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Buying a Home in Malta & Gozo

The Republic of Malta is a small country located in the Mediterranean Sea. This Southern European country encompasses Malta, Gozo, Comino and few other uninhabited islands. Malta is located at about 100 kilometers to the South of the Italian island of Sicily and 300 kilometers to the east of North Africa. Malta is a member country of the European Union since 2004.

Malta is blessed with beautiful sunny days almost round the year and the temperature never goes beyond comfortable levels. It rarely rains here and it never lasts for a long duration continuously. The annual rainfall in the country is only around 600mm. Added to this is the low tax structure in the country which will be an additional incentive for foreign investment.

Excellent and healthy weather conditions, cosmopolitan society, beautiful sea coast landscapes, friendly people and good health care facilities are the factors fondly remembered by tourists visiting the country. Many tourists make Malta their annual vacation destination.

Valletta is the capital city of Malta

Malta economy

Malta became popular a transit location for ships after the opening of Suez Canal in the middle of the eighteenth century. The county's economy was at its peak during this period and sustained it for about a decade. With the advent of new generation sea liners, Malta lost its importance.

In recent times, lime stone business and tourism are the major economic activities in the country. Statistics indicate continuous increase in the number of foreign tourists visiting the country. The government has catalyzed this growth by investing on infrastructural facilities to suit the needs and lifestyles of foreign visitors. Liberalization and foreign direct investments have accelerated this growth and now Malta is back to its past economic glory.

Financial transactions

Maltese Lira (MLT) is the authorized currency in Malta. The conversion rate of this currency as on March 1, 2007 is:

1 Maltese Lira = 3.06899 US Dollars

1 Maltese Lira = 1.56507 British Pound

1 Maltese Lira = 2.32188 Euro

Exchange of foreign currency is not at all difficult in Malta, indicating the true cosmopolitan nature of the country. Popular foreign currencies can be exchanged easily in banks, foreign exchange bureaus and large hotels. Some of the foreign exchange bureaus are open 24 hours for the benefit of the customers. Automated foreign exchange machines are also located at many places in the country. Many large shops and restaurants also accept foreign currency. Traveler's cheque can be exchanged in authorized foreign exchange agencies in the country.

American express, Visa, Master card and Diners club credit cards are accepted in the country. Malta has good number of ATM to take care of your cash liquidity, if the need arises.

Infrastructural facilities

Malta's healthcare services are among the best in the world. Services offered in general and private hospitals are excellent. Private schools in Malta mostly follow British system of education and teach in English. Roads in Malta are being improved to make it suitable for international tourism development. The main advantage for UK citizens is that British driving license is valid here and you drive on the left side of the road. Good ferry services connect the islands and there is also a helicopter service connecting Malta and Gazo.

Hotels, restaurants and bars are available in plenty in the country. Malta is also well known for its carnivals and club outings. The infrastructure is so good that international level carnivals can be conducted here.

The county's business infrastructure is excellent with good communication facilities. The government has formulated many incentive packages and tax concessions to attract foreign investment.

Popular locations in Malta

Malta is a small country and all places within Malta can be covered within a day or two. Total area of Malta is around 245 square kilometers and Gozo has an area of just about 70 square kilometers. The length of Malta Island at the widest point is about 25 Kilometers and width at the maximum is just about 15 kilometers. In case of Gozo Island, the figures are 15 and 7 square kilometers respectively.

Malta is frequented by many foreign tourists round the year, mainly from European countries. UK accounts for nearly 50 % of the tourists visiting the country. UK citizens feel at home here because English is spoken a lot here and the weather is predominantly sunny.

Historical places

The country is proud of its long history and there are innumerable historically significant locations all around Malta and Gozo islands. The museums, the palace and churches in Valletta are few representatives of the history of the land.

Sight seeing

Malta has a vast coastal line with beaches that have crystal clear water, long sand stretches and naturally formed small rocky bays. Anchor bay and Paradise bay in the north, Peter's pool and Pretty bay in the south and Ramla bay and blue lagoon in Gozo and Comino are a few such beaches. City tours can be a very beautiful experience. Country side tours are energizing due the unspoiled natural beauty of the area and hospitality of local people.

Sports facilities

Sports lovers will appreciate the sports clubs located in the country offering variety of sports facilities such as tennis, golf, swimming, squash, cricket, indoor games and general health and fitness facilities. Marsa Sports club and Union Club in Sliema are frequented by foreign nationals as the facilities are excellent and of international quality.

Sea diving enthusiasts will love Malta as the sea temperature seldom goes beyond the comfortable range of 13 to 25 degree Centigrade** and the sea around the country is quite calm without any major tides. Excellent diving schools are available in Malta and diving gear can be leased near the beaches. A diving permit is required for divers in Malta.

Yachting is another popular sports activity in Malta. Excellent maintenance and sheltering facilities are available all around the country for all yachts of all sizes.


