Ownership of property in Malta is generally regulated by the Civil Code (Chapter 16 of the Laws of Malta). Leases of immovable property are governed by ad hoc legislation depending on the type of property being leased. For instance:
- agricultural property leases are regulated by the Agricultural Leases (Reletting) Act (Chapter 199 of the Laws of Malta); and
- residential leases are regulated by the Private Residential Leases Act (Chapter 604 of the Laws of Malta).
Ownership of property is generally regulated by the Civil Code. However, certain properties may also be governed by more stringent requirements from a planning policy perspective or by laws governing the enjoyment of common parts in apartment blocks.
Property in Malta is generally transferred by title of full ownership. However, the institute of emphyteusis – particularly where property is transferred by means of this title on a perpetual basis – is very similar to title of full ownership; although some restrictions, such as the payment of an annual ground rent, do apply.
Property is generally owned by physical persons, although major developments may be owned by one or more commercial companies, given the investment required. It is also not uncommon for property to be owned by trusts or foundations.
Non-residents require a permit to acquire property in Malta. Furthermore, certain leases made before 1995 do not allow the owner to retake possession of the property after the expiration of the agreed timeframe. However, the latter laws are being gradually phased out due to various court judgments – including decisions of the European Court of Human Rights – deeming them to be in breach of the owner’s fundamental right to enjoyment of the property.
Generally, the owner of the land owns all that may be found on it. However, exceptions are possible, as the ownership of the overlying airspace may be divided between various individuals – for example, in the case of apartments overlying each other, which may be subject to fractional ownership.
Generally, the security instruments which may attach to immovables under Maltese Law are privileges and hypothecs, with privileges ranking before hypothecs.
The Land Registration Agency (https://landregistry.gov.mt/mt/Pages/default.aspx) and the Public Registry.
If a property falls within a registration area, it must be registered with the Land Registry. Conveyance of land in a registration area must be registered to become operative. Therefore, in a registration area, the following will not be operative against third parties unless the title to the land conveyed or affected, whether beneficially or adversely, by any contract, judgment, judicial sale, redemption or hypothec is registered:
- all contracts conveying the ownership of immovable property or any real right over such property, including transactions relating to immovable property under trusts, or whereby any act having the effect of conveying the ownership of immovable property or any real right over such property is dissolved, rescinded or revoked;
- every judgment whereby any act having the effect of conveying the ownership of immovable property or any real right over such property is dissolved, rescinded or revoked; and
- every conveyance of immovable property by judicial sale and every redemption of ground rent (in the case of an emphyteutical contract).
The registrar may, in his discretion, nonetheless register the title to land situated outside a registration area.
The main requirements for registration are the deed of acquisition and the site plans, apart from the relevant forms, which are generally completed and filed by the notary public who publishes the relevant deed.
In order to complete registration:
- the duty must be paid on the transfer as per the Duty on Documents and Transfers Act; and
- an extract of the deed of transfer must be registered with the Public Registry and with the Land Registration Agency.
Yes, this is essential to ensure that everyone’s rights are safeguarded.
Commercial leases are generally regulated by the Civil Code (Chapter 16 of the Laws of Malta). However, leases entered into before 1995 are regulated by the Reletting of Urban Property (Regulation) Ordinance (Chapter 69 of the Laws of Malta).
Commercial terms are negotiable between the parties.
A commercial lease contract must be concluded in writing and, like any other contract of lease, must satisfy certain formalities, such as including details of:
- the tenement;
- the rent;
- the term; and
- whether the lease is renewable.
A commercial lease must be concluded in writing and signed by all parties.
The respective obligations and liabilities may vary depending on the terms agreed between the parties. Fundamental requirements include:
- the establishment of a timeframe for the lease;
- the use to be made of the tenement; and
- the rent to be paid.
Other very common terms which are included relate to:
- the requirement for a security deposit;
- insurance obligations;
- the right to sublet;
- the right to make structural changes;
- signage that may be used;
- maintenance;
- termination; and
- dispute resolution.
This may take the form of an annual percentage increase – for example, a 10% increase over the rent of the previous year. Alternatively, the rent for every year of the lease may be explicitly stipulated in the agreement.
