Buy - Maltese Nationals

Tips for the 1st time buyer
It is of utmost importance that purchasers know their rights and limitations when taking what possibly could be one of the most important decisions in their life; the purchase of a property.

It is therefore very important to first establish needs and requirements according to affordability. At this stage a quick property search on our site should give some idea of what is available on the market at the present moment, and for what price, on the following criteria:

1. Location: Where would you prefer to live?
2. Type: What type of property would you like?
3. Number of Bedrooms: What size will best accommodate your needs for the foreseeable future?
4. Finished or shell: Would you prefer a more modern home or one with traditional character? Would you buy a finished or lived-in property or would you rather do it up yourself, to your own taste, at your own pace?
5. Amenities: What services and amenities do you require? (Schools, transport etc)

First time buyers are probably not familiar with current property prices and values. Affordability is the key. We therefore recommend a budget be stipulated from the offset. If bank financing is required this should be done prior to property hunting. Only once a budget is set, that one can really decide the kind of property and its location. Prices may completely differ from one location to location, even from one street to another.

At Coldwell Banker we can guide you on proper current market values of properties and we will show you the properties that would best fit your requirements and budget.

The more information you give us from the outset, the better we will be able to assist you to find what you are looking for.

The Procedure
Once we have found the property you were looking for, we will do our utmost to negotiate the best price possible for you, and once price and conditions are agreed to, a date and time is set for the signing of the 'promise of sale' (or Convenium) with your notary. However, before proceeding to the notary it is imperative that the following is clearly agreed to by both parties:

1. The agreed price
2. Whether Freehold, if property has a Ground Rent the amount, and also whether Temporary or Perpetual
3. List of fixtures, fittings and pieces of furniture included in the price
4. Payment terms, if any
5. List of pending works to be completed by the vendor
6. Other terms of the promise of sale, for example Subject to loan clause
7. The Deposit amount. Although not stipulated by law, it is practice that the deposit on account is the equivalent of 10% of the agreed purchase price, paid as a sign of goodwill by the purchaser and of their intention to appear on the final deed of purchase.
8. Term of the agreement (Convenium). Unless otherwise agreed, is valid for three months. It is important to know that the Deposit will be forfeited in favour of the vendor should the purchaser does not appear on the final deed without a valid reason at law.

During the period between the signing of the Convenium and the final deed (the contract), the following will take place:

1. The Notary (employed by the purchaser) will, within 3 weeks of signing the promise of sale agreement, register the said agreement with the Commissioner of Inland Revenue and pay 1% of the sale price on account of Duty due by the purchaser on the final deed of sale.
2. The Notary will also carry out researches on the property and verifies clear legal title, assuring that there are no outstanding debts, hypothecs or liens on the property.
3. The purchaser must honor all the conditions mentioned in the promise of sale agreement e.g. Bank application for loan in good time, ascertaining that a valid building permit covers the property etc.
4. The vendor in turn must honor all the conditions that are mentioned in the promise of sale, which apply to him or her e.g. Completion of pending works agreed upon etc.

Our Property Consultants will actively follow up these procedures to ensure a smooth, final transaction of the property.

Once the above have been completed, the Notary advises the parties on the date of the final deed.

1. The final deed is signed at the bank in the case of bank financing.
2. The contract of purchase is read out and if all is in order all the parties concerned sign it.
3. The balance due, i.e. the purchase price less the deposit already paid when the Convenium was signed, is paid to the vendor.
4. The parties concerned pay all outstanding payments concerning the purchase. For instance, the vendor may settle any outstanding amount due to a bank as the final part of a loan settlement, as well as Capital Gains tax that may be due on the property, and the estate agent's fee if applicable. The purchaser will pay Stamp Duty, notary's fees and searches etc.
5. Keys to the property are passed on to the purchaser.
6. The notary public registers the contract at the public registry (and the land registry if applicable).

Expences
Stamp Duty on the purchase price must be paid as to 1% on signing of the preliminary agreement and the balance on signing of the final contract, together with the notary's fees and cost of searches.

When the property being purchased is to be used as purchaser's ordinary place of residence, stamp duty is charged at 3.5% on the first Lm50,000(€ 116,469) and 5% on any amount over Lm50,000(€ 116,469).

For any other property purchase, Stamp Duty is charged at 5% on the total value of the property.

No Stamp Duty is charged on the value of the movable property (furniture and fittings) being transferred with the immovable property.

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Non - Maltese / Overseas

Conditions and Procedures for Non - Maltese/Overseas buyers
The procedure for property purchase is very simple.

Once the selling price is agreed upon, a Preliminary Agreement or Promise of Sale (Convenium) is drafted and signed in the presence of a Notary Public (nominated by the purchaser), binding the vendor to sell and the purchaser to buy the property at the agreed price within a stipulated time and under other terms agreed upon by the parties to the agreement.

