> First Time Buyers Property Guide

Whether you’re looking at buying a second home, seeking to upgrade, renovate or invest, or if you are a first time buyer, buying a property in Malta is a lengthy process that can have complex considerations if you are unprepared for them. Best Deal Properties’ guide to purchasing a property is aimed at the first time buyer in Malta, and enables you to get a clear and comprehensive understanding of the entire purchasing process, from costs to loans, property viewing and more.

What are the costs of buying a property in Malta?

When buying a property in Malta there are more than just the costs up front to consider. There are running costs, loans and insurance payments to consider.

The upfront costs you will need are the deposit, typically 10% of the value of the property purchasing price, as well as notary fees and stamp duty.

What are stamp duty costs?

The standard stamp duty rate on a property in Malta is 5%, with 20% of this payable upon the signing of the Konvenju, and the remainder upon the final deed.

Thanks to a government incentive, first time buyers are exempt from paying stamp duty on the first €150,000 of the property price. This is applicable to both Maltese nationals and foreign residents.

What other fees are there during the property purchase?

First -time buyers in Malta need to appoint a notary to check the property and to oversee the contract. Notary fees typically amount to 1.5% to 2.5% of the property price.

I need a bank loan, where do I start?

To start the application process for your bank loan, you will need to set an appointment with a bank to establish your affordable monthly payments based on your current income and expenses. You must take into account any expenses including existing loans or credit card payments.  There are various offers and packages available so don’t be afraid to shop around. You will need to provide evidence of income (FS3, months’ payslips of Income Tax Return if you are self-employed) as well as bank statements for any accounts with other banks, and a copy of the Konvenju. The bank will then process your request and, if successful they will issue the sanction letter enabling you to proceed with the purchase of your new home.

How much do I need to pay for the Home and Life Insurance policies?

The Home and Life Insurance policy payments vary depending on the type and the amount of cover, and should be discussed with your broker. We recommend that you shop around to get the best rate you can.

How do I start my property search?

Once you have determined what you can afford and that the bank will approve your loan, you can start looking for a property to buy. We recommend that you create a list of the areas and localities that you wish to live in, as well as your personal property requirements: how many bedrooms you need, parking availability, commuting time, school facilities, garden or outdoor space etc. Develop your list as you start to view properties, and determine what your essentials are.

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?

How long is the Konvenju period before signing the Promise of Sale?

Once you have signed the Konvenju and settled all of the terms within the contract, there is typically a period of a minimum of one month, during which time your notary will conduct the necessary legal searches, to ensure that you can possess the property. At this point you must settle the deposit on the property (10% of the final purchase price). Usually within three to six months the final deed can be settled, particularly in the case of first-time buyers.. In such cases with inheritance, buildings still under construction and other complications the Konvenju can be extended.

What happens when we sign the Final Deed?

If you have obtained a bank loan for the property purchase in Malta, then the Final Deed with be signed at the bank’s head offices together with the sellers, bank officials and your notary. The final deed will be read out, signed, payments will be settled and the keys to the property will be yours.

> Property Purchasing Procedures & Costs

If it’s your first time buying a property in Malta, you will undoubtedly be nervous, and you will more than likely find yourself asking a lot of questions. If you have decided to become a home owner, then there are long term commitments to consider, aside from merely the financial ones. Choosing a new home means deciding on space, location, amenities and ultimately, the size of your future family.

Being informed about the general procedures and costs of buying a property in Malta will enable you to make correct decisions and to feel in a position of control throughout the process. Below, we at Best Deal Properties have broken down these property buying procedures and costs into the below steps:

Get to Know Your Requirements and your Limitations

Property searching is a good place to start. Whether online or on premises, a search of a wide selection of properties around Malta will give you a better indication of what you can afford and what you are looking for. Determine the type of properties that are available on the market; decide on preferred localities and whether you wish for a house, apartment or maisonette. Do you want to live in the city or the outskirts? What amenities do you need?

Aside from the functional aspects of your property search, you also need to set aside clear budgets and make sure that you have a handle on your finances. Determine your current expenses and don’t forget to factor in some unexpected extras. Are you in a secure job? If you require a bank loan, are you eligible to be accepted? Determine your price range, and included any possible renovations, maintenance or furnishing costs. You will also need to create a Home Insurance Policy and Life Insurance Policy if you do not already have one. Don’t be afraid to shop around for the best loan repayment rates and interest rates.

Find your Dream Home

This is the fun yet frightening phase. You can start your property search online by browsing through our list of Properties for Sale, to get an idea of what is available on the market. We highly recommend setting a meeting with our Sales Agent so that we can help you realise your desires and to find a property that fits your budget and ticks all of your boxes. Once you have decided on purchasing your property, we will assist you in starting the purchasing process. At this stage, a date and time must be set for the preparing of the Promise of Sale, known in Malta as the ‘Konvenju’, which must be drafted with your notary.

Signing the Konvenju

Before signing the Konvenju you need to confirm several factors, from confirming the agreed price of the sale to determining what is included (such as finishings and fittings, any ground rent etc). You must also have a clear idea of how you are going to pay for the property, such as through a bank loan. Make sure you have clearly discussed and understood the terms of your contract, the deposit and the date for the signing of the final deed and final payments.

A breakdown of the property purchasing fees in Malta are:

• A deposit of 10% of the total price of the property is to be paid upon the signing of the Konvenju between the buyer/s and seller/s.

• Stamp duty equivalent to 5% of the total price or the property

• Notary’s fees typically amount between 2% and 2.5%

• Health and Life Insurance costs

For more information on purchasing a property, we recommend reading our First Time Buyers Property Guide.

> Buying a Second Home

Buying a second home is probably as equally challenging as buying the first, however, there are number of distinct considerations. Are you looking to buy a second home for a larger family, for a summer residence or an investment opportunity? Have you finished paying off your first property yet?

Jumping onto the property ladder for the second time, the most important thing is to do your maths. If you haven’t repaid the loan of your existing property, you must calculate the monthly expenses of this and a possible second loan, not to mention the addition of more children, if that is your reason for purchasing a second home.

If you have guaranteed that you can afford the monthly payments, determine the function of this second home. Malta offers numerous locations each with their own benefits; whether you are looking for an investment property in an up and coming area such as St Julian’s, a seaside residence in Marsascala or Xemxija, or you’re looking for somewhere a little more tradition like Zurrieq.

In the case of changing family dynamics, it could be as parents you find yourself wishing to expand on your family, thus requiring a property with additional bedrooms, an outdoor space, closer amenities such as schools and clinics, or perhaps a quieter and safer area to live in. As older parents whose children have flown the nest, purchasing a second home is the ideal way to downsize; finding a property that more suitably fits your changing lifestyle and less need for space.

Tax rates vary from your first property to buying your second home. On your first property you will be taxed at a rate of 3.5% on the first €150,000 and 5% over and above. Second homes are charged at 5% tax on the entire purchasing price.
 
Should you need to balance your finances better, or if you are planning to sell your first property to move into a new one, many banks offer you the option of a bridging loan to finance part of the purchase price, until you sell your property.

If you can afford to indulge in a second home, the rewards are endless. You have already gone through the hurdles of buying your first property, so no doubt the process of purchasing a second will seem far less daunting. Buying a second home in Malta is an important step that more and more people are committing to thanks to favourable tax and schemes, an abundance of high quality apartments, maisonettes and penthouses that are ready to move in to, and great investment potential on all corners of the island.

Should you be looking to purchase a second home in Malta for any of the above reasons, Best Deal Properties will be able to guide you through the smooth transition into your second home, facilitating the procurement of loans, property viewings, rental and investment advice, finishings and more.