Real Estate
The term ‘real estate’ essentially refers to what is commonly known as the notion of ‘Immovable Property’ in most civil law systems. Under Maltese law, immovable property is primarily dealt with in the Civil Code and is primarily governed by the provisions of the Second Book of the Maltese Civil Code (Chapter 16 of the Laws of Malta).
Other laws relating to specific aspects of real estate in Malta include the Duty on Documents and Transfers Act, Land Registration Act, Development Planning Act, Immovable Property (Acquisition by Non-Residents Act) and the Special Development Areas Act.
Renting Immovable Property in Malta
The rental of immovable property is generally a fairly simple process, which usually involves a written lease agreement setting out the general terms and conditions governing the rental of the property in question. Whilst such terms and conditions are left to the discretion of the parties negotiating the contract, they typically include a description of the property, the payment of rent, the lease period and the provision of any security or a deposit.
Purchasing Immovable Property
Where property is purchased, the acquisition process typically involves a preliminary agreement or promise of sale agreement (konvenju), in terms of which the parties mutually undertake to enter the final deed of sale, subject to the satisfaction of certain specific conditions which must be clearly stated in the preliminary agreement. A sum of 10% is usually paid on this preliminary deed, either by way of deposit on account of the price or by way of earnest, which is normally retained by the Notary Public responsible for the publication of the final deed of sale, by the vendor or by any other person nominated for this purpose by the parties in the preliminary agreement. The preliminary agreement must be registered with the Inland Revenue Department within 21 days of its execution at which time 1% stamp duty must be paid to the Commissioner of Inland Revenue.
The preliminary agreement usually has a valid duration of three months. Once everything is in place i.e. legal title to the property concerned is established through the necessary searches and any financing or AIP formalities (see below) are taken care of, the final contract of sale will be drawn up. Transfer of ownership occurs when the final contract is published and signed by the vendor, purchaser and the notary public at which stage the balance due on selling price and the remaining balance due to the Commissioner of Inland Revenue by way of stamp duty are inter alia paid.
Acquisition of Immovable Property by Non-Residents
In terms of the Immovable Property (Acquisition by Non-Residents) Act (Chapter 246 of the Laws of Malta) (the ‘Act’):
– Citizens of all European Union member states, including therefore Maltese Citizens, who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining a permit under the Act;
– Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years may only purchase their primary residence or any immovable property required for their business activities or supply of services without the necessity of obtaining a permit under the Act;
– Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years, require a permit under the Act to acquire immovable property for secondary residence purposes.
– Individuals who are not citizens of a European Member state may not acquire any immovable property unless they are granted a permit in terms of the Act;
– There are no restrictions to acquisition where property is purchased in defined zones in Mata, referred to as special designated areas or where the acquisition is through inheritance;
– With respect to acquisitions by bodies of persons, other than commercial partnerships, established in and operating from an EU member state, as long as they are directly controlled by citizens of an EU member state, they may freely acquire immovable property that is required for the purpose for which it has been set up.
– A commercial partnership established in and operating from a European Union member state (therefore including Malta) may freely acquire immovable property that is required for the purpose for which it has been set up and at least 75% of its share capital is held by a person (or persons) who is a European Union Member state citizen.
– Any other body of persons will require a permit which is only granted if the property is required for an industrial or touristic project or as a contributor to the development of the economy of Malta.
David Zahra & Associates Advocates is in a position to advise and represent both local and foreign clients in the purchase, sale and letting of immovable property in Malta, including by:
– Negotiating and drafting the promise of sale, final deed and letting contract agreements;
– Conducting and reviewing searches at the Public Registry and the Land Registry;
– Recommending and liaising with notaries for the publication of the final deed;
– Assisting non-resident buyers with AIP permits;
– Conducting the necessary arrangements leading to the conclusion of the final deed of sale, such as assisting clients in obtaining banking facilities; and
– Providing tax planning and tax compliance advice.
The term ‘real estate’ essentially refers to what is commonly known as the notion of ‘Immovable Property’ in most civil law systems. Under Maltese law, immovable property is primarily dealt with in the Civil Code and is primarily governed by the provisions of the Second Book of the Maltese Civil Code (Chapter 16 of the Laws of Malta).