The agreement for non- Maltese buyers will include a 'subject to the acquisition of the A.I.P. permit' clause. It is common practice that 10% of the purchase price is deposited on account of the purchase price on the Promise of sale Agreement, or as agreed between the parties. The preliminary agreement is normally termed, but not necessarily, for a period of three months. This is also subject to agreement according to the requirements of the two parties. During this period the Notary Public carries out searches to ascertain the validity of the title.

On the expiration of the agreed period, if all the conditions of the preliminary agreement are satisfied, a final deed of sale will be entered into between the parties to the agreement and full ownership is attained.

Main Advantages

1. Moneys from a property sale may be repatriated to any country and currency of choice.
2. Local mortgage facilities are available for up to 90% of the purchase price.
3. Deeds and documents may be published and read in English.
4. Purchasers may benefit from special concessions on the importation of personal effects and pets.
5. Properties within certain designated areas or with swimming pools may be rented out.
6. No rates or local council taxes.
7. Multiple property purchase permitted in special designated areas.
8. Very beneficial Tax Advantages for non-Maltese taking up Residency in Malta

Conditions for Property Purchase
Non-Maltese may purchase a holiday home in Malta under the following terms and conditions:

1. A preliminary agreement or promise of sale must be signed undertaking to purchase a property of not less than € 104,509 in the case of an apartment or maisonette, and not less than € 174,333 for a house or any other type of residential property. Naturally, properties in shell form or requiring renovation may be purchased at lower figures, provided that the estimated cost of works for completion (as confirmed by an Architect) plus purchase price total not less than the € 104,509 in the case of an apartment, and not less than € 174,333 for any other type of residential property. The thresholds are adjusted on a yearly basis according to the inflation rate.
2. An A.I.P. (Acquisition of Immovable Property) Permit (cost Lm100/€233) is required from the Ministry of Finance and is normally granted within 2 months of application. The Notary Public will apply for the permit after a promise of Sale Agreement has been signed.
3. A non-resident may sell his/her property to another non-resident, provided that efforts have been made to find a local buyer. Once again, approval is required from the Ministry of Finance.
4. Moneys for the purchase have to originate from a source outside of Malta.
5. Properties having historical value or listed as part of the Island's heritage may not be purchased by non-residents. This does not apply to most farmhouses and houses of character on the market.

Other Purchase Expenses
Before committing on a Purchase it is important to budget for the following expenses:

1. Stamp Duty or Transfer tax at 5% of the value of the property
2. Legal/Research and Notary Fees between 1% - 1.5% of the value of the property
3. Ministry of Finance fee Lm100 on application for an Acquisition of Immovable Property Permit (A.I.P Permit). This is applicable only for non-residents.

The AIP Permit
The Notary Public applies for the Permit on behalf of the Purchasers after a Promise of Sale agreement has been signed. The Notary will Require 3 passport photos, and a Passport photocopy of each of the purchasers appearing on the agreement. The LM100 fee may be settled on the Promise of Sale or on the Final Deed as agreed with the Notary.

1. Application may be refused if applicant is not of a good conduct.
2. The acquisition (final deed) must take place within a (renewable) period of 6 months.
3. The property may not be sold in part or converted into more than one dwelling house. Likewise, plots are to be developed into one single property within 2 years.
4. Adjoining property as an extension, or a garage, can be purchased.
5. Properties need to be sold together as a whole.

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Residing Permanently in Malta

Why Malta?
A pleasant warm climate and hospitable English speaking population, rich culture and a relatively low crime rate together with a stable and democratic political situation are definitely a rare and irresistible combination for many people intending to settle or retire indefinitely in Malta or Gozo.

A residency permit in Malta entitles its holder to very favourable fiscal incentives and benefits, as the facility to travel into and out of Malta, as and when desired, without the requirements of other formalities.

The stay in Malta has to exceed 183 days per annum.

Brief Overview Of Advantages

1. A Flat rate of only 15% income tax on remitted income, subject to a minimum tax of Lm1, 800 (€4, 193) per annum.
2. Exemption from customs duty/VAT on Household and personal effects, furniture and domestic articles.
3. Exemption from customs duty/VAT on one private motor vehicle.
4. Repatriation of capital and income.
5. No local or council taxes are payable.
6. No death duties are payable in Malta (although transfer duty is charged on immovable property).

