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Property investment in Malta is restricted, though it is largely possible for expats to buy a home there. Round-trip property transaction costs are moderately low by international standards (around 9%).
The Maltese like to own their home. Malta’s homeownership rate (77%) contrasts with Germany (46%). Like many other countries in the world, the expansion of credit has caused a housing boom prior to the 2008 downturn. However, this boom and bust cycle was limited in Malta.
Foreign investment restrictions
Malta’s property investment restrictions can remind of some jurisdictions in the Asia-Pacific region, such as Australia or Singapore.
As a general rule, foreign nationals must apply for an Acquisition of Immoveable Property (AIP) permit, subject to minimum investments of €103,906 (flats or maisonettes) or €173,129 (others). Exemptions may apply in Special Designated Areas (SDAs). SDAs are designed to cover prime property only and they are free of any foreign investment restrictions. The detailed rules are available here.
On an AIP permit, you can buy one property only. It must be for a residential purpose, i.e. you cannot rent it out. Malta tends to welcome foreign investment and an AIP permit will most likely just cost you a €233 application fee.
As a result of on-going negotiations with Brussels, EU nationals with permanent resident status (after 5 years) may also enjoy the same rights as resident Maltese citizens. Otherwise, they are treated like non-EU nationals.
Maltese housing market generally
Malta has become quite cheap with regard to housing. You can generally expect home prices to range between €2,200 and €2,800 per sqm.
Property prices had nearly doubled in the first half of the last decade, before going south in 2006. In nominal terms, prices are still around 10% below the 2006 peak. In real terms, that should be closer to 30%. Prices are not expected to substantially bounce back any time soon because of the Euro-zone crisis, but they seem to have stabilised.
Unlike the neighbouring countries, Malta’s GDP growth has remained quite resilient throughout the Euro-zone crisis (1.7%). Regarding housing supply, the output is generally between 1,000 and 1,500 per year. There is no significant housing shortage in Malta, at least not at the moment.
An assessment of the Maltese housing market must include many other macroeconomic factors, including:
Get your documentation right before applying for a mortgage, and do it early to avoid disappointment. Basically, you can expect interest rates to be between 3 and 4% if intend to be owner-occupier. On a buy-to-let mortgage, this should be closer to 5%, which is virtually uninteresting given Malta’s poor rental yields.
From a financial point of view, remember that:
For more information on mortgages in Malta, see ACCOMMODATION – Mortgages for Expats in Malta.
There are no property taxes in Malta. Financially, this could justify accepting lower rental yields.
In theory, low property taxes should mean higher home prices. As property prices are moderate anyway, this makes Malta a relatively cheap jurisdiction.
Letting your property
Many expats cannot lease real estate in Malta because of foreign investment restrictions (see above).
Gross rental yields are very low (3 to 4%). Rents can be freely agreed and they may rise further in the future. Rent increases can be expected to at least match inflation over the long-term.
Do check the applicable landlord and tenant law prior to leasing property. In Malta, it is much better to have a reliable tenant than to require court enforcement. Do not attempt to evict a tenant illegally, as illegal eviction may be a criminal offence.
From a financial point of view, the return on property investment comprises of:
If rents are to rise (e.g. because of inflation), you are more likely to make capital gains over the long run, i.e. without taking into account medium-term fluctuations, such as mortgage availability.
Don’t be lured too much by expected capital gains. There is definitely some capital gains potential in Malta, but excessive speculation might be a risky business.
Sections in FINANCIAL CONSIDERATIONS IN MALTA:
» Money Transfers for Expats in Malta
» Foreign Exchange for Expats in Malta
» Banking for Expats in Malta
» Pensions for Expats in Malta
» Investment for Expats in Malta
» Wealth Management for Expats in Malta
» Property Investment for Expats in Malta
» Insurance for Expats in Malta
We value input from our readers. If you spot an error on this page or have any suggestions, please let us know.
If you are considering moving to Malta or are soon to depart, you can find helpful information and advice in the Expat Briefing dedicated Malta section including; details of immigration and visas, Maltese forums, Maltese event listings and service providers in Malta.
From your safety to shopping, living in Malta can yield great benefits as well as occasional drawbacks. Find your feet and stay abreast of the latest developments affecting expats in Malta with relevant news and up-to-date information.
Working in Malta can be rewarding as well as stressful, if you don't plan ahead and fulfill any legal requirements. Find out about visas and passports, owning and operating a company in Malta, and general Maltese culture of the labour market.
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