KNOWLEDGE BASE

PROPERTY OWNERSHIP

Buying a Property in Malta

Introduction The AIP Permit The Exemptions The Acquisition Process Renting Immovable Property in Malta

INTRODUCTION

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:

  • any individual who is not a citizen of Malta or of another Member State; or
  • a citizen of Malta or of another Member State, even in either case, if in possession of a valid residence permit, who has not been resident in Malta for a minimum continuous period of five years at any time preceding the date of acquisition; or
  • any body or other association of persons, and any authority, institution, organisation, fund, firm and any other entity whatsoever, whether corporate or not, if incorporated or registered in, has its registered address under the laws of, a state other than Malta or another Member State; or 25% or more of its share or other capital is owned by a non-resident person or is registered in the name of a trustee for the benefit of a non-resident person; or it is in any manner and whether directly or indirectly controlled by one or more nonresident persons, amongst other.

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).

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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.

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THE EXEMPTIONS

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):

  • any immovable property devolving causa mortis on any person, wherever resident, provided that the person from whom the property devolves had acquired such immovable property, where applicable, in accordance with the provisions of the AIP Act; or
  • the acquisition of any further divided or undivided share in immovable property by any person, wherever resident, where such person had previously lawfully acquired a share in such immovable property; or
  • the transfer of immovable property in an inheritance between co-heirs; or
  • the partition of immovable property between co-owners.

The Special Designated Areas (to date – June 2012) are the following:

  • Portomaso Development, St. Julian’s, Malta
  • Portomaso Extension I, St Julians, Malta
  • Cottonera Development, Cottonera, Malta
  • Manoel Island / Tigne Point, Tigne/ Gzira, Malta
  • Tas-Sellum Residence, Mellieha, Malta
  • Madliena Village Complex, Malta
  • Smartcity, Malta
  • Fort Cambridge Zone, Tignè, Malta
  • Ta’ Monita Residence, Marsascala, Malta
  • Pender Place and Mercury House Site, Malta
  • Pender Place and Mercury House Site, Extensions I, II, III, IV and V, Malta
  • Metropolis Plaza, Gzira, Malta
  • Fort Chambray, Ghajnsielem, Gozo
  • Kempinski Residences, San Lawrenz, Gozo
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THE ACQUISITION PROCESS

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.

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RENTING IMMOVABLE PROPERTY IN MALTA

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.

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CONTACT A CONSULTANT

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

OCRA (Malta) Limited
The Penthouse
Tower Business Centre
Tower Street
Swatar BKR3013
Malta – EU

Tel: 
Fax: 
Email: 
+356 2557 2333
+356 2557 2444
malta@ocra.com

Languages spoken in this office: English, Italian and French

REQUEST A CALLBACK

Michael J. Zammit (Managing Director)
MALTA OFFICE
Tel: 
Fax: 
+356 2557 2333
+356 2557 2444
Email: mjz@ocra.com
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professional advice. OCRA Worldwide does not accept any responsibility, legal or otherwise, for any errors or omission.