Malta The Maltese islands are the ideal home in the Mediterranean since they have managed to blend their rich historical past with a modern way of living. With its location in the middle of the Mediterranean, Malta is well used to being invaded, back as far as the Romans. However, the next invasion of the island won't be by bloodthirsty empire builders but by property investors attracted by its history, climate and cheap property prices that are among the lowest in Europe.

Sliema is a modern commercial centre with apartment blocks towering the shore line. Apart from its natural beauty, peaceful way of life, rich in cultural and historical heritage and warm hospitality, it has a lot to offer. Situated in the middle of the Mediterranean Sea south of Sicily the Republic of Malta consists of seven islands, although only three are inhabited: Malta, Gozo and Comino.

The population of Malta is estimated at only 404,039 and the small capital of Valletta is home to only 6,315 people. However the island is far from lonely as the population density is recorded as 1,282 per square kilometre, which is one of the highest in the world. For tourists, the island has proved equally popular. 1,124,233 people visited Malta in 2006 and it ranks as the 49th most popular tourist destination. The number of foreigners buying in Malta has grown by 35% in recent years.

Malta joined the EU in 2004 and adopted the Euro in January 2008.

Malta in the EU includes links to Maltese government sites and Tourist Information.

How to Buy Property: For local development there are many English newspapers such as The Malta Financial and Business Times and The Malta Independent. There are many local estate agents and it is safest to use those accredited by the Federation of Estate Agents in Valletta, the Federation of Overseas Property Developers, Agents and Consultants or the Association of International Property Professionals. There are restrictions on buying property. EU citizens can only buy one property in Malta or Gozo, except in the 'Specially Designated Areas' [SDAs], where there are no limits. These are usually up market areas where prices are growing fastest and demand is high.

 

Restrictions: If you are seriously considering buying a property in Malta, there are some legal restrictions that you should be aware of. Foreigners are entitled to purchase only one residential property in Malta or Gozo (unless one purchases in a Special Designated Area such as e.g. Portomaso) on acquiring an Acquisition of Immovable Property Permit (A.I.P Permit) from the Ministry of Finance, which normally is issued within three months. Subject to the conditions listed below:

  • The purchase price must be at least 99.000 in the case of an apartment and Lm 165,024 in the case of a house. However, if the property you have your eye on is a renovation project, you may be able to secure the deal for under these price brackets, providing that you spend the difference on the renovation works.
  • Proof that funds for the purchase of the property have originated from abroad
  • The property is for the sole residential use of the purchaser and his immediate family or guests when accompanied by the owner. The residence may only be rented out if the property enjoys the use of a swimming pool, provided that the property is licensed as holiday accommodation by the Hotels and Catering Establishments Board or if the property purchased is in a Special Designated Area.

Properties outside the SDAs can only be used for personal use and a second property can only be bought after residing on the island for five years. When buying the first step is to get a notary and once a property has been chosen they will set up the agreement. Upon signing, a deposit of 10% is usually paid.

The SDAs are located around Portomaso, Cottonera Waterfront and Sellum Village up market areas where rental return is good and demand for property high. The Northern part of the island around Bugibba, St Paul's Bay and Qawra are very popular for holiday apartments. Gozo, the smaller island, has been enjoying growing popularity as it is more rural and quieter than Malta.

The above restrictions were introduced by the government in order to protect locals from being priced out of the market, which seems sensible taking into account the small size of the islands.

The Rental Market: Average rental yields are around 6.9% for properties in Valetta and a little higher in Gozo. As a result of the building boom there is now an over supply of apartments, therefore rental yields have been stagnant for about 10 years and have gone down in some areas.

Foreigners can only rent their property if it is valued over 233,800, it has a pool and it is officially registered with the Hotel and Catering Establishments Board. Foreigners can also only rent their properties on a short term basis. The best rental properties are two-bed apartments at least 120sq m and situated in the SDAs.

Re-sale: Foreigners can only sell their Maltese properties to Maltese citizens. They can only sell to other foreign nationals if a Maltese or EU buyer is unavailable.

 

 

Mortgages/Loans: Mortgages in Malta are relatively easy to arrange, with lenders such as Bank of Valletta, APS Bank, Lombard Bank and HSBC who are used to dealing with British buyers. It is possible to borrow up to 90 per cent of the purchase price, but this really depends on the amount that you want to borrow, and what your existing financial commitments are. The minimum loan amount is around 20.000 but, no matter how much you decide to borrow, you will always have to provide proof of income.

Once you have secured a local mortgage, it is possible to re-finance but only if the purpose of this is for home improvements on that particular property.

The length of loans also tends to be lower than in the UK, around ten to 20 years, and interest rates are generally higher (around seven per cent). Repayment and interest-only mortgages are available. Therefore it would be worth considering raising the finance for your Maltese home in the UK, either with a British mortgage or by releasing equity in an existing property.

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Disclaimer: This guide is for information only and should not be relied upon as definitive. Details have been obtained from various sources and although we have done everything possible to ensure that it is correct, we cannot accept responsibility for it or guarantee its accuracy. This is because processes and laws change frequently, and may also vary dependant upon personal circumstances. You are welcome to use the information provided, but should always obtain confirmation of specific details and get independent specialist and legal advice in the country that the information refers to.

24-10-2009