Value added tax.
Generally, the tenant is responsible for all the running costs of the immovable, such as electricity, utilities, maintenance and repairs.
If an amicable agreement is not reached, disputes are generally referred to the Rent Regulation Board.
Typical safeguards that landlords make use of to protect their interests include:
- bank guarantees;
- advance payment of rent (generally quarterly); and
- a substantial security deposit.
Real estate transactions must be concluded in writing and the contract is generally executed after negotiations between the parties, who are often introduced to each other by real estate agents.
Generally, the owner, the buyer (or tenant) and a real estate agent.
Sellers are bound to disclose important aspects relating to the property. The seller guarantees his or her title on the property and the seller provides a warranty against latent defects.
Mainly searches to confirm the rights of the seller over the property, but to a lesser extent also a survey to confirm the value of the property and its structural soundness.
Among other things, these include:
- the requirement to have an energy performance certificate;
- the payment of duty in the case of a promise of sale agreement or a deed of sale (as well as registration in the case of the latter two documents);
- the registration of a residential lease agreement; and
- in all cases, a written instrument.
Whether the writing may be private in nature or whether a public deed is needed depends on the nature of the transaction. A sale or an emphyteusis, for instance, must be made by public deed.
A transfer of ownership generally takes longer as land registry searches must be concluded by the notary public, and these can take a considerable amount of time and must be paid for by the buyer. Hence, the parties may enter into a promise of sale agreement, whereby a deposit is paid to bind the parties to appear on a final deed. The term is generally between six and 12 months.
Apart from the warranty against latent defects provided by the seller, the respective duties of the parties generally depend on the terms and conditions agreed between them in writing.
While there are several exemptions – such as where an individual resides or will reside in the property in question – the buyer must pay stamp duty at the rate of 5% of the market value of the property, whereas the seller must pay capital gains tax of 8%. On the signing of a promise of sale agreement, the parties must pay 20% of the tax due on the final deed.
Banks are the main providers of real estate finance in Malta. Banks are regulated by the Banking Act and the Financial Institutions Act, among others.
The most common forms of financing are secured loans from banks.
- Promise of sale;
- Searches;
- Payslips to confirm income;
- Medical assessment for insurance purposes; and
- Other sundry documents.
Banks are very cautious and will lend funds only if their security is privileged and if their security ranks first. In most cases, they will also insist it is the only security on the immovable.
The costs may vary, but one will need to pay for searches, bank legal vetting costs and other sundry expenses.
The enforcement process will require a court judgment and potentially the sale by auction of the immovable.
Contractors, insurers and banks are the most common investors in property.
Trusts and limited liability companies are often used as investment vehicles in this sector.
They are generally instituted by law firms and trusts will generally be administered by individuals holding a licence to act as trustees.
The Planning Authority, among others, regulates land development and the issue of permits related to land development.
The process may be lengthy, especially if neighbours, local councils or non-governmental organisations make objections. The various costs range from architect fees to Planning Authority fees and potential penalties.
A decision of the Planning Authority may be appealed to an ad hoc tribunal and the tribunal’s decision may then be appealed to the Court of Appeal (inferior jurisdiction).
A party that fails to obtain planning permission is precluded from proceeding with the development in question. If the development continues, the consequences may range from fines to the demolition of any illegally erected building.
Yes; however, this must be for a public purpose and is subject to payment of the market value.
No, expropriation is allowed for a public purpose only.
All developments must be assessed to ensure they are compatible with environmental requirements and buildings must be covered by an energy performance certificate (EPC).
Liability is established through the judicial processes and clean-ups must be organised at the culprit’s expense.
The main clause which is included in contracts relates to the provision of an EPC.
There are some financial incentives, but these are not always deemed to be very effective.
There are various types, such as an environmental impact assessment and the EPC.
Real estate development is a vital component of the Maltese economy. Amendments may be in the pipeline to assist developers in the wake of the COVID-19 pandemic.
The assistance of an efficient legal team, including a notary public and a lawyer, is vital to expedite the process and avoid unpleasant surprises such as problems with authorities and counterparts.
