Malta has arguably got one of Europe’s fastest-growing housing markets. The total market increase over the past ten years has been over 51%. The Maltese housing market experienced increases during the worst years of the global recession including 2008 onwards until 2014, when the recession started fading away. If this is compared to other European jurisdictions like Italy, Greece or Spain where the market correction has been very considerable, the final property growth figures in Malta are very positive, to the extent of having surpassed Hong Kong over the last years.
Malta is a historic island located in the centre of the Mediterranean in between Sicily and North Africa, some 80 km south of Messina and 333 km North from Tripoli in Libya. It has a mild Mediterranean climate with over three hundred days of sunshine per annum. The three islands include Malta, Gozzo, and Comino. The country has been ruled by a succession of different powers including the Phoenicians, Carthaginians, Byzantines, Arabs, Normans, Sicilians, Spanish, Knights of St John, French and finally the British. A little culture of each of these powers has been left on the island like in most Mediterranean countries and jurisdictions, including Gibraltar, to where a considerable number of Maltese emigrated over the past few hundred years.
Malta was granted independence by the United Kingdom in 1964. It then became The Republic of Malta in 1974. It is now a member state of the Commonwealth of Nations and the United Nations having joined the European Union in 2004 and the euro currency monetary system in 2008. It has gone from strength to strength since then with a very healthy economy and a growing property market.
Why is Malta a growing market which at present shows little signs of slowing down?
There are many reasons for this, and these are complex and somehow unusual. I can name some of the most important factors which have made Malta and its property market consistent, strong and growing.
These are as follows:
A booming economy based on tourism and recently on the great efforts of the Government of Malta to turn its Islands into a major Financial Services Center and an Internet Gaming Hub. Malta´s Economy grew 7.9% in 2014, 2015 and 5% in 2016. The amount of growth in 2017 was 6.6% and in 2018 6.2%. These are very positive figures. In 2019 the economy is forecast to grow over 5% as well, a slight reduction in real growth.
An attractive taxation system which is lower than in most other EU jurisdictions.
Much like in the case of Gibraltar, there is no capital gains tax on property. But there is a flat transmission tax payable by the seller which at present stands at 12%. This tax does not exist in Gibraltar but does exist in most European jurisdictions and it is normally considerably higher.
Like in Gibraltar, there is no gift or inheritance tax in Malta.
Stamp duty is a fair 5%. Higher than Gibraltar but lower than in other European countries.
And what other expenses does a property buyer have? Notary fees which range between 0.50% and 0.75%
Lawyers fees which amount to about 1%.
The agency fees are paid by the seller as in Gibraltar. Normally 3%.
It is quite clear that as far as charges are concerned it is not expensive to purchase a property in Malta.
How about rental yields. Are they good? At present a well managed property yields about 4.5% per year. But there are certain conditions that apply to property owners from abroad. A property owned by foreign investors needs to be registered at the Hotel and Tourist Board. Furthermore, conditions apply, and should the case come up, must be checked by your appointed solicitor or estate agent.
What about residency status? The Republic of Malta has established an Individual Investor Program for foreign investors which at the time of publication of this article include full residency status and citizenship. Malta does not object to dual nationality status. The conditions are probably stricter than in other EU jurisdictions like Spain, Portugal or Greece. In Malta, in order to meet the eligibility criteria, you must:
Make a contribution of €650,000 to the Maltese Government, which is deposited in the National Development and Social Fund.
Either lease a residential property for a minimum of €16,000 per year, or purchase a property valued at least €350,000.
Acquire €150,000 of Government Bonds/securities listed on the Malta Stock Exchange
You must keep the property and bonds for at least 5 years.
This is close to the one-million-euro mark so it would probably attract the very rich only. All this said, it seems to have worked well and there are many investors who have opted for this program.
And what are prices like in Malta? €4,600 per square metre upwards is the answer. A 3-bedroom compact apartment can set you back between €140,000 to €400,000 and more. Prime property is considerably more expensive and old restored palazzos or sea-front property can reach millions of euros. Much like in Gibraltar, space is limited despite the fact that Malta has 3 islands and is considerably larger than Gibraltar. But so is its present population which stands at about 450,000 inhabitants.
Similar to us, Malta has an increased number of foreign workers, the difference being that they are full-time residents keeping the rental market on the move.
On a visit to Malta when we asked the Portuguese sea captain about the place, he simply turned to us and explained: “Es como Gibraltar a lo bestia!” – Just like a huge Gibraltar!