Malta Property Purchase

Malta Property Purchase

Property has proven to be a steady investment to most persons who seek a high return on their investment. Due to its Mediterranean climate, its political and economic stability, its relatively cheap cost of living and diverse property market, Malta has recently become popular when buying property. The wide variety of properties in Malta and Gozo ranging from high-end villas to houses of character, maisonettes, townhouses, and apartments as well as the different zones which are offered, cater for all types of buyers.

The process of buying property in Malta

Acquisition of property in Malta is carried out in three main stages:

  • a promise of sale agreement
  • the term in between the promise of sale agreement and the final deed
  • the final deed of sale

In Malta, these stages, despite being relatively straightforward, are carried out with the assistance of legal advisors, mainly to ensure that the rights of those involved are safeguarded.

The procedure for buying property in Malta is mainly as follows:

  1. Choosing a property and agreeing on the price with the seller
  2. Drawing up and negotiating the terms of the Preliminary Agreement of Sale that is acceptable to both parties
  3. Signing the Preliminary agreement of sale (by seller and purchaser, or their legal representatives if power of attorney is given)
  4. The Promise of sale agreement is normally valid for three months, but a longer or shorter period can be agreed upon
  5. A deposit of 10% of the purchase price is imposed on the buyer when signing this contract. If the sale is not complete, this is forfeited in favour of the vendor
  6. The conditions held in the contract must be fulfilled
  7. The final deed of sale is signed and the keys of the new property are passed on to the new owners.

The Promise of Sale

As a form of preliminary agreement, the promise of sale (also referred to as ‘il-konvenju’) lays down the main conditions under which the property will be purchased. Once these negotiations have been agreed upon by the legal representatives of the buyer and seller, the contract is drawn up and signed. In the case where the buyer or seller are not physically present when signing, it is essential that the legal representative is authorised through the power of attorney to sign on behalf of his client, accepting the negotiations agreed upon.

A standard promise of sale provides:

  • Details of the contracting parties;
  • Detailed description of the property;
  • Details on payment of a deposit;
  • Minimum conditions surrounding the purchase;
  • Agreement on the remaining works to be undertaken (if any);
  • Clauses on payment due to the estate agent (if any);
  • Condition that on final deed, the vendor will warrant peaceful possession according to law;
  • Date by which the Final Deed needs to be signed;
  • Authority to the Notary Public to register the promise of sale with the Commissioner of Inland Revenue.

This contract has a term of validity of three months (90 days) unless the parties agree on a shorter or longer period of time. This period is essential to ensure that all conditions listed down in the promise of sale are satisfied, in order for the final deed to be fulfilled. Such conditions normally include the agreement that the property is to be transferred in good title and that there are no court orders or third parties which may prevent the sale or grant of an absolute and proper title and that the property is vacant. The Notary Public and the relevant legal advisors would carry out the necessary searches to ensure that these conditions are satisfied. In the case where the buyer wants to take a loan, it is suggested that one of the conditions held in the contract is that the final deed of sale is made conditional on the issuance of the confirmation letter sent from the bank guaranteeing that the loan has been granted.

Upon signing the preliminary agreement, the prospective buyer must transfer 10% of the value of the property, which will be held in escrow, to the Notary Public appointed by the purchaser. This deposit will subsequently be given to the seller upon signing the final deed of sale. The legal representatives must ensure that the promise of sale agreement takes the form of writing, where the document must be registered and a provisional duty of 1% of the purchase price is paid within 21 days, this will later be paid to the Inland Revenue Department.

Malta Property Purchase by non-Residents

In particular cases, the Immovable Property (Acquisition by non-Registrants) Act holds that an Acquisition of Immovable Property Permit (AIP) is required for certain persons wishing to buy property in Malta. This applies to:

  • Persons who are citizens of a European Union Member State, but who have not resided in Malta for 5 years. Such person can only purchase their primary residence or any immovable property required for their business activity or supply of service. An AIP Permit is required if they want to acquire immovable property for secondary residence purposes.
  • Individuals who are not citizens of any Member states in the EU, who may only acquire immovable property if a permit has been granted.
  • Any body, association of persons, and any authority/institution/organisation/fund or any other form of entity, whether corporate or not, if it has been registered or incorporated under the laws of a state other than Malta or any other Member State; or has its registered address outside of Malta or any other Member State;  or has 25% or more of its share or other capital owned by a non-resident or is registered in the name of a trustee for the benefit of a non-resident person, or finally, is directly or indirectly controlled by one or more non-resident persons.
  • Any trustee who is: a non-resident, unless all beneficiaries of the trust are determined and are residents of Malta, or in the case of a discretionary trust, power of appointment or discretion is exercised in favour of residents of Malta; a resident of Malta, where any of the beneficiaries are non-resident persons, and in the case of discretionary trusts, the power of appointment or discretion is exercised in favour of any non-resident person.

