Step by step guide to buying property in Malta

There are some things I like about the property purchase process in Malta, like the promise of sale period, where the property is taken off the market and cannot be sold to someone else, whilst you arrange everything from architects reports to getting the loan. What I do not like is that NO ONE that you deal with will be transparent or knowledgeable. No one will be able to tell you what the process looks like or entails or costs from start to finish. No one will be proactive and once each step is complete you’ll need to continually chase your loan manager to find out what’s next.

So, I wrote this post to try and clear up some of the mystery and make sure as a first time buyer that you go into the process with a lot more knowledge than I did and can be prepared for what you need to do and what you need to chase others to do.

You can also find a full list of costs when buying property in Malta in my previous post.

1. Get loan quotes from banks

Before formally applying for a loan, I recommend going around as many banks as possible and finding out if you’re eligible for a loan, how much they are able to offer and what the repayments would be. Most banks will offer you a huge loan, but don’t just take it because it’s there. It needs to be affordable for you, long term.

One bank told me they can quote up to €850k there and then, but if I wanted up to €1M, that’d be fine, would just need a few more documents. At that level the repayments would be something like €5000+ per month, which would be my entire salary- obviously not a realistic option!

But, know that a preliminary ‘yes’ is not a guarantee that you’ll be accepted once you formally apply. As I found out, you can be approved during the first quote but then rejected later on as the desk staff do not seem to be informed on some of the banks qualifying criteria (for example, most banks in Malta do not give loans to C-level staff).

2. Find the people you will need

You’ll need:

1. an architect

2. a notary

They will be with you through a lot of the process so make sure you like and trust them, that they are available to do the work and be responsive and find out their fees so this does not come as a nasty surprise at the end of the process

3. Architect to review property

Your architect will need to locate:

• Land registry plan

• Schedule 8

• any permits registered to the property

Then, using this information they should come to the property and do an evaluation. The important stuff you need them to confirm:

• is the property built correctly in line with the approved plans/permits?

• is the property in good condition?

• is the property valued at the right amount?

4. Sign Promise of Sale

Your notary will need most of the documents from your architect (plans, permits etc) so make sure to provide these beforehand. Speak with your notary before setting the date to sign the promise of sale to agree on what points need to be included. At the very least, make sure these 6 points are there:

1. the property is covered by all necessary building permits and sanitary laws

2. all fees relating to the property (architect fees, building fees, any outstanding bill) are to be paid by the seller before the contract ends

3. the seller guarantees there are no pending or threatened litigation or disputes concerning the property

4. the seller must provide an Energy Performance Certificate

5. the sale is subject to notary searches being in order

6. the sale is subject to the purchaser getting a bank loan.

When you go to sign the promise of sale, you will need to pay the deposit on the spot, so go armed ideally with a cheque for the deposit amount, plus 20% of the stamp duty. For a first time buyer the stamp duty is 5% of the property value over €175,000, and you will pay 1% on signing promise of sale.

So for example, if the property value is €300,000 (and you are a first time buyer) the stamp duty will be

• Taxable amount: €300,000 - €175,000 = €125,000

• Total stamp duty: 5% of €125,000 = €6,250

• Stamp duty paid on signing of POS: 20% of €6,250 (or 1% of €125,000) = €1,250

• Remaining stamp duty paid at final signing: €6,250 - €1,250 =€5000

Present for the signing will be you, your notary, the seller and potentially the estate agent (if using).

5. Formally apply for the bank loan

Pick the bank you want to work with and begin the process. It’ll look something like this

1. Provide employment contract

2. Provide 3-6 months payslips

3. Provide 3- 12 months bank statements from all banks you hold (local, foreign, Revolut etc, current accounts, savings accounts).

4. Provide the promise of sale

5. Open bank account

In my application I had to sit whilst he went through almost every transaction on my Revolut account, asking me why I was sometimes sending some money here and there to certain people (you know, like the split bill function on Revolut) and telling me I clearly had a “YOLO” attitude to shopping and spending- despite having already paid my 10% deposit and still having half a year salary in the bank as savings. Really very condescending and judgemental.

5 a) Sanction Letter

Once the account is opened and the loan is approved you will receive a Sanction Letter, which you should give to your notary. This confirms that, based on the information they have so far, the bank will approve the loan. However it is still subject to the bank’s architect providing a favourable report and you purchasing all the necessary insurances.

5 b) Form A

To finalise the process, the bank will need to fill in Form A, which will be finalised once:

1. The bank sends their own architect to the property to ensure it is legal and worth the amount you are borrowing

2. You have purchased life insurance

3. You have purchased property insurance

The insurance can usually be done either via the bank or via another provider, as you prefer.

6. Signing the contract

Once the notary has been notified of the Form A, they can arrange with the bank to set a date to sign the final contract. There will be you, the notary and the seller and they should come with the keys to hand them over there and then, unless otherwise agreed with you beforehand.

Set aside 1.5 - 2 hours for this meeting as people will be late and there is a lot to get through. The notary will read out the entire contract, which probably varies a bit depending on each circumstance. For me, both the buyer (me) and the seller had the same bank so the contract consisted of 3 parts:

1. Section 1: the terms of the loan between me and the bank

2. Section 2: the releasing of the property from it’s previous owner

3. Section 3: the settlement of the purchase price and outstanding mortgage for the seller.

The notary will read it aloud, you will sign it, they might ask for a few last minute documents (copy of passport for example) and you’re done! Make sure you get the keys and congratulations- you now own a property!