Other laws relating to specific aspects of real estate in Malta include the Duty on Documents and Transfers Act, Land Registration Act, Development Planning Act, Immovable Property (Acquisition by Non-Residents Act) and the Special Development Areas Act.
Renting Immovable Property in Malta
The rental of immovable property is generally a fairly simple process, which usually involves a written lease agreement setting out the general terms and conditions governing the rental of the property in question. Whilst such terms and conditions are left to the discretion of the parties negotiating the contract, they typically include a description of the property, the payment of rent, the lease period and the provision of any security or a deposit.
Purchasing Immovable Property
Where property is purchased, the acquisition process typically involves a preliminary agreement or promise of sale agreement (konvenju), in terms of which the parties mutually undertake to enter the final deed of sale, subject to the satisfaction of certain specific conditions which must be clearly stated in the preliminary agreement. A sum of 10% is usually paid on this preliminary deed, either by way of deposit on account of the price or by way of earnest, which is normally retained by the Notary Public responsible for the publication of the final deed of sale, by the vendor or by any other person nominated for this purpose by the parties in the preliminary agreement. The preliminary agreement must be registered with the Inland Revenue Department within 21 days of its execution at which time 1% stamp duty must be paid to the Commissioner of Inland Revenue.
The preliminary agreement usually has a valid duration of three months. Once everything is in place i.e. legal title to the property concerned is established through the necessary searches and any financing or AIP formalities (see below) are taken care of, the final contract of sale will be drawn up. Transfer of ownership occurs when the final contract is published and signed by the vendor, purchaser and the notary public at which stage the balance due on selling price and the remaining balance due to the Commissioner of Inland Revenue by way of stamp duty are inter alia paid.
Acquisition of Immovable Property by Non-Residents
In terms of the Immovable Property (Acquisition by Non-Residents) Act (Chapter 246 of the Laws of Malta) (the ‘Act’):
– Citizens of all European Union member states, including therefore Maltese Citizens, who have resided in Malta continuously for a minimum period of five years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining a permit under the Act;
– Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years may only purchase their primary residence or any immovable property required for their business activities or supply of services without the necessity of obtaining a permit under the Act;
– Citizens of all European Union member states, including therefore Maltese Citizens, who have not resided continuously in Malta for a minimum period of five years, require a permit under the Act to acquire immovable property for secondary residence purposes.
– Individuals who are not citizens of a European Member state may not acquire any immovable property unless they are granted a permit in terms of the Act;
– There are no restrictions to acquisition where property is purchased in defined zones in Mata, referred to as special designated areas or where the acquisition is through inheritance;
– With respect to acquisitions by bodies of persons, other than commercial partnerships, established in and operating from an EU member state, as long as they are directly controlled by citizens of an EU member state, they may freely acquire immovable property that is required for the purpose for which it has been set up.
– A commercial partnership established in and operating from a European Union member state (therefore including Malta) may freely acquire immovable property that is required for the purpose for which it has been set up and at least 75% of its share capital is held by a person (or persons) who is a European Union Member state citizen.
– Any other body of persons will require a permit which is only granted if the property is required for an industrial or touristic project or as a contributor to the development of the economy of Malta.
David Zahra & Associates Advocates is in a position to advise and represent both local and foreign clients in the purchase, sale and letting of immovable property in Malta, including by:
– Negotiating and drafting the promise of sale, final deed and letting contract agreements;
– Conducting and reviewing searches at the Public Registry and the Land Registry;
– Recommending and liaising with notaries for the publication of the final deed;
– Assisting non-resident buyers with AIP permits;
– Conducting the necessary arrangements leading to the conclusion of the final deed of sale, such as assisting clients in obtaining banking facilities; and
– Providing tax planning and tax compliance advice.
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© 2022 – DAVID ZAHRA & ASSOCIATES ADVOCATES
Designed and developed by Blonde and Giant
© 2022 – DAVID ZAHRA & ASSOCIATES ADVOCATES
Designed and developed by Blonde and Giant