Property boom in Malta
Residential construction levels and property prices in Malta soared between 2003 and 2004, recording price increases of 20.3% and 13.3% respectively, after a 2003 referendum voted in favor of Malta becoming joined the European Union on January 1, 2004.
Located in southern Europe off the coast of Sicily, property in Malta, which comprises an archipelago of seven islands, with a population of 400,000, has long attracted foreign nationals. This is not only due to Malta’s intense Mediterranean climate, but also to the country’s tax-efficient status; Maltese residents enjoy one of the lowest levels of income tax in Europe.
Property application in Malta
But the international demand for homes in Malta, which comes mainly from the UK and Scandinavia, has been declining over the last year or so. This is particularly the case for “British buyers” largely due to “the falling value of the pound sterling” against the euro and the Maltese lira, says Paul Hay of Malta Homes. The declining value of the pound sterling has significantly increased the cost of buying property in Malta.
Although property prices have fallen, the recession has not been as drastic as most other European markets,” adds Hay. However, domestic demand for housing in Malta has been “surprisingly resilient,” says James Vassallo, Senior Manager, Tigne Point Real Estate Development.
Vassallo continues: “Reduced interest rates have encouraged fence keepers to commit [in housing transactions] And they’ve made those occasional deals that much more enticing.”
Malta property prices starting to stabilize
Although house values continue to fall in some areas, they have already stabilized in other regions, mainly because most Maltese homeowners are not as leveraged through borrowed money as those in the UK say.
Despite the short-term market slowdown, Malta’s property sector could find itself flying high in the medium to long term, buoyed by rising levels of tourism and an increasing number of budget airlines.
The houses of Malta fly high
In 2008, EasyJet, Ryanair and Scandinavian Airlines introduced or increased their direct routes from the UK and Sweden to Malta.
Vassallo adds: “Increased air traffic is certainly a good thing for the island, especially in these difficult times. Malta is strategically located between the west and east and the growing importance of North Africa. It attracts companies looking to relocate to the Mediterranean and beyond the years, business travel has grown steadily.”
Investment property rental in Malta
While there may have been a drop in foreign demand for Maltese homes to buy, Hay says higher levels of tourism are increasing the requirements for renting holiday homes in Malta.
“From a vacation rental point of view, 2009 looks healthy, given the global economic situation,” says Hay. “In fact, Air Malta recorded one of its most successful flight occupancies during the first quarter of 2009 for a number of years.”
Vassallo says that some of the best rental returns, albeit with relatively low returns (around 4%), can be achieved by buying a property in Sliema, a property in St Julians, a property in Valletta and a property in St Paul’s Bay. .
However, any foreigner wanting to rent their home in Malta is not worth registering their property with the Hotel and Catering Establishments Board, and can only be rented on a short-term lease.
Additionally, non-nationals can only purchase a single property in Malta, and usually only for owner-occupancy purposes, unless they purchase property in a ‘Special Designated Area (SDA)’ which allows them to purchase property in Tigne Point, a property in Portomaso, a property in Manoel Island, a property in Chambray and a property in Cottoenra.
Malta Properties located in an SDA do not face some of the strict restrictions imposed on foreigners wishing to rent their homes in Malta.
Residence in Malta
One way to overcome the limits imposed on foreign nationals is to become a Maltese resident, which would also offer people with average incomes a genuine opportunity to reduce their tax bill.
Malta does not charge capital gains tax on the sale of property after three years of ownership, but any local or foreign income brought into Malta is taxed at a rate of up to 35 per cent. However, residents can take advantage of The Maltese Residence Scheme, which charges a flat 15 per cent tax rate, subject to a minimum tax liability of EUR 4,200 (£3,630).
To qualify for residency in Malta, Mark Hollingsworth of Hollingsworth International explains that an individual would need to own assets worth at least EUR350,000 (£303,000) in the region or have an annual income of approximately EUR23,500 (£20,400). ) outside of Malta.
Foreigners moving to Malta have to “remit a minimum of EUR 13,950 (£12.00) plus EUR 2,300 (£2,000) for each dependent to the [country’s authorities], not engage in any type of commercial activity in Malta and buy or rent property in Malta. You would have to spend a minimum of €116,000 (£100,000) to buy a house or pay €69,000 (£60,000) for an apartment; otherwise, an annual rent of at least EUR 4,150 (£3,600) would have to be paid. spent on renting a house”.
The process of buying a property in Malta
Anyone really going ahead with buying property in Malta should find the buying process fairly straightforward. The legal purchasing system in the country presents a relatively safe purchasing environment.
Deeds are presented at final purchase of the property, while legally binding contracts are presented in English.
