Malta real estate investments: conditions and requirements for non-residents

Restrictions on the purchase of the real estate. Citizens of other countries, including the European Union, can usually buy only one property in Malta. Maltese property may be purchased without restrictions only by Maltese citizens or EU citizens who have lived in Malta for at least 5 years before the property’s purchase date.

It eliminates the possibility of unlimited real estate purchases by foreigners in Malta. It reduces the potential risk of distortion of local property prices, which is an important sector of the local economy.

Conditions for purchasing real estate. To buy property in Malta, a foreigner must obtain the Immovable Property Permit (AIP) by the AIP section of the Capital Transfer Duty (CTD). The time to obtain a permit takes 35 days. The fee for issuing the permit is 233 euros and does not depend on the property’s value.

Conditions that AIP applicants must meet in order to obtain a permit:

1. The real property will be used for residential purposes and therefore cannot be rented out.

2. After publication, a copy of the final notary deed must be submitted to the AIP department.

3. The real property may not be sold piecemeal or into more than one dwelling unit.

To obtain AIP permission, the purchaser first selects the property, then fills out the AIP application form entirely and submits a copy of the promise of sale or preliminary contract of the property to be purchased, if one has been entered into.

Applicants who have never applied for an AIP permit must also provide two passport-sized colour photographs and a photocopy of the applicant’s passport.

No permit is needed if the property in Malta is located in Specially Designated Areas, SDA. In such areas are built where luxury residential complexes with security, a closed yard, recreational facilities, a swimming pool and a gym.

Real estate in SDA can buy individuals and companies, and the transaction of sale can be completed in two months instead of the usual four or six. Demand for housing in SDAs is steadily increasing, with prices rising even during construction.

There is almost constant construction taking place in the north of Malta. Tens of thousands of square metres of new housing enter the market, and properties are offered on sale in new large residential complexes every six months.

It results in real estate in Malta being quickly sold, and prices for it have been growing at 5—7% per annum. Even during the difficult period of the pandemic, prices did not fall at the end of 2020. Although the rental market declined by 20%, Eurostat’s Maltese property price index continued to grow.

Eurostat index

The average cost per square metre in the central business and tourist areas is about €6,500, and €4,500 elsewhere. You can read about Maltese property prices in different areas of Malta in our article Real estate in Malta: purchases, benefits, and costs

Maltese real estate prices are high due to the following reasons:

• Interest from investors worldwide who want to get Malta citizenship by naturalisation for exceptional services by direct investment. One of the conditions for investors is to purchase or rent housing. Approximately half of such investors buy real estate because they receive a highly liquid and profitable asset.

• The huge popularity of Malta among British pensioners who consider the island as a suitable place to own a holiday home and willingly buy or rent a property there.

• Lack of new space, as Malta’s land resources are limited.

Apartments are the most common type of property in Malta. Larger new buildings often have terraces for more comfort and light. Apartments are usually located on one floor, but duplexes and triplexes exist. The apartments share an entrance, staircase and an elevator. They are part of a condominium, where the maintenance and cleaning costs of these common parts are shared between the owners of the different apartments in the block.

Maisonettes are similar to apartments. But the main difference is that the main door of a maisonette leads directly outside, while apartments lead to a common area. Maisonettes are usually smaller than apartment buildings. Most duplex maisonettes are located in blocks of two houses: the one below the other has a small garden or courtyard. The house above uses all or part of the roof of the lower house. Single maisonettes are often part of a larger building, with garages located on the first floor below the dwelling.

Townhouses or detached dwellings are located in the old part of the city or village. Townhouses with a double frontage have a wider frontage or frontage on two streets. Characteristic features of townhouses include original wooden openings, patterned shingles, and a small back garden or courtyard.

Farmhouses. Traditional Maltese farmhouses were once owned by Maltese farmers. Such houses are located in old villages or on the outskirts of towns. They can be up to 500 years old. Nowadays, such places are restored and combined with all modern conveniences. Many farmhouses have a garden.

Character houses are similar to farmhouses but are more often located in urban environments. They may have two or more stories, unlike farmhouses. Character houses have traditional architectural features: stone arches, traditional Maltese patterned tiles, and large windows. These houses can be up to 500 years old.

Terraced houses are usually two-story. Such houses may have a porch, modest garden, patio, or garage. Many terraced houses were built between the 1960s and 1980s and have become much rarer.

Villas are completely detached homes with extensive grounds, swimming pools and comfortable outdoor and indoor spaces. Villas are often located in areas such as Santa Maria Estate in Mellieha, High Ridge and Madliena in Swieqi, as well as many other areas in Malta and Gozo.

Penthouses are built on top of apartment buildings, where all the living space is on one floor. Duplex penthouses face another floor below, connected by an internal staircase in the building itself. The top floor of a penthouse often has terraces, barbecue areas or a swimming pool.

Malta, St Julian's

€740,000

Turnkey apartment with pool and sea view

222 m²

3

2

Malta, Mellieha

€310,000 — €750,000

Apartments in a new residential project with panoramic views of the coast of Malta

123 m² — 375 m²

1

2

The SDAs are designed to bring down the property prices in other areas for the Maltese. Due to the high demand from foreigners, real estate costs have been growing rapidly, making housing unaffordable for the local Maltese citizens. Foreigners can buy real estate in the SDAs under simplified rules.

