Malta Property Investments

Malta Real Estate

Malta’s buoyant house price rises over the last five years have been supported by a number of factors: a fast-growing economy, low-interest rates, rising disposable income, an optimistic investor approach and the rising number of foreign workers in the country.

Buying property in Malta
Mortar and bricks have always been a solid investment in Malta, even more so since 2008 when the global recession dug in, and even though property prices went down, the drop was marginal and the market was already on the mend by the end of 2010 and saw a positive increase in 2011. Price stability continued through 2012 and 2013, and has been on the rise ever since.

The influx of foreign nationals moving to Malta, be it to retire, relocate or to work here, has also paved the way for a golden opportunity for a rental investment. The growth of niche industries such as gaming, pharmaceuticals, back-end office operations and financial services has led to a strong surge in demand for rental properties. Local demand has also become a factor with many breaking tradition and opting to rent property ahead of purchasing.

For these reasons, property has been a smart investment choice in Malta, appreciating in the long term, whilst providing a steady income in the form of rental payments in the short term. Factor in the excellent choice of good value property available and attractive interest rates on home loans, and surely the recipe for a solid investment cannot be more fool-proof.

For these reasons, property has been a smart investment choice in Malta, appreciating in the long term, whilst providing a steady income in the form of rental payments in the short term. Factor in the excellent choice of good value property available and attractive interest rates on home loans, and surely the recipe for a solid investment cannot be more fool-proof.

One final aspect to keep in mind when considering a rental investment is that whilst the loan repayment is likely to remain constant over time, inflation and the cost of living are likely to keep rising and population growth and demand for property from overseas will continue. This ultimately drives up rents, especially if supply cannot keep up with demand which is what Malta is experiencing.

The buying process
Purchasing property in Malta is a relatively straightforward procedure and involves two steps. Once the purchase price and other conditions of the transaction are agreed to between the parties, a preliminary agreement is entered into, the duration of which is subject to the agreement
of the parties.

The most common duration being between 3 to 6 months, unless the property still needs to be built in which case the duration will be longer. It is customary for the seller to be paid a 10% deposit on the preliminary agreement by the purchaser, who also needs to pay 1% provisional duty on documents.

Throughout the duration of the preliminary agreement, searches would be made at the Public Registry and Land Registry to confirm that the seller is really the owner of the property and that there are no debts or unknown burdens on the property. Once the searches have been carried out satisfactorily, the final deed of transfer is published whereby ownership of the passes to the purchaser, the seller is paid the balance of the price and the purchaser also needs to pay the balance of duty of documents of 4%.

Property Transfer Tax
A seller who has resided in his or her property (the address of which is listed on their Identity Card), for over three years, does not pay any form of tax (capital gains, local council or municipal tax) when he or she sells their home. However, on selling an immovable property (NOT one’s primary residence), a seller has to pay a transfer tax, today referred to as a Final Withholding Tax on the value of the transfer. In fact, as from the 1st of January 2015, the option of taxing a transfer of property at the rate of 12% onCapital Gains has been done away with. It has now been replaced with a lower rate of final withholding tax of 8%, which is simply calculated on the sale value of the property. There are a few exceptions to this rule in which case the tax is lowered.

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