The acquisition of immovable property in Malta depends on a number of factors, including; the person acquiring the immovable property, the time, if any, the person has resided in Malta prior to the acquisition, and the intended use of the immovable property. These factors determine whether a person would be entitled to acquire the immovable property in Malta without any pre-requisite formality, or whether he requires a permit to do so. These instances are regulated by the Immovable Property (Acquisition by Non-Residents) Act, hereinafter the “Act”.
Under the Act, citizens of all EU Member States, including therefore Maltese Citizens, who have resided in Malta continuously for a minimum period of 5 years at any time preceding the date of acquisition may freely acquire immovable property without the necessity of obtaining a permit under the Act. In this case, the intended use of the immovable property is not an issue. Moreover, such individuals can acquire as many properties as they like and are also free to lease such properties to third parties.
Under the Act, the term “resident of Malta” is defined as:
(a) a citizen of Malta or another Member State who has been resident in Malta for a minimum continuous period of 5 years at any time preceding the date of acquisition;
(b) the spouse, of whatever nationality and wherever resident, of a citizen of Malta or another Member State where such spouses are acquiring together on the same deed;
Furthermore, the Act established that a “continuous period” shall be calculated by ignoring any periods totalling less than 90 days in any calendar year during which an individual is not in Malta, provided that such periods do not exceed 90 days in any given calendar year.
EU citizens (including, therefore, Maltese citizens) who have not resided in Malta for at least 5 years, but have the intention of acquiring their primary residence i.e. take up residence in Malta, do not require an AIP permit, nor do they require a permit to purchase immovable property required for their business activities or supply of services. They will, however, require an AIP permit to acquire immovable property for secondary residence purposes. Once such EU citizens have resided continuously in Malta for a minimum period of 5 years, they may freely acquire more than one immovable property without the necessity of obtaining an AIP permit. The Act defines a “primary residence” as the dwelling house in which an individual habitually resides in, or intends to habitually reside in, as his principal place of abode.
Considering the limited number of residences in Malta and the limited land available for construction, the EU agreed that Malta may maintain restrictions, on a non-discriminatory basis, on the right of EU citizens, who have not legally resided in Malta for at least 5 years, to acquire and hold secondary residences. The 5-year period as a residence requirement was the balance that was struck between the two diametrically opposed positions in Maltese and EU law. This was done in order to eliminate the possibility of foreigners buying as much property in Malta as they like. More important, Malta wanted to reduce the possibility of an increase in property prices because of EU membership.
Individuals who are not citizens of a Member State may not, on the other hand, acquire any immovable property unless they are granted a permit in terms of the Act. There is also a minimum immovable property price when a non-resident person wishes to acquire immovable property in Malta. Additionally, immovable property acquired by non-residents may not be rented out to third parties.
Nevertheless, there are defined zones in Mata, referred to as Special Designated Areas (SDA), where there are absolutely no restrictions to acquisition. These areas include the following:
An AIP permit is not required to purchase property that is located within a SDA, and this rule applies no matter how many immovable properties are purchased within the area. Moreover, owners of properties located in an SDA are free to lease such properties to third parties.
A body of persons, other than a commercial partnership, established in and operating from a Member State may freely acquire immovable property that is required for the purpose for which it has been set up, as long as it is directly controlled by citizens of an EU Member State.
A commercial partnership established in and operating from a Member State (therefore including Malta) may freely acquire immovable property that is required for the purpose for which it has been set up. In such a case, at least 75% of the share capital must be held by a person who is a citizen of a Member State.
Any other body of persons will require a permit, which permit is only granted if the property is required for an industrial or touristic project or as a contributor to the development of the economy of Malta. However, the permit may be withheld if the immovable property that is going to be acquired is considered to be of historical importance, or is situated in a historical locality.
Article 5 of the Act lists scenarios which exempt any persons from the need to acquire an AIP permit prior to acquiring immovable property in Malta. These exemptions include:
Obtaining the AIP permit to purchase immovable property
All persons need to fill in an AIP application form, and first time applicants also need to produce two passport-size photographs of non-resident applicants and a photocopy of the passport showing the applicant’s particulars. Applicants who already owned immovable property in Malta additionally need to produce a copy of the deed of sale of the previous immovable property, in order to prove that the property being acquired will be their primary residence.
When the application is approved, the applicant or mandatory will be informed by a notice. In accordance with a Quality Service Charter, the AIP Section is committed to issue the requested permit within 35 days, subject to application submitted being correct. A permit is issued against a payment of €233. The applicant may then proceed to enter into a contractual agreement to buy the immovable property. The permit applies solely to the property indicated in the permit and does not grant the holder absolute permission to purchase any immovable property in Malta. Moreover, it is not lawful for the holder of the permit to use the property in a manner other than that indicated in the permit.