We wrote about the costs incurred by an investor after buying real estate in our article Maintenance of real estate in Malta: costs and features.

There are 16 SDAs in Malta and Gozo. Of these, two SDA complexes are under construction, and two are planned, according to the data released for 2021. Please note that an investor needs to purchase a finished property to apply for citizenship or a residence permit, as it is initially considered the investor’s registered residential address.

List of SDA regions in which foreign investors can purchase apartments, penthouses, and villas under a simplified procedure:

• Portomaso Development plus Extension I, St. Julians, Malta

• Cottonera Development, Malta

• Manoel Island/Tigne Point, Gzira, Malta

• Tas-Sellum Residence, Mellieha, Malta

• Madliena Village Complex, Malta

• Smart City, Malta

• Fort Cambridge Zone, Sliema, Malta

• Ta' Monita Residence, Marsaskala, Malta

• Pender Place and Mercury House Site, plus Extensions I, II, III, IV, and V, St Julian’s, Malta

• Metropolis Plaza, Gzira, Malta

• Quad Business Towers, Mriehel, Malta

• Southridge, Mellieha, Malta

• Mistra Heights, Mellieha, Malta

• Fort Chambray, Mellieha, Gozo

• Kempinski Residences, San Lawrenz, Gozo

• Vista Point, Marsalforn, Gozo

Malta, Sliema

€920,000 — €1,300,000

Apartments in a new residential high-rise project near the sea

176 m² — 211 m²

2—3

2

SDA complexes are planned so that they combine the convenience of urban and resort life. They are located on or near the coast and close to historical areas.

The properties overlook the sea, and an SDA complex always contains a swimming pool, gym, underground parking, 24-hour security, restaurants, cafes, and shops. Usually, there are ferry stops, water taxis, and shopping centres nearby.

No need to obtain permission to purchase housing from the authorities of Malta. Buying a property in an SDA is twice as fast as in non-SDAs. It saves the buyer time and money.

The ability to buy multiple properties at the same time. For example, buying three apartments for €250,000 will allow you to fulfil the minimum price condition for investment in real estate when applying for citizenship. In contrast, if investors purchase property outside an SDA, they can only buy one property.

Higher return on investment. The ability to purchase multiple properties allows you to make a more profitable investment. Practice shows that the liquidity and profitability of these smaller properties are higher than that of one, more expensive property. Investors can sell the properties or rent them out 5 years after becoming Malta citizens.

Rapidly rising prices. For non-EU investors, buying property in the SDA complexes is faster and more profitable. At the same time, the value of the real estate in SDAs grows on average twice as fast as the price growth of properties located outside SDAs. The price of an SDA property bought at the construction stage often increases by 8—10% per annum compared to price growth of 3—5% per annum for residential real estate in Malta outside SDAs.

The path to citizenship in Malta. Moreover, buying a property in Malta can also result in the investor getting citizenship or a residence permit in an EU country. It offers them the freedom to travel visa-free around the world and the opportunity to move with their family to a country with a high standard of living and outstanding medical and educational systems.

We compare the features of the procedures for buying property in an SDA compared to other areas.

Conditions for buying real estate in return for citizenship

Investors who apply for citizenship for special services by direct investment and decide to buy a property must meet the following two conditions:

1. As indicated in the purchase-sales contract, the cost of the property cannot be less than €700,000.

2. For the first 5 years of ownership, they can only use it as their residence and cannot rent it out or earn income from it.

If the property was purchased before submitting the citizenship application, its value must be assessed by an architect. However, the evaluation cannot be done until the citizenship application has been approved.

We discuss the costs related to buying a property in Malta in our article Guide on costs when buying property in Malta.

It is important to remember that a property bought in return for citizenship must cost at least €700,000. It is the cost of a three-bedroom apartment 2 km from the sea.

Malta citizenship by naturalisation for exceptional services by direct investment

We recommend considering properties worth at least 1 million euros. For this price, you can purchase a fully furnished penthouse in a modern residential complex near the coast.

To apply for Malta permanent residence, an investor must buy a property costing at least €350,000. However, if the investor chooses a property in sparsely populated areas in the south of Malta or on the island of Gozo, the threshold is €300,000.

In our experience, there are only a limited number of transactions for these properties, as investors prefer developed areas.

Under the terms of the Malta residence permit by investment program, the property must cost at least €275,000, or €220,000 if located in Gozo or the south of Malta.

According to European laws regarding the construction and purchase of the real estate, the seller must submit an EPC and the real estate documents. This document contains the energy data of the building about to be sold. The EPC is issued by assessors registered with the Building Regulation Authority in Malta.

The purchase of real estate worth 700,000 € or more allows you to apply for Malta citizenship by naturalisation for exceptional services by direct investment. Property can be sold after 5 years.

Depending on the investment amount, citizenship can be obtained after 1 or 3 years. In both cases, the procedure is similar, and only some documents are different if the investor decides to apply after 3 years.