Buying,
Selling and Renting Property in Malta
Buying
and selling property:
International
Beneficiary Services Ltd can offer you all the services connected with buying, renting or
selling immovable property in Malta, whether you intend buying just a
holiday home or even if you intend buying a home to settle here. Or
perhaps you have inherited property in Malta and you wish to sell it and
have the proceeds sent to you in your home country. If you prefer to rent
property, then we can also offer you a full service in this regard.
Our
lawyers
and notary
can provide you with all the legal services involved in buying, selling or
renting property.
Once you have chosen a property and agreed on the price with the owner, a
preliminary agreement of sale is signed at our office between you (or our
firm to represent you by power of attorney if you're not in Malta) and the seller. This is normally
valid for three months, but a longer period can be agreed upon. This
agreement binds both parties to sell/acquire the property when the three
months are over. Normally 10% of the purchase price is deposited
with us when the agreement is signed, and this would be forfeited in
favour of the vendor if you do not complete the sale for a reason not
valid at law.
During this three month period, we will check the seller's title to the
property and also his liabilities on the same to ensure that you are
buying from the correct and real owner and that there are no liabilities
(like mortgages) burdening the property. We also instruct an associate
architect to check that the property is built according to the Planning
Authority permits and that it is vacant so that you can take up immediate
possession.
We will also apply on your behalf for an A.I.P. permit if necessary. This is a
Government permit which a non-resident who wishes to acquire property in
Malta must obtain. Normally the application takes about three months to be
approved. The value of the property must exceed Euro 155,000 (or
Euro 95,000 for an apartment) and can only be used as a residence though
guests may be accommodated. The funds must be brought to Malta from
abroad through a Bank. Foreign owners of Maltese property are not
allowed to rent out property - however if the property is valued in excess
of Eur 233,000 and has a pool, the foreign owner is allowed to rent the
property provided tax is paid on the rentals received.
Following Malta's
accession to the EU in May 2004, a new regime has come into force
concerning AIP permits.
-
Non-EU
citizens will still only be able to buy one residential property and
always subject to an AIP permit being granted; non-EU citizens
cannot acquire more than one property.
-
EU citizens, even
if not resident in Malta, can buy any property without the need
of any permit, provided that:
-
the property is intended to be their
primary
residence - primary residence means that the property is
intended to be the
principal place of residence whether in Malta or abroad; or
-
the property is required for the carrying out of a business
activity or the supply of services;
-
EU citizens can buy both a primary residence and a business
property.
-
EU citizens who
have been resident in Malta for at least five years can
also buy a secondary or further residence without the
need of an AIP permit
In practice therefore
EU citizens can buy property freely if they are going to live
primarily in Malta, carry on a business here or have already lived here
for five years. Other situations will still require an AIP permit.
There
are certain areas in Malta, usually the more costly and upmarket
developments, where no AIP is necessary and there are no restrictions on
the number of properties that can be purchased.
Once we have verified that all is in order and the permit has been issued,
then the final deed of transfer of the property is signed and the balance
of the purchase price is paid to the seller, whereas we hand over to the
seller the remaining 10% of the price you had deposited with us.
We can also arrange a bank loan for you. Interest is currently charged at
6% and the loan is repayable over a maximum period of ten years. The
Maltese Banks will lend as much as 90% of the purchase price.
Costs
and fees for buying property:
In addition to the price
agreed with the seller, you will have to pay:
-
transfer
tax - this is 3.5% on the first Euro 116,468 and 5% on the excess.
Following
recent amendments to Maltese law, this transfer tax is now payable
in two stages: 1% of the agreed purchase price must be paid to
the Inland Revenue with the signing of the preliminary agreement which
must now also be registered with the Inland Revenue to have validity, and
the balance of the transfer tax with publication of the final deed
-
1% of the purchase
price as a legal and Notarial Fee; this fee is also payable in two
stages: 33% with the signing of the preliminary agreement and
67% with publication of the final deed
-
Eur
600 approx. for
the researches into title, liabilities etc.
-
Eur
233 for the AIP
permit;
-
if you have found
your property through the services of a Registered Estate Agency, then
brokerage fees are only due by the seller; if the property has been
found through the services of a private agent (broker), then you must
pay 1% as a brokerage fee to this private agent.
Costs
and fees for selling property:
From the price paid to
you by the buyer, you will have to deduct:
-
1% of the purchase
price for legal fees and expenses
-
5% of the purchase
price if you have found a buyer through the services of a Registered
Estate Agency
-
1% of the purchase
price if the buyer has been found through the services of a private
agent (broker)
-
12%
withholding tax or 35% Capital Gains tax
as explained below.
Until November 2005, if you sold your property,
then Capital Gains Tax was charged on the profits you made from the sale,
according to the rates applicable at the moment of the sale for Income Tax
( 35% in October 2005). The tax was not paid on the sale price, but only
on the profit made from the sale, that is on the difference between the
purchase price and the sale price.
This has now been changed with effect from November 2005.
If an owner sells his property within five years of acquisition, the
seller can opt either to pay Capital Gains Tax on the profit or else
pay a flat rate withholding tax of 12% on the sale price. This is
the choice of the seller. If the property is sold more than
five years after the acquisition, the seller has no option but to pay the
12% withholding tax on the price.
However holders of Permanent Residence Permits who
sell their property and can satisfy the Inland Revenue that the house has
been the “only or main” residence of the seller for the past three
years, will not be liable to pay the either the capital gains tax or the
12% withholding tax.
Renting
property:
There is no
restriction on foreigners as regards property renting. You can rent
anything, at any price for as long a period as you like. However
foreigners are not allowed to rent out property which they themselves have
rented.
Once you have found a property and agreed on the rental price, then a
private agreement is signed in our office between you (or our firm to
represent you by power
of attorney if you're not in Malta) and the seller. This agreement
will contain all the conditions of the lease. Normally you would have to
pay for water, electricity and telephone charges. If the rent is for a
long period of time (over one year) you would normally have to maintain
the property as far as ordinary maintenance is concerned. You can accommodate
any non-paying guests, even when you're away from Malta, but you cannot
sub-let, assign or make over the rental to third parties.
There are no fees or charges to be paid when the
agreement is signed, saving our legal fee.
Estate agents (or
private brokers) charge one month's rent for their services.
Normally you would
also pay a security deposit to the owner at the beginning of the rental,
equivalent to one month's rent, against unpaid bills, damages etc. and
this is refunded to you at the termination of the lease provided you have
settled all bills, made good for damages etc. The rent contract
would usually include a clause allowing you to terminate the lease at any
moment and in this case you would normally forfeit the deposit paid.
ESTATE AGENTS
In an effort to offer the most comprehensive
service possible, we have negotiated a special arrangement with Malta's leading
estate agent company through which special service is given to our clients
who are looking for property to purchase or rent. The estate agent
will call for you at your hotel, will take you around Malta and show you a
carefully selected choice of properties. We know that at times our
clients are in Malta only
over weekends (or have very little time available) and we have arranged for
the estate agents to
be available to you even on Saturdays and Sundays.
Page last updated on
Copyright 2001: International Beneficiary Services Ltd.
