Buying and Selling Property in Malta
The process of buying and selling your property in Malta is fairly straight forward, as a large part of all property transactions in Malta are negotiated through either brokers or Estate Agents. A big part of the sales team’s job at Malta Luxury Homes apart from securing the right buyer for the property, is to advise and guide both vendors and purchasers throughout the entire process of the property sale/purchase transaction.
The Process
Unlike in the rest of the world, in Malta, the property Title is acquired on the final deed which is a public contract registered in the Public Registry of Malta. This is a two part process comprising the signing of two separate contracts which are exactly identical to each other.
In the first contract known as a “Convenum” or (promise of sale) the parties (both Vendors and Purchasers) are “Promising” to sell and buy to and from each other. This contract usually has a validity of three to four months, during which the notary orders the necessary researches on the parties and the property from the Public Registry and carries out the necessary due diligence and Kyc of all the parties involved.
Once the notary is finished reading his researches and is happy that the Title has been duly vetted, an appointment is set to sign the second contract which is the final deed published and registered in the Public Registry of Malta.
As a general rule in Malta, all brokerage of property is done adopting a multi Agency listing system; meaning that at any given time, multiple Real Estate brokers and Real Estate Agency firms could be representing the same property, unless a vendor specifically hires a particular Broker or Agency firm exclusively as the sole selling agents to represent his property. Sole agencies usually have a minimum term period of 6 months to 1 year unless agreed differently between the parties.
Typical documents attached to the contract
(i) Certified Copy of I.d Cards or Passports of all parties.
(ii) Vendor to produce EPC certificate and plans of property. In the case of a new build, a full set of plans with relevant permits and compliance certificate have to be submitted.
(iii) All Kyc documents of all parties.
(iv) Last Ground rent receipt if applicable.
(iv) A receipt of last Condominium fees paid.
(v) A Fiscal receipt issued by the Real Estate Agency for agency fees duly paid.
FEES & TAXES
Below is the list of the typical expenses which buyers and vendors have to pay on the purchase / sale of property in Malta. Read more about all government property tax incentives here
Estate Agency Fees
Vendor pays Estate Agency fees on the property sale price plus 18% vat, and the Estate Agency 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 there is no sales tax is due. Otherwise, Vendors will pay a “final withholding tax” and not a “capital gains tax” charged at the flat rate 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.
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.
Notary Fees
Buyers pay Notarial fees which is a % calculated on 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 as a % of the purchase price of which 20% of the total stamp duty is paid at the pre-contract stage(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.
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).
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.
Read more about all government property tax incentives here
Links
View Lifestyle (SDA) Properties For Sale here
View Villas and Properties with pool For Sale here
Learn more about Property Management Service here
Learn more about Malta Residency here
Need help with Residency Application or Looking for a specific property contact us here
