invest in real estate. It offers picturesque landscapes, a rich history, and friendly locals.

Nevertheless, buying property in a foreign country can be complex, especially with all the rules and regulations involved.

Not to worry! This guide is here to make it simple for foreign buyers to understand how the property market works in Malta. We'll cover all the essentials you need to know in a straightforward and easy-to-follow manner.

Also, for a more in-depth analysis, you can check our property pack for Malta.

Can you purchase and own a property in Malta as a foreigner?

If you are American, we have a dedicated blog post regarding the property buying and owning process in Malta for US citizens.

Buying real estate in Malta as a foreigner involves a mix of opportunities and restrictions, and understanding these can help you navigate the process more effectively.

Foreigners can indeed buy property in Malta, but there are certain conditions and distinctions to be aware of. While you can purchase apartments and houses, owning land is a bit more complex.

Generally, as a foreigner, you are not permitted to buy undeveloped land or farms, which are typically reserved for Maltese citizens.

The primary difference between foreigners and locals in terms of property rights is related to the type and location of the property you can buy. For instance, there are 'Special Designated Areas' (SDAs) where the restrictions for foreign buyers are less stringent.

In these areas, you can buy property with the same rights as Maltese citizens, which means fewer limitations on the type and number of properties you can own.

Your nationality can play a role. EU citizens who have resided in Malta for more than five years face no restrictions, similar to Maltese citizens.

However, if you're an EU citizen who has not lived in Malta for this duration, or if you're a non-EU citizen, you generally need to obtain an Acquisition of Immovable Property (AIP) permit for purchasing property outside SDAs.

There's no requirement to reside in Malta to buy property, but residing can affect the type of property you can purchase.

As mentioned, EU citizens who have lived in Malta for over five years have more flexibility.

If you're from outside the EU, you might need a visa or residence permit to stay in Malta, but this is separate from the property buying process. The AIP permit is specifically related to property acquisition and is different from a residence or visa permit.

The AIP permit is a form of government authorization. It's necessary for non-EU citizens and EU citizens who haven't lived in Malta for at least five years when buying outside SDAs.

This permit ensures that the property meets certain conditions, like a minimum value and that it's not your second home unless you meet specific criteria.

There's usually a minimum investment threshold, which varies depending on the property and its location. This minimum value is set to ensure that foreign investments in property are substantial and align with the local market values.

Can you become a resident in Malta by purchasing and owning a property?

Malta offers a residency-by-investment program, commonly known as the Malta Permanent Residence Programme (MPRP), which allows individuals to gain residency through real estate investment.

This program is designed for non-EU/EEA/Swiss nationals who want to obtain residency status in Malta by making a significant investment in the country.

To qualify for residency under the MPRP, you need to either purchase or rent a property in Malta. If you choose to buy, the minimum investment varies depending on the location.

For example, the minimum is higher in more developed areas like Valletta compared to other regions. The investment thresholds are subject to change, so it's important to check the current requirements at the time of your application.

Besides the property investment, there are other financial commitments. This includes a non-refundable government contribution and a donation to a Maltese registered charity. The exact amounts can vary, and these contributions are a crucial part of the application process.

The process begins with submitting an application through a licensed agent. This includes thorough due diligence checks, where you must provide proof of income, a clean criminal record, and other personal and financial details.

The due diligence process is rigorous, as Malta is keen to maintain a high standard of applicants.

Upon approval, you will be granted a residency permit. This permit allows you to live in Malta and travel within the Schengen Area without a visa.

However, it's important to note that this residency does not allow you to work in Malta unless you obtain a separate work permit.

The residency obtained through this program is not automatically permanent but can lead to long-term residency if certain conditions are met.

You must maintain your qualifying property investment and fulfill other program requirements to renew your residency status.

Holding residency under the MPRP does not directly lead to Maltese citizenship. However, it can be a step towards it, especially if you later fulfill the criteria for naturalization, such as a certain number of years of physical residence in Malta.

