Situated in the heart of the Mediterranean, Malta offers a dynamic real estate market with diverse investment opportunities for both local and international investors. This guide delves into the Maltese property purchasing laws and procedures, with a focus on the benefits of investing in Special Designated Areas (SDAs) and the charm of non-SDA properties.

Special Designated Areas (SDAs)

Special Designated Area (SDA) status allows both EU and non-EU nationals to buy property in designated locations without a permit. They can also rent these properties to generate rental income and benefit from long-term capital growth. SDA properties are sought after for their luxury and prime locations, offering a variety of residential options like studio apartments, two-to-three-bedroom units, penthouses, and standalone homes.

Most SDAs offer access to amenities such as gyms, pools, spas, concierge services, and private parking, enhancing the appeal of these developments. They are often located near commercial centers and provide beautiful views and high-quality finishes tailored to buyer preferences, aimed at those prioritizing comfort and quality of life.

In Malta, owning an SDA property comes with the advantage that non-Maltese and non-EU investors face no limits on the number of properties they can own or rent out. Conversely, EU and Maltese citizens who haven’t lived in Malta continuously for five years can only buy one non-SDA property as their primary residence, needing an Acquisition of Immovable Property (AIP) permit. Further purchases are restricted and require detailed examination.

Investing in an SDA property in Malta offers substantial freedom, privacy, and a luxurious lifestyle, along with the potential for significant rental yields and capital appreciation.

Complete List of SDAs and Their Features:

Non-SDA Properties and Emerging Trends

Non-SDA properties offer a different appeal, often located in Malta’s most historic areas. These properties provide traditional Maltese architectural styles and integrate seamlessly into the cultural fabric of the island. They tend to be more affordable than SDAs, offering a unique charm and a more authentic Maltese living experience.

Acquisition of Immovable Property (AIP)

For properties outside of SDAs, non-residents and some EU nationals need an AIP permit. The application includes a fee of €233 and requires a promissory sale agreement, passport photos, a copy of the buyer’s passport, and other relevant documents. The permit is processed within about 35 days, facilitating the purchase of residential properties not located in SDAs.

Purchasing Timeline and Expenses

• Promise of Sale (POS): Sign the POS, paying 1% Stamp Duty and a 10% downpayment.
• Due Diligence: Conduct property inspections and finalize financing arrangements.
• Final Deed Signing: Pay the remaining 90% balance and the remaining 4% Stamp Duty.

Additional Costs:

• Notary Fees: Typically 1% to 3% of the purchase price.
• Architect’s Survey: If required, costs approximately €500.

Freehold & Non-Freehold

When exploring property ownership in Malta, it’s important to understand the differences between freehold and non-freehold properties and the concept of ground rent.

A freehold property offers complete ownership of the land and building, allowing the owner full freedom to use, sell, or modify the property without restrictions. Non-freehold properties, however, involve ground rent, where the land is owned by a third party who charges an annual fee, usually established at the property’s development.

In Malta, non-freehold properties can be converted to freehold through negotiations with the ground rent owner. The cost of this conversion depends on the property’s market value and ground rent.

Owning a freehold property eliminates annual ground rent fees and gives the owner total control over the property. Freehold properties also tend to have higher market values and attract more buyers, boosting long-term capital growth.

For assistance with converting a property from non-freehold to freehold, contact Attard Baldacchino for professional advice and guidance, as costs and procedures vary by property.

Conclusion

Investing in Maltese real estate, whether in SDAs or non-SDAs, offers significant opportunities due to simplified legal procedures, tax benefits, and diverse living environments. These properties cater to luxurious lifestyles and represent high investment potential, making Malta a top choice for real estate investors.