Conditions of Residence
A permanent resident must have an annual income equivalent to LM10, 000 (€24,000) or a capital equivalent to LM150, 000 (€350,000). The capital may include a property purchased in Malta

1. Remit annually into Malta an income equivalent to LM6, 000 (€13,900) in his own respect and LM1, 000 (€2, 300) in respect of each of his dependants
2. Take up residence by not later than 1 year from the issue-date by either purchasing a property, or by renting for not less than LM1, 800 (€4, 200) per annum
3. Undertake not to exercise any occupation or profession, hold any appointment, seek employment, or engage in any form of business in Malta *
4. Undertake not to participate in political activities *
5. Dependants may remain in Malta until they reach their 21st Birthday

* EU Citizens and Permanent Residency
The scheme did not change as a result of Malta's EU membership. Certain benefits are superseded since EU citizens automatically qualify for a residency permit. However EU citizens are required to inform the Immigration Department, Police Headquarters, Floriana if they intend to stay in Malta for more than three months. Moreover Proof of Income and health cover are required by the authorities to ensure the resident will not be a burden on the country.

Other conditions attached to the scheme, such as the condition for applicants not to engage in work or political activities are being reviewed.

EU citizens who have been residing in Malta for a period of 5 years will be able to buy a second or more property in Malta. Following the 5 year period, they will then have all rights associated with being a Maltese citizen.

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Property Type Maltese Terminology

Apartment
The term Apartment or Flat in Malta has the same universal meaning of the word. In other countries it may be also termed as condominium/condos or pied a Terre. An apartment is a dwelling with a number of rooms all on one floor and forming part of a block or condominium, with other households making use of the same common areas, namely a common entrance, stairwell and lift, and owning a pro-rata undivided share of the same common areas. Apartments come in all sizes, forms and development size. Given the high cost of land, Apartment blocks make the best use of every square inch. From a studio apartment or bed-sit covering 45 sq. m to apartments of over 500sq. m, the apartment is today the property that can appeal the widest possible spectrum.

Maisonette
A Maisonette is a small house that forms part of a larger building having its own entrance from the outside. They were introduced to the Maltese property market after the war and have nowadays become very common due to very comfortable one-floor-layout with the added benefit of an own independent entrance, therefore no common areas or shared entrances and condominium agreements with third parties as in the case of apartments. Maisonettes are either ground floor leveled, first and also second floor. Ground floor Maisonettes are common to benefit from their own back yards, whereas first or second floor normally benefit from the use of shared or full roof and airspace ownership.

Penthouse
A penthouse is an apartment built on the roof, or top floor or floors of a building or apartment block. Penthouses are set back from the outer walls thus offering terrace space ideal for entertaining. Also, since they are situated on the top end of buildings, they are normally very bright and may have views.

Duplex
A duplex is an apartment, penthouse or maisonette on two different connected floors. A duplex apartment or duplex penthouse will form part of a block or condominium with a common entrance, stairwell and lift. Whereas a duplex maisonette will benefit from its own independent entrance

House of Character
Built over 150 years ago, ageing even up to 400 years, these types of properties are normally found within typical old Village cores. They are normally built in rural Maltese stone and may offer a world of features and character from which the term house of character has derived. Courtyards, stone arches, troughs, wooden beams, slabs, corbels, flagstone flooring or patterned tiles being the most common. Most of these houses, unless restored, do not have a lot of external apertures but may benefit from a lot of natural light from their own central courtyard.

Farmhouse
Farmhouses are normally situated in rural countryside surroundings, away from the village cores. They are normally very old structures that used to host farm families with their tools and animals. They normally come with a wealth of features, such as wooden beams, mangers, troughs, corbels and flagstones. Farmhouses are normally surrounded by their own fields and land and therefore offer the possibility of a lot of outdoor and entertaining space.

Townhouse
Townhouses are pre-war or post-war houses built during the period Malta formed part of the English Colony. Inspired by the British terraced dwellings they may age from 60 up to 150 years. Layouts are very typical with entrance halls and lateral rooms for guest reception and entertainment, typical Maltese stone staircases with wrought iron railings, kitchen/dining areas and backyards. Most of these houses may also offer some other interesting features such as typical Maltese wooden or wrought iron balconies, wooden or iron beams, patterned tiles, slabs and stone decorations on facades and hallways.

Villa
Detached and semi-detached villas are the same in Malta, as you would expect anywhere else in the world. To varying degrees of size, they will also have outside space, a garage, larger than normal rooms, above average luxury and therefore occupying the high end of the property market.

Bungalow
Most bungalows in Malta are villas built on one story having all rooms on ground floor level. They will in most cases have ample outdoor and entertaining space. Due to the limited land supply, bungalows are associated with luxury and therefore occupy the higher end of the property Market. A bungalow may be fully or semi-detached from other buildings. They are normally situated in up-market villa areas.

Terraced House
A Terraced house is a house that is part of a terrace, or a house that is in a row of houses, situated and attached side by side. A terraced house normally has accommodation on two floor levels, a ground floor and a first floor with roof terraces, and with either an underlying or street level garage. Terraced houses may also be termed simply as a house, a private house, or an attached house.

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