Our aim always is to make buying a home a delightful and convenient experience. We believe that a high percentage of the population investing in property is a once or twice in a lifetime project. Therefore, Fairwise Real Estate Agency offers its clients professional service related to all aspects of the real estate business. This includes financial, legal and architectural advice on both residential and commercial sales and rentals. We make sure that each cent spent on your property is worthwhile.
Fairwise database of property listings incorporate both residential and commercial investments in various locations around the Maltese islands. Residential properties include villas, farmhouses, terraced houses, character homes, maisonettes, penthouses and apartments. Commercial properties comprise of warehouses, offices, retail outlets, catering outlets, and other business premises.
Purchasing a property in the Maltese Islands requires a different process according to your nationality. There are different procedures for Maltese Nationals and Foreign Nationals. The following links describe exactly the relevant procedures.
Procedures to purchase immovable property for a Maltese National
One of the most complex and important financial events in peoples' lives is the purchase or sale of a home or investment property. As a result, people usually seek the help of real estate agents and brokers when buying or selling real estate. Real estate agents and brokers have a thorough knowledge of the real estate market in their community. They know which neighborhoods will best fit clients' needs and budgets. They are familiar with local zoning and tax laws and know where to obtain financing. Agents and brokers also act as an intermediary in price negotiations between buyers and sellers.
When one wants to purchase any kind of property, a number of points have to be taken into consideration. We feel that purchasing your residence is one of the most important decisions you will ever make. It is a decision not to be taken lightly and must be well thought out. It is important that you seek professional help as you might not be aware of your rights and limitations.
Before you start looking for immovable property you have to consider the following:
- Previously owned property or preference of property to live in
- Size and type of property you require.
- Financing the purchase.
- Services, Transport, amenities and schools.
- Your tastes - modern, antique, character, etc.
These points above require serious thought and should be related to knowledge, prices, values, necessities and affordability. One has to give enough details to help the consultant to assist you in finding the right property that suits your requirements. As well as carrying out negotiations on your behalf, the consultant will conclude a deal satisfactory to all parties.
Once the immovable property is chosen and an agreement is reached with the owner, do confirm the following before a promise of sale agreement (convenium) is entered into:
- Price.
- Ground rent.
- Extras included within the price.
- Payment Terms
- Works to be undertaken by owner.
- Term of the Promise of Sale agreement.
A notary public has to be appointed and the promise of sale agreement can be drawn up after the above points are clear and agreed upon to your satisfaction, The promise of sale agreement will contain all the relevant points that were previously agreed upon including:
- Price.
- Ground rent.
- Furniture, kitchen and any other movable included in the price.
- Conditions agreed by the parties to the agreement i.e. subject to bank loan, subject to building permit, subject to architect's approval etc.
- Deposit, on account. It is normal practice for the sum equivalent to ten percent of the purchase price to be paid as a deposit on account as a sign of goodwill by the purchaser and their intention to appear on the final deed of purchase. Please note that earnest (not deposit on account) is less binding as neither party can oblige the other to appear on the final deed of purchase. The penalty is limited to the sum of the earnest.
- Term i.e. when the final deed can be signed. A promise of sale agreement without a term stated is valid for three months.
- The purchaser, vendor and property in question must be identified clearly in the promise of sale agreement
It is important to be aware that the deposit is forfeited in favor of the vendor if the purchaser does not appear on the final deed without a valid reason at law.
During the term of the promise of sale agreement the notary and the parties involved must fulfill certain duties and obligations. The notary researches the property and verifies legal title and assures himself that there are no outstanding debts, hypothecs, or liens on the property. The purchaser must honour all his conditions contained in the promise of sale agreement, such as bank loan applications and building permit applications within specified time frames. The vendor must honour all his conditions contained in the promise of sale agreement, such as finishing or refurbishing works within specified time frames.
The notary drafts the final deed, prepares it for signature and notifies the parties concerned. Once every condition of the promise of sale agreement is complete and all duties fulfilled, all parties get together to sign the final deed. The normal procedure is the following:
If a bank loan is required for the purchase, the final deed is signed at the bank. The contract of purchase is read out and if all is in order all the parties concerned sign it. The balance due i.e. the purchase price less any deposits paid on account is paid to the vendor. The parties concerned settle their relative expenses concerning the purchase. Keys to the property are passed on to the purchaser. The notary public registers the contract at the public registry (and land registry if applicable)
The information contained in this page is general and it is important to note that certain cases require more work and knowledge depending on the situation. Most clients purchase property once or twice in a lifetime whilst notaries and estate agents go through the motions on a daily basis. We feel that a professional agency and a competent notary public are a necessity to avoid mistakes or erroneous decisions. We are at your service for any information or advice you might need regarding both selling and buying all kinds of immovable property.
Expenses on selling or buying immovable property
Upon the transfer of immovable property the following expenses must be taken into consideration:
Purchaser
3.5% stamp duty is charged on the first Lm30,000 (thirty thousand Maltese liri) of the immovable property contract price. This concession is applicable only on the purchase of one's place of residence and subject to the purchasers not having other property to their name.
