Procedure for Purchasing Property in Malta
When the immovable property to be purchased is chosen and agreed upon, a Notary Public is appointed to draft a Promise of Sale. The promise of sale is a document wherein the vendor promises to sell and the purchaser promises to purchase the property agreed upon, for the price and subject to the terms and conditions agreed upon, within a certain period of time. Upon the signing of the promise of sale the purchaser normally pays 10% of the purchase price to the Vendor as deposit.
The tax due on the final deed of sale is of 5% of the purchase price, or 3.5% in the case of EU citizens who are purchasing the first property for the purpose of establishing therein their sole and ordinary residence. On the promise of sale, an amount of 1% of the value of the property is payable on account of duty on documents. This is required for registration of the promise of sale with the Inland Revenue and is a requisite for the validity of a promise of safe for the period exceeding 21 days from when it is signed.
During the time of the promise of sale the following is carried out:
• The Notary orders the searches of the vendor and the prior owners to verify the legal title and to ensure that there are no outstanding debts or other burdens on the property;
• If the Purchaser is a Non-EU citizen, or an EU citizen who has not resided in Malta for a five year continuous period during his lifetime, unless in the latter case such EU citizen intends to establish his primary residence in Malta, the Notary needs to apply for an AIP (Acquisition of Immovable Property) permit;
• The promise of sale may be subject to a bank loan, in which case the purchaser needs to liaise with a bank to obtain a loan facility;
• If the Vendor agreed to finish the property, he must follow the specifications stipulated in the promise of sale.
On the final deed the actual transfer of the property takes place, subject to all terms and conditions agreed to in the promise of sale. The balance of the purchase price and of the tax are paid at this stage. If the purchaser required a bank loan to pay the final balance, the bank’s representative appears on the deed to grant the loan and the property is normally hypothecated in favour of the bank. At this stage the keys are passed on to the Purchaser. After the signing of the deed, the Notary registers the deed in the Public Registry and in some cases in the Land Registry.
AIP Permit
The AIP (acquisition of immovable property by non-residents permit) is required for the following category of persons to be able to purchase property in Malta:
• Individuals who are not citizens of a European Union member state;
• Citizens of an EU member state who have not resided in Malta for a continuous period of at least five years at any time preceding the date of acquisition, unless they are purchasing their primary residence in Malta.
The AIP permit is granted under certain emotions:
• The property purchased must not be less than a minimum purchase price established by law. In the case of an apartment/maisonette the minimum price is €98,351, in the case of a villa/terraced house it is €163,918. This amount may vary from time to time;
• Purchasers can only purchase one property, except in Special Designated Areas;
• The immovable property is to be used for residential purposes;
• The immovable property may not be sold in part or otherwise into more than one dwelling house.
