Property Purchase Guide

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The hardest part of buying a property – though for many, it’s also the most enjoyable – is finding the right one.

While real estate agencies have become almost essential to this process, prospective buyers should remain directly involved and ready to act swiftly when opportunities arise. Malta’s property market moves fast, and it’s not uncommon for a well-priced property to sell on the same day it’s listed. Luxury properties, however, tend to be less affected by this rapid pace.

For those hoping to score a bargain, patience is key – such opportunities are rare. The low cost of holding property, coupled with the fact that property investors tend to be fairly liquid, means there is little urgency to sell, except in cases of personal circumstances. Establishing relationships with multiple property agents from different agencies can be a smart move, as they may alert you to new listings the moment they hit the market.

Once you’ve found the right property and agreed on a price with the seller, the buying process is relatively straightforward.

Sign a Promise of Sale agreement

First, a notary – engaged by the prospective buyer – will draw up a promise of sale agreement. This legally binding document outlines the agreed price, any conditions of the sale and the deadline for the final transfer. Typically, the period between signing the promise of sale agreement to the final deed is three to six months.

The buyer normally pays a 10 per cent deposit upon signing the promise of sale agreement, which is usually kept by the notary. If the buyer backs out for reasons not specified in the promise of sale agreement, the deposit is forfeited to the seller, so it’s essential to do your due diligence before signing.

Additionally, the buyer must pay 1 per cent of the stamp duty (calculated on the transaction price minus the value of any agreed-upon movable furniture) at this stage. The remaining 4 per cent is due when signing the final contract of sale.

The notary gets to work

Once the promise of sale agreement is signed and the deposit paid, the notary will conduct a thorough investigation of the property’s legal history and title. This involves reviewing previous contracts and relevant documents to verify its ownership and boundaries, as well as checking for any legal issues or guarantees. Planning permissions and building regulation certificates will also be verified.

Satisfy any conditions

A Promise of Sale agreement may contain certain conditions.

Often, a buyer will ask that the sale is conditional on obtaining bank financing. Another condition that is often included is for either of the parties to obtain the necessary planning permits. If a property is not up to code, the seller may be requested to obtain what is known as Regularisation – that is, clearance from Malta’s Planning Authority that it accepts the building as is. On the other hand, the buyer may desire to make certain changes – up to demolition and reconstruction. Therefore, they may want to insert a clause making the transaction conditional on their obtaining such permission.

There are no hard rules on the type or number of conditions to include. It all depends on the agreement between the buyer and the seller, both of whom will benefit from the expert advice of property agents and notaries.

Finalise the sale

When the notary is satisfied that everything is in order, a meeting is set up to finalise the contract, at which point the balance of the sale price is paid and ownership of the property is transferred to the buyer.

Notary tariffs are established by law, as are all the taxes, stamp duty and other relevant charges due from both purchasers and sellers. Legal fees and stamp duty are payable by the purchaser, while agency fees are payable by the seller.

Tax on property transactions

For property purchases, a 5 per cent stamp duty is applied, while sales are subject to an 8 per cent capital gains or final withholding tax. There are several exemptions and discounts, under certain conditions.

For sellers, properties that have served as a primary residence for at least three years are exempt from the 8 per cent tax, while properties sold after less than three or five years may qualify for a reduced rate of 2 or 5 per cent, respectively.

It is important to note that taxes on property transactions are calculated on the full sale price, excluding the value of movables. Selling a property worth €300,000 under the regular 8 per cent tax rate incurs a €24,000 tax bill, regardless of the price it was bought for. It is essential that your real estate investment strategy takes this into account.

As of 2025, investors can benefit from incentives targeting the buying and selling of traditional properties, waiving the taxes due on the first €750,000 of the price of acquisition. However, the incentives tied to traditional properties do not apply to transfers of property to persons who require an AIP permit.