The Law on Property Sales and Foreigners
According to provisions made in Chapter 246 of the Laws of Malta with regards to property sales, citizens of all European Union member states who have resided in Malta on a continuous, uninterrupted basis of a minimum period of five years BEFORE the date of acquisition of immovable property may freely acquire such property without the necessity of obtaining an acquisition permit (AIP). However, individuals who are not citizens of a European member state may not acquire any immovable property unless they are granted an acquisition permit issued by the Maltese tax authorities. With regards to those who need an AIP, the minimum price is also set in stone with foreigners being legally obliged to spend at least €104,500 for the purchase of a flat or maisonette and at least €174,000 for the purchase of any other immovable property.
Areas of Interest for Foreigners
While some may view these price ranges as being somewhat restrictive, Finance Minister Edward Scicluna recently said in parliament that almost 1,000 properties worth €400 million have been sold to foreigners over the last four years and that almost half of that number were in areas such as St Julian’s, Sliema, Swieqi, Gżira, Msida, Pietà, Ta’ Xbiex, Pembroke, San Ġwann, Qormi, Birkirkara, Ħamrun and Santa Venera, showing an overall preference by foreigners for the Northern Harbour district. Given that these areas are notoriously pricier than the south, it comes as no surprise that the value of the 482 properties mentioned by Mr Scicluna amounted to the princely sum of €175 million with an average of €363,881 being spent on each. The lowest number of property sales was registered in Żejtun, Birżebbuġa, Gudja, Għaxaq, Kirkop, Marsascala, Marsaxlokk, Mqabba, Qrendi, Safi and Żurrieq where a mere 38 properties were purchased and the total sum spent in this area was valued at €5.5 million. Moreover, in an interesting twist, a total of 115 properties collectively worth €25 million were bought by foreigners in the sister island of Gozo and despite the fact that properties in Gozo are markedly cheaper than in Malta, the average price of each property purchased was €220,801.
Why is this happening?
Given past trends, this boom in market dynamics and property sales is being ascribed to the revamped residency and visa programme launched last August which allows third country nationals to gain residence permits against an investment in interest-free government bonds of €250,000. Due to the fact that individuals given a residence visa can travel in the Schengen area as well as reside in Malta itself, it is of little wonder that investments in our little island have sky rocketed and property sales have increased.
