Published on 20 January 2006 at 05:44 pm
Filed under: Europe:- Malta Property Guides » Malta Property Buying Process
The legal system in Malta and Gozo is based on English common law and the property buying process in Malta is relatively straightforward as a result.
Permission has to be sought by certain groups of non-residents for the purchase of freehold real estate on either island, but a well regulated and documented purchase process makes the entire experience pretty painless for everyone.
Since Malta joined the European Union back in 2004 its laws relating to the foreign freehold ownership of property have been simplified and are now basically in line with the agreed EU standards; although some further refinement is required relating to the restrictions that remain in place and prevent certain EU citizens from freely purchasing more than one property on the island.
The basic rules relating to foreign freehold ownership can be divided into three categories: -
1) Rules for EU citizens who have lived in Malta for at least five years
2) Rules for EU citizens who have not lived in Malta for at least five years
3) Rules for Non-EU citizens
The first group, i.e., people who originally herald from another EU member state but who have lived continuously in Malta for at least the last five years can purchase more than one property in Malta and do not require permission to do so.
The second group, i.e., those who are citizens of another EU member state and who reside elsewhere other than in Malta or who have lived in Malta for less than five years can buy a single residential property for the purposes of permanent or semi-permanent residence and can purchase business premises and they do not require permission to do so.
The final group, which includes everyone else basically, can purchase one piece of real estate on either Malta or Gozo after they have received permission to purchase in the form of an AIP Permit or ‘Acquisition of Immovable Property by Non-Residents Permit’ from the Ministry of Finance.
There are certain areas on both the island of Malta and Gozo where permission is not required for any property investor to buy more than one piece of real estate; basically these are some of the most expensive areas on the islands for property and those who can afford to buy there are welcome to do so.
So, once a property investor has established whether or not they require permission to purchase in Malta the search for real estate that fulfils the specific objectives of the investor can begin.
As real estate agents in Malta are not regulated per se, an overseas property investor would be wise to conduct a bit of due diligence on anyone they choose to assist with the entire property buying process in Malta as a result. The reason for this is that it is not uncommon for an estate agency to be formed by a public notary or a lawyer and for the lawyer to also be the legal representative of the company, or for an estate agency to also be a property development company for example. These conflicts of interest could potentially present a property investor with a slight headache! There are many well established and reputable estate agencies on Malta and Gozo though and with their assistance an investor will be able to quickly target suitable properties.
Once real estate has been found that matches the property investor’s specific objectives an offer can be made to the vendor either directly or more usually via the estate agent. Once the price has been agreed upon it’s usual for both the vendor and purchaser to sign the preliminary agreement and for the purchaser to pay a deposit of 10% of the asking price as well as 1% of the stamp duty.
The preliminary agreement actually commits both parties to the sale subject to the conditions of the agreement being met. The conditions will include the purchaser being successful in their application for an AIP Permit (if required) and also on the property investor’s appointed solicitor finding no issues with the title of the real estate. If an investor has not appointed a solicitor or notary to act on their behalf before they find a property to purchase they should most definitely find one before signing the preliminary agreement and parting with the 10% deposit.
It’s usual for the agreement to have a valid duration of three months which should be ample time for permissions to be sought and title searches to be conducted. Once everything is in place for the sale to proceed to closing the final contract of sale will be drawn up by the purchaser’s solicitor. When the final contract is signed the outstanding balance for the cost of the property is due and the purchaser is also expected to pay the rest of their stamp duty obligation and their legal fees.
In terms of all the additional fees a property investor needs to be aware of when considering the Maltese real estate market, stamp duty is 5%, notary fees usually come to a total of 1%, searches and title registration are a flat fee of around GBP 160 as are fees for the AIP Permit. Estate agency fees are paid by the vendor and if an additional lawyer or notary is involved in the sale process by the purchaser they will charge fees in addition to aforementioned notary fees. Upon completion of the purchase process the land registry office will receive notification of the sale, all relevant documentary evidence and the property purchaser will be registered as the new owner.
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