MALTA Law and Practice Contributed by: Damien Degiorgio and Ramona Galea, Fenech Farrugia Fiott Legal
1. General 1.1 Main Sources of Law The main sources of real estate law are the fol - lowing: • Civil Code, Chapter 16 of the Laws of Malta; • Private Residential Leases Act, Chapter 604 of the Laws of Malta; • Reletting of Urban Property (Regulation) Ordi - nance, Chapter 69 of the Laws of Malta; • Housing (Decontrol) Ordinance, Chapter 158 of the Laws of Malta; • Agricultural Leases (Reletting) Act, Chapter 199 of the Laws of Malta; • Government Lands Act, Chapter 573 of the Laws of Malta; • Real Estate Agents, Property Brokers and Property Consultants Act, Chapter 615 of the Laws of Malta; • Development Planning Act, Chapter 552 of the Laws of Malta; • Immovable Property (Acquisition by Non-resi - dents) Act, Chapter 246 of the Laws of Malta; • Duty on Documents and Transfers Act, Chap - ter 364 of the Laws of Malta; • Income Tax and Duty on Documents and Transfers on Transfers of Dwelling Houses to Shareholders Exemption Order, Subsidiary legislation 123.54 of the Laws of Malta; and • Income Tax and Duty on Documents and Transfers on Transfers of Dwelling Houses by Commercial Partnerships Exemption Order, Subsidiary legislation 123.58 of the Laws of Malta. 1.2 Main Market Trends and Deals The cost of real estate in Malta has increased at a consistent rate as can be seen from the Prop - erty Price Index (PPI). The inclusion of first-time and second-time buyer schemes and reduced taxes for both purchasers and sellers of immov -
able property can be seen to sustain the demand for property, and also aims to encourage first- time buyers in acquiring property. In fact, first-time property buyers shall continue to benefit from a EUR1,000 grant for a period of ten years. In addition, all property buyers (includ - ing non-first-time buyers) will continue to benefit from an income tax and stamp duty exemption on the first EUR750,000 of the higher of the value of or consideration paid for the acquired property if the property prior to the transfer date: • has been constructed for a period of 20 years or more; • has been vacant for more than seven continu - ous years; and • is situated in an Urban Conservative Area (UCA). In addition, property restoration schemes have also been introduced with the aim of preserving Malta’s national heritage, whereby homeowners of qualifying properties will be able to benefit from a refund of VAT expenses incurred such as architect’s fees, project management fees and planning permit fees (up to EUR54,000 on the first EUR300,000 of the property’s total purchase price). Qualifying properties means those prop - erties which satisfy the aforementioned condi - tions. Also, property purchases in Gozo outside an Urban Conservative Area (UCA) have drastically increased mainly due to a government incentiv - ised reduction of the applicable stamp duty from a rate of 5% to 2%. Although the incentive has now been removed, this nevertheless created an unprecedented tide of real estate investors attempting to acquire property in Gozo, which does not seem to be slowing down any time soon.
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