Malta's real estate market continues to attract non-EU high-net-worth individuals seeking relocation, investment, or a strategic "Plan B" in the Mediterranean. However, the legal process for acquiring property in Malta is rigorous, especially for non-residents, and requires strict adherence to regulations concerning source of funds, notarial due diligence, and the "konvenju" (Promise of Sale) agreement.
Source of Funds and Wealth Verification
Non-resident buyers must demonstrate the legal origin of all funds used for property purchases in Malta. This is a cornerstone of Malta's anti-money laundering (AML) compliance regime and involves providing robust documentation such as bank statements, proof of business income, or investment records to both the notary and, where applicable, the financing bank. Transparency in the source of wealth is not only a legal requirement but also a prerequisite for the notary to proceed with the transaction.
The Notarial Research Process
Following the execution of the preliminary agreement, the appointed notary undertakes a comprehensive due diligence exercise. This process is critical to confirm the property's legal status and to protect the buyer from future disputes. The notary's investigations typically include:
- Verification of Legal Title: The notary confirms that the seller holds a clear and marketable title to the property, free from defects or competing claims.
- Search for Encumbrances: The notary examines whether there are any outstanding debts, mortgages, liens, or other encumbrances registered against the property that could affect ownership rights.
- Planning and Permit Compliance: The notary ensures that all necessary planning permits and conditions have been duly obtained and complied with, verifying that the property's use and development conform to Maltese regulations.
This rigorous research is a mandatory safeguard embedded in Maltese property law, designed to provide buyers with confidence that their investment is legally sound and free from hidden liabilities.
The Konvenju (Promise of Sale) Agreement
Once the buyer and seller agree on the property and purchase price, they enter into the konvenju, a binding preliminary contract. This agreement sets out the terms and conditions of the sale, including the payment schedule and any conditions precedent to the final transfer of ownership. For non-resident buyers, a common condition precedent is the obtaining of the Acquisition of Immovable Property (AIP) permit.
At the time of signing the konvenju, the buyer typically pays a 10% deposit, which is held in escrow by the notary. This deposit secures the buyer's commitment and provides the seller with assurance of the buyer's intent to complete the transaction. The konvenju generally remains valid for a period of six months, during which the notary completes all necessary legal checks and the buyer obtains any required permits.
AIP Permit and Minimum Property Values
Non-residents are required to obtain an AIP permit unless they are purchasing property in a Special Designated Area (SDA). Annual updates determine the minimum property values for AIP eligibility, which currently stand at €143,410 for residential properties/maisonettes and €247,701 for other immovable property. The property must be used for residential purposes and cannot be rented out or divided into multiple dwellings. Additionally, non-residents are generally limited to one property unless buying in an SDA.
The acquisition of immovable property in Malta by non-residents is governed by a specific regulatory framework, primarily through the requirement of an Acquisition of Immovable Property (AIP) permit. The necessity for such a permit arises in cases where the purchaser is either a non-EU/EEA national or an EU/EEA national who has not resided continuously in Malta for a minimum period of five years prior to the intended acquisition. Furthermore, non-residents seeking to acquire a secondary residence or investment property are similarly obliged to obtain an AIP permit. It is pertinent to note that, outside Special Designated Areas (SDAs), non-residents are generally restricted to the acquisition of a single property, unless otherwise authorised.
The procedural steps for securing an AIP permit are as follows. The process commences with the identification of a suitable property and the execution of a promise of sale agreement, thereby formalising the parties' intention to proceed with the transaction. Subsequently, the purchaser is required to submit an application to the Capital Transfer Duty Department, which must be accompanied by the promise of sale agreement, two passport-sized photographs, a copy of the purchaser's passport, and the completed application form. The prescribed fee for the application currently stands at €233. Provided all documentation is in order, the Department endeavours to process applications within approximately thirty-five days.
It should be emphasised that the Minister responsible for Finance retains a discretionary power to grant or refuse permits, with particular regard to the applicant's conduct and compliance with Maltese law. Notably, properties situated within SDAs and acquisitions by EU/EEA nationals who have resided in Malta for at least five years are exempt from the AIP requirement.
Given the complexity and significance of the AIP process, prospective purchasers are strongly advised to seek the guidance of legal professionals versed in Maltese property law to ensure full compliance and to facilitate the efficient completion of the transaction.
Would you like further guidance on the supporting documentation required or on the implications of purchasing within a Special Designated Area?
Final Deed and Payment
Upon successful completion of notarial research and receipt of the AIP permit, the final deed is executed. The buyer pays the balance of the purchase price, remaining stamp duty (typically 5% of the property's value), and notarial fees (usually 1–3% of the purchase price). The notary then registers the deed and ensures all legal obligations are met.
The process of acquiring property in Malta as a non-resident is structured to ensure transparency, legal certainty, and compliance with both local and international standards. Engaging a reputable law firm such as Attard Baldacchino ensures that your transaction is handled with the highest level of due diligence and professionalism.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
