Strategically located in the heart of the Mediterranean, Malta basks in the sun for most of the year. Blessed with long, dry summers and short, mild winters, this tiny island roughly 60 miles south of Sicily is a year round destination for people from Europe and elsewhere. Besides great weather, Malta has history – in variety and abundance, romance, a whiff of the orient, beautiful old houses of golden limestone, warm and welcoming people who speak English, safety as well as good standards of education and healthcare.
EU membership, a favorable tax structure and good infrastructure have made Malta a preferred destination for European retirees, lifestyle buyers and investors alike. For pensioners, the income tax rate is as low as 15%. There are no inheritance, wealth and municipal taxes. Corporate tax rates range from a maximum of 35% to nil. In general, living costs are lower than elsewhere in the EU.
Though most of the demand for property in Malta is driven by locals who consider property one of the best investments, foreign demand for Maltese property is also increasing with the improving economic situation in some EU countries. Encouragingly, the recession has not affected the property market in Malta as much as it has in other countries and many overseas buyers now consider the country a relatively safe haven for their funds.
The Maltese economy is fairly stable and depends on tourism to a significant extent. In recent years, the number of low cost flights to Malta has increased significantly, bringing in more visitors every year. 2009 and 2010 saw a marked increase in tourist traffic relative to previous years. Multi-nationals with bases in the Middle East are also setting up offices in Malta with the aim of reaching out to emerging markets. Consequently, the demand for rentals has increased.
Malta Real Estate prices, which had weakened to some extent in 2008, are in positive territory now largely due to fairly low home loan rates, increasing demand for rental properties in some areas and the availability of quality properties at affordable rates. On the whole, the Maltese property market has fared better than many others in the EU, particularly those in Spain, Greece, Portugal and Cyprus.
According to the Central Bank of Malta, price growth for Q2 2010 had settled at moderate levels as compared with the previous quarter. The bank attributed the increase to the prices of apartments, which were higher than that of houses of character, villas and townhouses. While prices of maisonettes fell on a y-o-y basis, prices of terraced houses remained the same.
As indicated in a report based on a survey conducted by the Royal Institution of Chartered Surveyors, price increases are generally better than expected. Though some areas are seeing falling prices, in others, the trend is upwards. Regions such as St. Juliens and Sliema are doing well.
Citizens from EU countries are permitted to buy one property in Malta subject to conditions. However, they can buy more than one property in SDAs or specially designated areas such as Tigne Point, Portomaso, Cottoenra, Chambray and Manoel Island. A recent amendment permits foreigners to rent out personal property to vacationers over the short term if the property conforms to standards set by the Maltese Tourism Authority.
Recently, the government decided to bar non-EU nationals from the Residents Scheme. This move could have an adverse impact on property sales and prices in areas that are popular with citizens from non-EU countries.
Overall, this could be an opportune time to invest in property in Malta provided one surveys the market well and identifies areas that have consistent demand for sale and rentals and the potential for price growth. Apartments in Sliema, St. Andrews and St. Juliens are normally good buys. Maltese property has quite a few positives – prices are still relatively reasonable, buyers can choose from a variety of modern apartments as well as charming, old houses and prices are expected to increase over the next few years.
Points about property transactions:
• Once buyer and seller have agreed on a price, they enter into a preliminary agreement and the buyer is normally required to pay a 10% deposit.
• This agreement is subject to the issuance of an A.I.P. permit for non-residents.
• The Notary Public conducts a search on behalf of the buyer to verify that the property has a clear title.
• Once the conditions of the preliminary agreement have been met, a final deed of sale is drawn up and signed by both parties.
• E.U. and non-E.U. citizens are required to fulfill a number of conditions in order to buy property in Malta.
• They must also provide proof that the funds for purchase have originated abroad.
By www.holprop.com (February 23, 2011)
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