Purchasing property in Malta is a straightforward process where property title is acquired on the final deed which is published in the Malta registry and is a mirror image of the signed pre-contract (promise of sale) which is drafted based mainly on English law.

Like in all countries around the world, the majority of properties in Malta is sold through brokers and Estate Agents, but unlike the rest of the world Malta real estate brokerage has adopted the multi-agency listing system. Therefor the Agency or broker would be representing both Buyer and Vendor, and at any given time the same property could be listed with numerous Real Estate Agencies so it is important to find the right Agent/ Real Estate Agency or broker who is going to work for you, assist and guide you throughout the largest financial commitment of your life.

Buying Process – 6 simple steps

1. Once you have selected your preferred Agent/ Agency or broker, scouting the island begins, visiting many locations to get the feel and vibe of the different locations. As a general rule, Malta is the main Island, the largest and the cultural, commercial and administrative centre. Gozo is the second largest island but more rural, characterised by fishing, tourism, crafts and agriculture, with a slower pace of life than Malta, and is very popular with both nationals and foreigners seeking to retire to tranquillity and less stress full life. Comino, the smallest of the trio, has one hotel and is largely uninhabited and only visited mainly in the summer with avid boaters or tourists wanting to swim in the infamous Blue Lagoon.

2. Once you have found the preferred location and have decided on what type of property, property size and budget, our expert agents can start by creating a shortlist of properties in the desired locations that fit within your criteria and set up viewings.

3. Having selected the desired property along with a second and a third choice, arrangements are made to revisit all three properties to have a second in more detail look and compare all three properties on their size, standard of finishes, presentation, attributes and price to move onto the next step – the negotiation stage.

4. Happy with first choice, the negotiations start with clients submit an offer through their broker to make the deal which is usually followed up by a property inspection by an architect.

5. Having the deal set with all conditions and price agreed, an appointment is set up with a notary where the pre -contract (promise of sale) is signed to secure the property. The normal validity time frame of this contract is usually 3 to 4 months in which time the notary carries out all the due diligence, proof of source of funds and a thorough search of the title. As a general rule the purchaser pays a deposit on account equal to 10% of the agreed purchase price with the notary in escrow, this is usually paid by bank transfer directly to the notary or by local cheque/bank draft. The notary registers this pre-contract with 21 days with the public registry to be legal.

6. Once the Notary has compiled the relevant searches and is happy to verify proper title of the property a contract for transfer of title is drafted and signed, the remaining balance of purchase price is paid to the vendor, agency fees are settled along with any outstanding ground rents if any and condominium charges and the notary gives a certified through copy of the signed contract to the parties whilst the original contact is then registered in the public registry. Keys to the property are handed over and the utility services are transferred onto the new homeowner.

Vendors Expenses

Real Estate Agency Fees

Vendor pays Estate Agency fees on the sale of the property at the rate of 5% plus 18% vat unless agreed differently with the vendor, and the agency in return issues a vatable receipt to be attached to the contract in the case that the vendor has to pay sales tax.

Property Sales Tax

If the property being sold is the main residence of the vendor which was held in their possession for more than 3 years than no sales tax is due. Otherwise, Vendors will pay a “final withholding tax” and not a “capital gains tax” charged at the flat rate of 8% on the property selling price which is paid on contract directly to the Inland revenue by the notary who subtracts the amount due from the balance of sale price funds still to be collected by the vendor. Pre Covid Recovery Plan – As of June 2020 as a Covid economy recovery plan the 8% sales tax rate applicable was reduced to 5% on the first €400,000 of the selling price.

EPC Certificate

On contract the vendor is obliged to produce an EPC certificate to be attached to the contract.

Condominium Charges

All condominium charges are settled, and a receipt of payment is presented.

Ground Rents

Unless the property is freehold any ground rents due by date of contract will need to be settled and a receipt produced to be attached to the contract. In normal cases with perpetual ground rents most buyers opt to convert the ground rent into a freehold by contract date.

Buyers Expenses

Notary Fees

Buyers pay Notarial fees which vary between 1.5% to 2% of the purchase price and are usually settled on contract.

Architect Fees

Architect fees are paid by the buyer, the fees vary according to the report drafted.

Stamp Duty

In Malta stamp duty is paid at 5% of the purchase price of which 20% is paid on precontract (POS- Promise of sale) and the balance is paid on the final contract. However, the Government has introduced certain incentives which vary according to the buyers’ circumstances.

(i)FIRST TIME BUYERS – Local or Foreign buyers can get an exemption from paying any stamp duty on the first €150,000 of the purchase price which is a tax savings of over €5,000. In the case of the foreign buyer certain criteria and conditions apply.

(ii) GOZO PROPERTIES – All residential properties purchased in Gozo are entitled to a reduction of the stamp duty tax rate from 5% to 2%.

(iii) SECOND HOME BUYERS – There is an incentive to discount the total Stamp duty due on property transfers by up to €3,000.

(iv) URBAN CONCERVATION AREA (UCA) – An exemption on stamp duty due on the first €750,000 of the the purchase price of any property found within an UCA area or has certain traditional features. This also applies on the sales tax due on properties being sold within UCA Areas. Certain terms and conditions apply.

Ground Rents

Most properties in Malta have Ground Rents which in most case are perpetual. By law Buyers are usually obliged to pay a yearly ground rent plus a recognition fee which is an amount equal to the yearly ground rent. Vendors would produce the last ground rent receipt to be attached to the contract. In most cases buyers opt to convert the perpetual ground rent into a freehold status before the signing of the contract so as to purchase the property freehold (free from any ground rents). This is done by capitalising the ground rent value at 5% (or multiplying the ground rent by 20).

Restoration Grants

The government has introduced various grants as an incentive for buyers to purchase unconverted and derelict houses located within UCA Areas. The grant can reach an amount up to €100,000 that can be claimed back against any restoration expenses carried out in the property.

Links

View Lifestyle (SDA) Properties For Sale here

View Villas and Properties with pool For Sale here

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