The sale of property to non-residents is a growing trend and in recent years Malta has witnessed an influx of foreigners who purchase property in Malta as a holiday home, retirement residence or simply because they work here.

For non-residents, the advantages of buying property in Malta are many, including the fact that one can make use of all local mortgage facilities offered by major banks, and that all deeds and documents are read and published in English.

Now that Malta has joined the European Union, many are asking how this will affect the property sector. The main issues are as follows.

EU citizens

EU citizens means nationals of EU countries but also includes nationals of Iceland, Liechtenstein and Norway since these three countries have an agreement with the EU and are part of the European Economic Area (EEA).

The acquisition of property in Malta by non-Maltese has long been restricted and although restrictions have changed upon Malta's membership, some restrictions were not lifted altogether.

The position before EU membership

A law enacted in 1974, known as the Immovable Property (Acquisition by Non-Residents) Act, provided for a number of conditions that non-residents had to satisfy before being able to purchase property in Malta. In the main these restrictions, which applied until May 1, included the following:

¤ only one property can be purchased in Malta
¤ even for the first property, a permit from the minister (AIP permit) is required, although this is granted automatically if certain conditions are met
¤ the property must exceed certain value thresholds (which were increased over the years)
¤ no authorisation is granted for the purchase of more than one property
¤ the property can only be used as a residence for the purchaser and his/her family.

During membership negotiations, Malta sought a permanent exemption from EU law so as to retain the same or similar restrictions that applied in our country before membership. The outcome of negotiations may be summarised as follows:

¤ EU citizens who want to buy a secondary home in Malta (holiday home) will still require a permit
¤ this permit will continue to be granted automatically if certain conditions (such as the value of the property) are fulfilled. They cannot buy more than one property
¤ EU citizens who settle in Malta and obtain a regular residence permit and want to buy a first property as their primary residence can do so without requiring a permit. Again, however, they cannot buy more than one property
¤ EU citizens who have been resident in Malta for five years will be able to buy a second (or more) property in Malta
¤ EU citizens who conduct business in Malta will be able to buy property that is related to their business in Malta without requiring a permit
¤ existing restrictions will continue to apply to non-EU citizens
¤ existing rights of Maltese citizens are not affected
¤ Maltese passport holders who have not lived in Malta for five years will be treated like other EU citizens.

The arrangement applies on a permanent basis and not just for a few years. It is guaranteed by a protocol attached to Malta's Treaty of Accession.

This information has been compiled by Dhalia Real Estate Services. More information on conditions of property purchase by overseas buyers is available at www.dhalia.com/overseas.asp.