If you are looking for a place in the sun, Malta is a great choice. This historic island is much-loved by the Brits. It has lovely weather, most Maltese speak fluent English, and the Maltese tax system is very favourable to expats. To help you navigate Malta’s property market, here is a guide to purchasing a home on the island.
Local knowledge is your friend, suggests Norman from Karkanja Property in Malta. Buying a property overseas is not the same as purchasing a house in the UK. Whilst the property purchase process is relatively simple, there are differences you need to be aware of.
Engage a Notary and Lawyer
Legal documents might not be in English, so you will need a local notary and a lawyer to handle the legal aspects of your purchase. It is their job to protect your interests. Don’t be swayed into using a lawyer recommended by a building developer or a notary who happens to the seller’s brother/uncle/cousin. In fact, it’s best to appoint a notary and lawyer who specialise in handling property transactions for foreigners.
Be aware that you will also need a permit if the property is not going to be your main residence. At present, the UK is part of the EU, so you will need an AIP permit from the Ministry of Finance. This can take up to eight weeks to process. However, the rules could change after Brexit, so bear this in mind.
The next step is to find a suitable property. Talk to local real estate agents and spend time on the island, getting to know the towns and villages. If you want to make Malta your permanent residence, you shouldn’t rush the process of finding a home.
Putting an Offer on a Property
Malta isn’t like the UK. Once an offer has been accepted by the vendor, you are both committed to the transaction for three months, which means you can’t be gazumped or change your mind. You both must sign a preliminary agreement, which is legally binding. Your notary will use the three-month period to conduct all legal checks and searches pertaining to the property. If everything is in order, the purchase will go ahead.
Stamp Duty in Malta is 5%. Buyers must pay 1% of Stamp Duty up front and the balance when the final deed on the property is issued. You must also pay a 10% deposit to the buyer. With a potentially large sum of money changing hands, it is essential that you hire a reputable lawyer and notary. Problems are rare, but you don’t want to be the exception to the rule.
Sometimes, problems such as an outstanding debt attached to the property or missing title occur. If these problems cannot be resolved, you are legally entitled to withdraw from the purchase.
Assuming no problems or discrepancies with paperwork have arisen during the legal checks, it will be time to sign the final contracts and paperwork and pay the balance to the vendor and the remaining stamp duty to the Inland Revenue, plus your 1% fee to the notary.
Property Tax Rules
For new holiday home or investment property purchases, capital gains tax at 8% is payable when you eventually sell. If you elect to live in your Maltese home, you won’t have to pay capital gains tax if you live there for more than three years. There also rules applicable to property that apply if a joint owner dies, so take legal advice and make sure you understand the Maltese taxation system before you invest in a home on the island.