During these nine years that I have been in the real estate industry as an agent I have come to know many aspects of the business.
One thing that I have learned is that in real estate you get to be part of what many clients consider to be one of the most exciting periods of their lives. Therefore my reliability, independence and professionalism have always been my every day targets, to be able to provide the proper guidance to my clients in this delicate period of their lives.
Below is useful information about the process of buying property in Malta.
Once a client decides on a property and his offer is accepted, a Preliminary Agreement is signed between the seller and the buyer to bind themselves. This agreement is often referred to as the ‘Convenium’ or ‘Konvenju’ in Maltese and binds both parties to the transaction based on a set of mutually agreed terms and conditions. The Preliminary Agreement is usually valid for three months or more depending on the agreement and client requests. After the signing of the Preliminary Agreement (but before entering into a final deed of sale), a Notary would be engaged by the buyer to carry out the necessary searches into the property to confirm everything is in order before proceeding. It is at this stage that 1% of the 5% total stamp duty fee is payable to the Inland Revenue and a 10% deposit is paid by the buyer, which either is to be deposited by the Notary or passed on to the Vendor depending on the agreement reached between the Vendor and the Purchasers. The remaining 4% of the stamp duty will be paid with the publication of the final deed. Also be advised that the 1% of the stamp duty will be refunded if the final deal fails to materialize and that the deposit agreed on during the signing of the Preliminary Agreement will be handed over to the seller if the buyer does not sign the final deed without a valid reason at law.
The following terms must be agreed before the Preliminary Agreement is signed: Price, Ground Rent, Features / Furniture included in the price, Payment terms, Works to be undertaken by the owner if applies and The duration of the promise of sale agreement. Once all the conditions of the preliminary sale agreement are complete and all duties fulfilled, all parties get together to sign the final deed. It is the responsibility of the Notary to draft the final deed and prepare it for signature.
The normal procedures are as follow:
The final deed is signed at the bank if a mortgage is required by the buyer.
The final contract is read out and if both parties agree to the terms and conditions the contract will be signed.
Time to pay the balance (the purchase price less any deposits paid on account) to the seller.
Both parties must now confirm that they have settled all expenses in relation to the purchase and property.
The keys of the property are then exchanged.
The contract will now be registered at the Public Registry by the Notary.
Other than the above the Purchaser will be obliged to pay the Notary fees to the Notary Public and which fees are equivalent to 1% up to 2% of the selling price. Once the contract is signed and registered at the Public Registry, no other hidden expenses are due.
The last expenses that you might come across is in the event of Purchasing a new property because you would require to apply for the installation of the Water and Electricity meters which the cost would be around €800.
Non-EU Nationals have to pay 5% in Stamp Duty on the value stated in the Final Deed of Sale. However EU citizens taking up permanent residence in Malta and who have sold their overseas properties and plan to use their Maltese home as their primary residence qualify to pay 3.5% on the first €150,000.
Please Note: New in 2014 - the government has just launched an incentive for 'First-Time Buyers' where there is an exemption from stamp duty on the first €150,000 (therefore the maximum saving could be €5250). Both foreigners and Maltese nationals can benefit from this scheme provided that they have never owned a property onto their names in Malta or overseas.