Malta Real estate

Main considerations for buying a property in Malta are the ambience and the price. In rural surroundings, real estate prices are much less than in the cities. Beach properties are the costliest in Malta. However one is never very far away from the beach considering the size of the country. Gozo island real estate will suitable for foreigners who love leisurely way of life. Many properties here are in rural surroundings and invariably overlook the sea. This is an ideal place for retirement settling.

With tourism activity increasing in the country, buying a property for rental purposes is lucrative. Government approval is required for foreigners to rent a property. Rental returns of five to six percent are feasible and the returns are dependent on the location and condition of the property.

Legal issues Real estate purchase in Malta

The legal system in Malta is based on the English system. The real estate purchase process is straight forward and simple and should not be a hurdle, particularly for foreigners from UK.

Foreigners have certain restrictions for purchasing property in Malta. These restrictions are basically formulated to protect the interest of local residents and keeping in view the limited property available for sale due to small size of the nation.

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People form EU countries that are living in Malta continuously for more than five years can purchase more than one property in the country. There is no need for any government approval

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Other EU nationals who have lived for less than five years in Malta or living elsewhere can purchase single residential or commercial property without any permission

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All other foreigners need permission from the Ministry of Finance for buying a real estate property in Malta

In some notified areas of Malta and Gazo where property prices are very high, no foreigners can freely buy any number of real estate properties without any approval. In case of any doubt on this issue, it is necessary to check with Ministry of Finance before entering into any real estate contract in Malta

Purchasing process

Preliminary agreement

Once a property is identified as suitable for buying, the price is negotiated between the buyer and seller. The logical next step is to sign a preliminary agreement to seal the transaction. The buyer also deposits 10 % of the value of the property as a token of commitment for the purchase. A reliable advocate can help in drafting and finalizing this agreement

This finalization of this agreement generally takes about three months. This time can be utilized fruitfully for getting the government approval for the purchase and to complete the research on the property ownership and registration.

Purchase contract

Once the buyer is satisfied that the property is legal and the permission for the purchase is in place, the next step is to sign the final contract. The buyer's lawyer generally prepares this document. The contact is signed by both the parties. All the payments that are due are settled by the buyer and the document is registered with the appropriate agency in order to legalize the change of ownership.

Stamp duties, legal fees and all other dues are settled by the buyer. The total time taken for the entire process is normally around five months. UK citizens will cherish the fact that the complete documentation is in English language.

Real estate purchase finance

The ideal arrangement to finance your purchase is through your own funds but this is seldom the case. Property mortgage is readily available in Malta and the banks finance up to 90 % of the funds. However the repayment period and interest levels in Malta are higher than in the United Kingdom. Banks in UK can also finance your real estate project in Malta.

The quantum of funds required, preferred repayment period, repayment capacity, forecasted foreign exchange rates etc are some of the factors that can influence the final decision for the mortgages. It is preferable to consult an expert in the relevant area for calculated decision in this regard.

Cost of purchasing

Buyers often tend to forget that additional costs, other than the negotiated purchase price can inflate the total cost of the purchase. Buyers should always compare the *total* cost with their allowable budget to make the final decision on the purchase of the property.

Real estate transactions attract a stamp duty of 5 % in Malta and notary fee of 1 %. In addition to this, if the services of an advocate or agents are utilized in the process they have to be paid the appropriate fee. It is a good practice to define their roles and fee in advance to avoid any misunderstanding when the amount is paid. Traveling expenses, hotel accommodation and all other incidental expenses also need to be considered to arrie at the total cost.

It is reasonable to allocate around 12 % of the purchase price for additional costs and other expenses. You may finally end up with little surplus money in hand which will be a good thing.

If the property requires remodeling, provision has to be made for such expenses also in the budget.

Malta property taxes

Foreigners will be happy to note that there are no annual taxes on real estate properties in Malta. Malta does not levy any capital gain tax. However one should be careful before selling the property. If the owner sells a property that was not his primary residence for the last three years, a hefty amount is charged as transfer tax.

There is no inheritance tax in Malta as long as there inherited property is not sold. But transfer tax is levied if an inherited property is sold.

Travel documents

As Malta is an EU member since May 2004, there is no restriction for EU nationals to tour the country. Many country nationals can stay for up to three months as tourists in Malta with a valid passport with no visa. Check with the embassy in the home country and get a complete list of the documents required before traveling to Malta.

Foreigners, who wish to reside permanently in Malta, must apply for a residency permit. Proof of sufficient funds or annual income has to be provided as a support document when applying for this permit. If a foreigner wants to work or start a business in the country, government permission is required.

Malta may make a difference

If you are looking for real estate in a sunny country, rich in culture, Malta is the right choice. Low taxes, relaxed life styles and popularity of the English language are very compelling reasons for a UK citizen to consider looking for a second home in Malta and Gozo islands.