The AIP Permit
The Acquisition Process
Renting Immovable Property in Malta
The acquisition of immovable property in Malta may be subject to certain restrictions for non-resident persons. In terms of Chapter 246 of the Laws of Malta, the Immovable Property (Acquisition by Non-Residents) Act or, the “AIP Act”, non-resident persons are defined as:
In cases where a person or body corporate would fall under the definition of non-resident, the buyers would have to apply for a permit to acquire immovable property in Malta (the AIP Permit).
Citizens of EU member states who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining an AIP permit for such acquisition.
Citizens of EU member states who have not resided continuously in Malta for a minimum period of 5 years can purchase their primary residence without an AIP permit. However, the acquisition of a secondary residence will require an AIP permit.
Individuals who are not citizens of a European member state may not acquire any immovable property unless they are granted a permit, or any one of the exemptions listed below is satisfied.
The above restrictions in terms of the AIP Act do not apply to purchase of property in the “special designated areas”, which areas represent developments intended to provide top-end residential properties.
The restrictions are not applicable also in respect of the following (amongst other):
The Special Designated Areas (to date – June 2012) are the following:
Where property is purchased, the acquisition process would initially involve a preliminary agreement also known as promise of sale agreement, which is signed by the parties, and then finally in terms of which the parties mutually undertake to enter the final deed of sale (generally made subject to the satisfaction of certain specific conditions which must be clearly stated in the preliminary agreement, such as the issuance of an AIP permit and obtaining the bank loan). The promise of sale must be registered with the Inland Revenue Department within 21 days of its execution, together with a payment equivalent to 1% of the consideration of the property.
A sum of 10% is usually paid by the purchaser on the day that the promise of sale is signed, either by way of deposit on account of the price or by way of earnest, although the parties may make any other arrangement as they consider appropriate. This 10% deposit is retained by the Notary Public responsible for the publication of the final deed of sale.
The promise of sale may be valid for any period of time agreed upon by, and between the parties, but would usually be for a period of between 3 to 6 months. During this time period, legal title in the property concerned is established through the necessary notarial searches and AIP formalities are finalised in anticipation of the publication of the final deed of sale. Once such formalities are complied with, and the time period decided upon between the parties lapses (as established above), the final deed of sale is duly read by the notary public to the parties and signed in his presence.
All relevant duties and taxes in respect of the final deed of sale, must be paid to the notary public (who collects such funds on behalf of the Inland Revenue Department) at the same time as the publication of the final deed.
The renting of a property in Malta would involve a written lease agreement setting out the general terms and conditions governing the rental of the property in question, namely a description of the property, the payment of rent, the warranty of all necessary permits by the landlord, the provision of any security or damage deposit/s, the renewal of the lease period upon expiration and other matters of similar importance.
A bespoke 'offshore' solution can be complex and requires careful planning and execution. We
therefore encourage our clients to contact us directly, without obligation.
While all of our consultants in our offices provide a Free Initial Consultation, the
office and consultant listed below has particular expertise in this area and will gladly assist with advice
on how to approach your unique challenge.
Alternatively, to select one of our multilingual offices, click here for a list of our office contact details
Languages spoken in this office: English, Italian and French
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