The number of people who have used this scheme varies over time. The program has been popular among individuals seeking a stable and attractive residency option within the EU.

Thinking of buying real estate in Malta?

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Market data

You can find fresh and updated data in our pack of documents related to the real estate market in Malta.

If we look at the the GDP per capita indicator, it seems that Maltese people have become 8.2% richer throughout the past 5 years.

Actually, this rise in population wealth has the potential to stimulate the demand for real estate, which may translate into price increases in the future.

Looking at the data reported by Numbeo, we can see that residential properties in Malta offer yields between 4.0% and 6.7%.

Foreign investors can benefit from these rental yields in several ways. First, they enjoy consistent cash flow and can reinvest in more properties. Also, strong rental yields enhance overall ROI, making the property a valuable asset. Lastly, attractive yields attract long-term tenants, reducing vacancy rates and providing stability.

To know more, you can also read our dedicated article: is it a good time to buy a property in Malta?

The life as an expat

The life of an expat in Malta is one of great opportunity and potential. With its stunning Mediterranean coastlines, vibrant culture, and friendly locals, Malta is an attractive destination for those looking to move abroad. Expats in Malta can enjoy a relaxed lifestyle, with a variety of activities to suit their interests. From exploring the historical sites of Valletta and Mdina, to relaxing on the beaches of Gozo and Comino, there is something for everyone. Expats will also find a strong job market, with a variety of sectors to choose from. Malta's economy is highly developed, and expats will find plenty of opportunities to work in finance, IT, and tourism. The cost of living in Malta is relatively low, and expats will find that their money goes further here than in other countries. Malta is also a safe place to live, and expats will find that the locals are welcoming and friendly.

What are the best places to buy a property in Malta?

This table summarizes some of the best places to buy a property in Malta.

City / Region Population Average Price per sqm (EUR) Strengths
Valletta ≈ 6,500 4,000 - 7,000 Capital city, UNESCO World Heritage Site, historical architecture
Sliema ≈ 16,000 3,500 - 6,500 Seaside town, shopping and dining options, promenade
St. Julian's ≈ 10,000 4,000 - 7,000 Entertainment hub, nightlife, luxury apartments and resorts
St. Paul's Bay ≈ 21,000 2,500 - 5,000 Tourist destination, coastal views, watersports, beaches
Mellieħa ≈ 7,500 3,000 - 5,500 Coastal town, popular for diving, sandy beaches, natural beauty
Gozo ≈ 31,000 2,500 - 5,000 Island retreat, rural charm, historical sites, natural landscapes
Marsaskala ≈ 12,000 2,500 - 5,000 Coastal town, fishing village ambiance, relaxed lifestyle

Do you need a lawyer to buy a property in Malta?

When purchasing a property in Malta, engaging a local lawyer can provide valuable assistance in navigating the legal aspects and ensuring a successful transaction.

One crucial document they can help you with is the Preliminary Agreement (Konvenju Preliminari), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.

The Maltese lawyer can also assist with conducting a Property Title Search to verify the property's ownership status and identify any potential legal issues or encumbrances.

Additionally, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registry or relevant authorities.

They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Stamp Duty, are paid correctly and in compliance with Maltese laws and regulations.

What are the risks when purchasing a property in Malta?

We've got an article dedicated to the risks associated with purchasing property in Malta.

When buying a property in Malta, there are some unique risks that are not common in other countries.

The first risk is the fact that the Maltese property market is unregulated. This means that buyers do not have the same protection as in other countries, and they may be taken advantage of by unscrupulous sellers or agents.

Another risk is that Malta has a very old property registry system, which can make it difficult to verify the accuracy of the information provided by the seller.

Furthermore, the laws and regulations governing property transactions in Malta are complex and difficult to understand.

Finally, there is a risk of title fraud. In Malta, it is possible for someone to register a property in their name without the owner's knowledge. This can lead to a dispute over ownership and can cause significant financial and legal problems.

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Everything you need to know is included in our Malta Property Pack

What are the documents needed for a real estate transaction in Malta?