Once it has been established that the AIP applies to the person involved, the immovable property in question must also satisfy certain requirements:

  • The minimum property price to purchase the property is €110,938 for a flat or maisonette, €169,850 for a villa or house, or €184,469 for any other type of immovable property
  • It must be used for residential purposes
  • The property in question must not be sold in part or into more than one dwelling house, and cannot be rented out
  • The property cannot be of historical interest or situated in a historical area

The law holds that non-residents are only allowed to purchase one immovable property in Malta unless such property is situated in Special Designated Areas, where there are no restrictions on acquisition. The applicant must also provide documentary evidence proving satisfaction of the Central Bank of Malta prior to the signing of the contract and a copy of the notarial deed must be provided to the AIP section upon its publication

If the conditions required for the purchaser and the property are satisfied, the Inland Revenue Department holds that the permit shall be issued within 35 days. Along with the application, the applicant must also attach: 2 passport-sized photos; a copy of the promise of sale and a copy of their passport showing details. Once the permit has been issued, a fee of €233 is to be paid.  

If it is the case that legal persons, which are established and operate in the EU and are directly controlled by citizens of an EU Member State, wish to purchase immovable property, they can do so freely if it is to be used for the purpose which the company has been set up for. Commercial partnerships which are established and operate in the EU may also freely acquire immovable property, provided that at least 75% or more of its shareholdings are held by one or more EU citizens. In any other case, property purchase by legal bodies is not allowed, unless the Minister issues a specific permit if he believes that the property will contribute to Malta’s economic development.

The Final Deed of Sale

Upon the fulfillment of all the conditions stated in the Promise of Sale, the Notary Public will issue a final deed of sale, which must be signed by both parties involved. The transfer that had been held in escrow during the Promise of Sale is now paid to the vendor, and any remaining duty is paid to the Commissioner of Inland Revenue. If the buyer had taken out a bank loan, it is required that a bank representative signs the relevant documentation on the final deed of sale. In this case, the final deed is divided into two parts: the agreement for the purchase of the property, and the agreement between the bank and the purchaser. The Notary Public is subsequently responsible to register the transfer at the Public Registry or the Land Registry, this will make the agreement public.

If the conditions in the Promise of Sale has not been fulfilled, the law holds that serious liabilities will apply for the party in question.

Applicable Taxes and Fees:

The costs incurred on the purchaser include:

  • The payment of approximately 1% of the price of the immovable property to the Notary Public
  • The payment of stamp duty, which is typically 5% of the purchase price or the value of the property. 20% of the total stamp duty must be paid upon the Promise of Sale Agreement, the rest is paid upon the deed of purchase. This may be reduced to 3.5% on the first €116,000 upon the acquisition of the property if it is the purchaser’s sole residence and an AIP is not required.

The government has recently introduced an incentive for First-Time Buyers, where purchasers are exempted from stamp duty on the first €150,000. This applies to both Maltese Nationals as well as foreigners. Another incentive is the reduction of stamp duty for residential properties bought in Gozo, provided that the relevant criteria are satisfied.

Our Services:

Chetcuti Cauchi’s Property Law team is well versed to assist during the purchase and transfer of property process as well as the drafting and vetting of all documents with suppliers, agents, and contractor. Subsequently, we will also ensure that the condominia involved are in line with Malta’s rules and regulations. Our services also include any form of dispute resolution, including any court settlements.

Our team is proficient in:

  • Managing a real estate portfolio
  • Providing trust and financial management
  • Overseeing any real estate transactions in Malta
  • Providing consultation regarding any residential, commercial or mixed-use industrial property acquisition; any sale or lease; any residential, tourism and industrial real-estate development
  • Applying for any permits
  • Drafting, reviewing and negotiating the terms of preliminary agreements and deeds of sale in Malta.
  • Conducting the necessary legal searches and tracing of the seller's title to the property to ensure that the property rightfully belongs to him and that it is not affected by any liabilities (hypothecs, privileges, etc.) burdening the property.
  • Instructing an architect to check whether all the necessary planning permits are in place and to ensure that the property is vacant so that you can take up immediate possession, and to estimate the purchase price of the relevant property
  • Applying for an AIP permit (the Government authorisation required by non-resident seeking to acquire property in Malta. A process of 1-3 months.
  • Drafting of a Maltese will to govern your property in Malta.


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