Your guide to your first home in Malta
Buying a new home is one of life’s milestones, so it should be an exciting time that goes to plan. But it can also be stressful and expensive. So how can you ensure you avoid the latter and effortlessly find yourself in the house of your dreams? Premier Malta’s, first time buyers guide will give all the information you need to make the right purchase for you.
Confirm Your Budget
Malta and Gozo are full of properties of all shapes and sizes, in varying locations and suiting every budget — so it’s crucial to establish what you can afford even before you search for your ideal first home. Your first step is to check your finances, and gauge if you will need to take out a loan. If you do, you’ll need to set up a meeting with your bank to discuss the limit of the amount you may borrow, which is usually set based on your salary or a combined income if you are buying jointly with a partner or spouse. Factor in any other expenses you may already have such as the architect’s visits and contingencies for refurbishment, whilst keeping in mind the utilities and general maintenance that would be required before moving in. Once you have your figure, don’t forget to also take any other costs into account, such as furnishings or notary fees and stamp duty which may affect the amount you can reasonably afford to spend on the property.
Now is the Time
The Maltese government has announced the extension of the temporary COVID-19 measure providing for a reduced rate of tax and duty of 5% and 1.5% respectively on the first €400,000 of real estate transferred inter vivos.
This scheme will apply to any promise of sale or transfer concluded before 1st January 2022, provided that the final transfer is made before 30th June 2022:
The following taxes apply: Non Covid Budget Times
5% stamp duty
1% – 3% notarial fee
€600 (approximate fee) for searches and registration
€233 AIP permit fee might be also applicable
Covid Stamp Duty
1.5% stamp Duty
Choosing The Right Property
What we want and what we need in a property can often differ. Even though may desire a Villa with a pool and a sea view, you may actually need only a two-bedroom apartment in a convenient location for your commute to work so finding the right property for you is important.
By writing down both your list of wishes and your list of needs for your new home, you will be better equipped to communicate exactly what you are looking for to your agent, including your absolute deal breaker points as well as any bonus items.
I’m interested in a property, what do I do next?
Before you make an offer, take some time to view and inspect the property in detail. Does it meet your location and practical requirements? Does the property need work or is it finished and ready to move in to? Are you ready to make your offer and begin the notarial proceedings?
Preparing to sign your promise of sale
- Choose your notary
- Set a date/time with you, the notary, the seller and the estate agent
- Send the notary any special terms you want (e.g. how long to have the promise of sale, any special works you want the current seller to complete)
- Paying the deposit + notary fee. Deposit is usually 10% (but depends on the agreement you have with the bank) and notary fees can range from 1 – 2%. Be prepared either with a cheque or come prepared to make the bank transfer to the notary.
Details to be covered by the Promise of Sale
- The agreed price.
- If the property is Freehold (with no Ground Rent) or if there is Temporary or Perpetual Ground Rent.
- Terms agreed by both vendor and purchaser
- What fixtures, fittings and pieces of furniture are included in the price?
- How payment will need to be affected and in what stages? (Do you need to apply for a loan?)
- Are there any works to be completed by the owner?
- When will the final deed be signed?
- In case of a property forming part of a block, what other conditions apply, such as the installation of air-conditioning units and other fixtures, condominium obligations, timeframes for delivery.
How long is the Promise of Sale
A POS is often done for 3 months when it is a relatively straightforward process, such as when it’s a new block that’s been recently built. Where a bank loan is required, a sanction letter takes between 6-8 weeks (pre-Covid, but currently expect for it to take up to 12 weeks) to be issued. Researches on the property may be readily available through a previous notary, for example, but when it comes down to an old property (for example, an unconverted house of character which has been within the family for years and is the subject of an inheritance, an on-plan property or land with pending permits for building) then the process could get a lot more complicated. The ultimate goal for the Buyer (and what the notary aims to achieve) is to purchase the property as ‘free and unencumbered’. So, the period between the POS and the Final Deed allows the notary to check the background and history of the property and there is nothing that will impede the sale from proceeding. Extended periods of time for POS beyond the times given above are not uncommon as long as both parties agree.
Should any impediment be found to stop the sale from proceeding, the notary will call both owner/seller and buyer to discuss and terminate the agreement
The Final Deed
At the end of the Promise of Sale, a Final Deed or Final Contract of Sale is signed, where the property officially becomes owned by the Buyer and the keys are handed over. As of the date on the Final Deed, the ownership is transferred over to the Buyer.