5% stamp duty is charged on the amount greater than Lm30,000 (thirty thousand Maltese liri) of the immovable property contract price, or on the full price if the concessions mentioned previously are not applicable.
Approximately 1% of the immovable property price is due to the notary who is usually chosen by the purchaser.
On immovable property subject to ground rent, a recognition fee equivalent to one year's ground rent is due upon the signing of the contract of sale. This fee is payable just once and is due to the owner of the said ground rent
If the present owner is imposing the ground rent, no recognition fee is due to the vendor but stamp duty amounting to Lm100 (one hundred Maltese Liri) is due on every newly imposed ground rent up to Lm100 (one hundred Maltese Liri).
Vendor
7% of the immovable property contract price is charged as a provisional capital gains tax. This provisional tax is always due, with the following exceptions:
a) If the immovable property was inherited and is being sold for the first time since it was inherited.
b) If the immovable property was the vendor's primary residence for the previous three years.
c) If it can be proved that no profit on the sale has been made.
One must bear in mind that, as a provisional tax, the 7% forms part of the vendor's annual income and ultimately the amount to be paid can be lesser or greater, depending on how much the immovable property was purchased for, the expenses incurred (against receipts) and how much it is being sold for at present.
Naturally, every case must be taken upon its' own merits. We would be in a better position to advise the vendor when the immovable property is placed on our books.
Estate agency fees
Fairwise Real Estate Agency charges NO COMMISSION to the buyer. The seller usually pays 5% of the selling price in the case of a multiple-agency agreement, and 3.5% of the selling price in the case of a property benefiting from a sole agency agreement.
One has to note that the expenses listed above are all due upon the signing of the final contract. Stamp duty and capital gains tax are collected by the notary in the form of bank drafts to be passed on to the respective government departments. Notarial and estate agency fees are paid directly there and then.
Procedures to purchase immovable property for a Foreign National
In Malta, foreign residents form quite a large community. They are warmly welcomed by the Maltese nationals who easily integrate them in their local social and cultural life.
Non-Maltese can purchase property for use as a residence or holiday home in Malta or Gozo. The Government of Malta implemented schemes which make Malta an attractive destination. There are several financial advantages of owning real estate in Malta which include the exceptionally good value for money of property. Also, residents enjoy a relatively low cost of living. There are no annual property rates or taxes in Malta.
Malta has a double Taxation Agreement with most western Countries and these generally ensure that a move to Malta results in tax advantages. Pensions are freely transferable to Malta. Relations with the European Union are particularly close and in some cases, besides a Double Taxation Agreement, there exist Reciprocal Health Agreements resulting in treatment at nominal or reduced cost. Residency requirements are modest and offer appreciable tax advantages.
In a further effort to encourage more foreigners to purchase property in Malta, the Maltese Government has nominated so far three (3) areas as Designated Areas . These are:
- Chambray in Gozo
- Portomaso in St Julians
- The Cottonera
In these areas the regulations are more liberal. Even foreign companies are allowed to purchase real estate. Tthe properties can be rented out and the use of the property is more generous; besides, there is not limit to the number of properties one can purchase in a designated area.
A foreigner purchasing property in Malta must satisfy the following conditions:-
- A permit for the Acquisition of Immovable Property (AIP) to the Ministry of Finance. This permit is normally granted within two or three months from date of application.
- The property purchased must be solely as a residence for the applicant and his/her family. It may not be rented to third parties, but guests may be accommodated. A Villa or House of Character with swimming pool in specially designated area may only be rented out.
- Documentary evidence satisfactory to local exchange control authorities must be produced prior to the signing of the final deed of sale showing that the funds used for the acquisition of property have originated form the external source.
- The immovable property shall not be transferred except to a resident of Malta. This condition is however waived when efforts to re-sell the property to a resident of Malta have proved unsuccessful.
- Applicants may only own one property in Malta and Gozo. Permission to purchase another property will be granted subject to the first property being sold.
New Regulations have established minimum price to be paid by non-Maltese purchasing property, namely:
- Lm 30,000 for an apartment or maisonette
- Lm 50,000 for a house
In the event of the property being sold, all the proceeds may be repatriated overseas.
Residency Rules apply. (explained below)
Malta recognises three levels of residency:
i. Non-residence
ii. Temporary Residence
iii. Permanent Residence
The costs incurred when purchasing a property are as follows:-
- Duty on documents equivalent to 5% of the purchase price of the immovable property [please note that no stamp duty shall be payable on fixtures/fittings or furniture (if any)].
- Lm100 payable to Ministry of Finance [for application or The Purchase of Immovable property (AIP)].
- Approximately 1% Notary fees.
N.B. - A foreigner may repatriate all the funds from the sale of their property.
Further Information may be obtained from the Department for Citizenship and Expatriate Affairs, 3 Castille Place, Valletta CMR 02, Malta. Telephone Nos +356 2122 6268 or +356 2125 0577.