The list of documents needed when buying a property in Malta includes:

1. A valid identity card or passport;

2. A valid residence permit or visa;

3. A valid tax number;

4. A valid contract of sale;

5. The title deed;

6. Payment of Stamp Duty;

7. A signed deed of transfer;

8. An application for a Certificate of Residence;

9. An application for a Certificate of Suitability;

10. An application for a building permit;

11. An application for a building licence;

12. An application for an occupancy permit; and

13. An application for a planning permit.

We review each of these documents and tell you how to use them in our property pack for Malta.

What strategies can you employ for successful negotiation with Maltese people?

When engaging in negotiations with individuals from Maltese culture, it is essential to consider specific aspects of Maltese culture in order to achieve success.

Firstly, the concept of "band clubs" is significant in Malta.

Band clubs are social and cultural organizations that play an important role in local communities. Recognizing and acknowledging the importance of band clubs in Maltese society can help establish a positive rapport and build trust during negotiations.

Religion holds great importance in Malta, with the majority of the population being Roman Catholic.

Understanding and respecting the influence of Catholic traditions and religious holidays can be crucial in scheduling negotiations and avoiding potential conflicts with important religious observances.

The Maltese language, Maltese (Malti), is one of the official languages of Malta. Although English is widely spoken, showing respect for the Maltese language by learning a few basic phrases or using a local interpreter can demonstrate cultural sensitivity and facilitate effective communication during negotiations.

Malta has a strong sense of national pride and identity.

Recognizing and appreciating Maltese history, culture, and achievements, such as the UNESCO World Heritage sites or the country's maritime heritage, can create a positive atmosphere.

Yes, the pace of negotiations in Malta can be slower compared to some other cultures.

Patience and a willingness to build relationships gradually are important. Rushing or pushing for quick decisions may be viewed as disrespectful or indicative of a lack of understanding of the Maltese way of doing business.

Finally, understanding the role of family in Maltese culture is crucial. Family ties are highly valued, and decisions may involve consulting with family members. Being aware of this dynamic and showing respect for family-oriented values can contribute to successful negotiations in Malta.

Can foreigners obtain a bank loan in Malta?

Yes, foreigners can obtain property loans in Malta. The Maltese banking system allows non-residents to apply for property loans, subject to certain conditions and requirements.

If you're a foreigner looking to get a property loan in Malta, you'll typically need a valid residence permit, evidence of income or employment, and meet the specific requirements of the lenders.

Bank of Valletta, HSBC Malta, and APS Bank are among the Maltese banks that have the potential to offer mortgages to non-resident individuals.

Finally, please note that the current mortgage rate in Malta, ranging from 2% to 6%, is considered fairly average compared to global standards.

What are the taxes related to a property transaction in Malta?

Here is a breakdown of taxes related to a property transaction in Malta.

Tax Description Calculation Who pays
Rental Income Tax Tax on rental income generated from the property A progressive rate from 0% to 35% of gross rental income Owner
Property Transfer Tax Tax on the transfer of immovable property 8% of the property sale price or transfer value Seller
Stamp Duty Tax on the transfer of property ownership 5% of the property value or the consideration price Buyer
Capital Gains Tax Tax on the capital gain from the sale of a property 12% of the transfer value or the selling price of the property Seller
Ground Rent Annual leasehold payment for land held on a ground rent basis Ranges between 40 and 250 euros, depending on the area size and location Owner

What fees are involved in a property transaction in Malta?

Below is a simple breakdown of fees for a property transaction in Malta.

Fee Description Calculation Who pays
Registration Fee Fee for registering the property transfer with the Public Registry From 13.98 euros to 46.59 euros, depending on the value of the property Buyer
Notary Fee Fee for notarizing the property transfer documents Generally around 0.4% to1% of the property value Buyer
Real Estate Agent Commission Fee charged by real estate agents for their services Typically around 1% to 5% of the property purchase price Seller

Buying real estate in Malta can be risky

An increasing number of foreign investors are showing interest in Malta. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Malta