Property Investment in Malta: Complete Guide for Investors

Malta’s real estate sector has experienced impressive growth. The luxury market has performed very well over recent years, with rental yields pushing above 5%. This consistent growth makes Malta an attractive destination for wealthy individuals looking to invest in property.

Factors contributing to Malta’s strong property market performance:

• economic stability — Malta provides a stable environment that attracts both local and foreign investors;

• tourism industry — demand for short-term rental properties increases as tourism continues to grow on the Maltese Islands;

• demand from expats — there is increased demand from expatriates seeking high-quality residential real estate options during their stay on the island.

The rise in rental yields can be attributed primarily to increasing demand within specific segments of Malta’s rental market, such as luxury apartments targeting affluent tenants and short-term vacation rentals. Investors can benefit from these rental yield trends by investing in properties that meet the requirements of targeted market segments.

For example, purchasing a high-end apartment in popular tourist areas like Sliema or St. Julian’s could generate significant rental income due to the consistent demand from tourists and expats alike.

Additionally, investing in smaller properties with unique features such as traditional Maltese architecture or stunning sea views may attract higher-paying tenants willing to pay a premium for an authentic local experience.

Many investors choose to purchase real estate in Special Designed Areas. A Special Designated Area (SDA) in Malta is a classification for certain high-end real estate developments.

These areas are treated as if they are outside Malta for property law. The main implication is that, unlike other properties in Malta, there are no restrictions on who can purchase properties in these areas. It ensures access to the best possible deals in local markets while quickly navigating legal issues.

Malta has several Special Designated Areas, each offering unique features and amenities tailored to cater to the needs of wealthy investors.

Investing in buy-to-let properties can generate a steady income while offering eligibility for European residence and other benefits like political stability and excellent living conditions. The proximity to European countries makes it an even more appealing option for potential investors.

Benefits of investing in buy-to-let properties:

• rental income — with Malta’s strong rental market, property owners can expect consistent returns on their investment through monthly rent payments from tenants;

• tax benefits — non-resident property owners enjoy favorable tax rates on rental income earned within Malta, further enhancing the appeal of investing here;

• diversification — adding a Maltese property to your investment portfolio helps diversify your assets geographically, reducing risk exposure tied to any single country or region.

Northern and Eastern Harbors are the most popular and developed regions of Malta. The biggest cities located there are Sliema, St. Julians, St Paul’s Bay, and Msida. Residential properties are in high demand due to the cities’ location near the sea, beautiful landscapes and developed infrastructure.

The square meter in an apartment in Sliema costs €4,000, and in St Julians — €3,500.

Living in the capital appeals to those who like being surrounded by rich culture and architecture. Valletta is the most expensive city in Malta: a square meter apartment costs from €4,000 to €6,500.

Gozo Island is suitable for those who want to invest less money and live in a more tranquil environment, as this part of Malta is less developed.

Malta has all types of properties you might be interested in: apartments, townhouses, penthouses, villas and others.

Apartments are the most popular option to invest in as they are always in high demand by tourists and expats. This type of residential property is usually located on one floor and has a spacious terrace.

Apartments are part of a condominium and share staircases, elevators and entrances with each other. The prices for maintenance of common areas are divided among all owners.

Modern buildings with luxurious apartments are usually located in big cities.

Villas are the second most popular option. They consist of several floors and are completely detached from one another. Villas usually have swimming pools and outdoor grounds. The best places for buying this type of object are Santa Maria Estate in Mellieha, High Ridge and Madliena in Swieqi.

The tax system in Malta is favorable towards foreign investors, offering competitive rates compared to other European countries. Non-resident property owners are subject to a flat 15% withholding tax on rental income derived from their Maltese properties.

Capital gains realized from the sale of immovable property in Malta are taxed at a final withholding rate of 8%. However, certain exemptions may apply depending on the holding period and primary residence status.

1. Stamp duty. One must typically pay stamp duty when buying a property in Malta. It is a tax on the purchase price of the property. The standard rate is 5%.

2. Capital gains tax. When you sell a property in Malta that is not your primary residence, you may have to pay a tax on the profit you made from the sale, known as capital gains tax — 8% of the selling price. However, there are some exceptions to this. For example, the rate may be reduced if you have owned the property for more than three years.

3. Rental income tax. If you rent out a property in Malta, the income you receive may be subject to tax. The rate is 15% for Maltese residents. Non-residents may be taxed at a different rate.

4. Property tax. Malta does not have an annual property tax like some other countries.

Basic bills in Malta include water, electricity, heat, and taking out garbage. On average, an owner of an 80 m² apartment pays around €100.

Electricity. Most Maltese families use electricity instead of gas. The rate depends on the number of people living in a residential property. The bills are calculated based on the meter reading that inspectors take. If the family lives in an apartment, the meters are located outside of it.

Water bills are also calculated based on the meter readings.

There is no central heating and gas network in Maltese houses and apartments. Residents use air conditioners and heaters to warm air and water. Gas is usually bought separately. A cylinder sufficient for 2—3 months costs around €20.

Garbage is taken out for free as the state pays for the services. The average garbage collection is once a week.

Remember that all waste must be sorted out and put in different containers.

Internet and mobile phones. A monthly Internet plan costs €30—35 depending on the provider. A monthly sum for a mobile phone is €25 on average. The plan includes the required number of calls and Gb of Internet.

If an individual invests in real estate, they can participate in the Malta Permanent Residence Programme and obtain permanent residency there.

The requirement is to rent or buy a property. The costs are the following:

• Visa-free travel. Maltese residents have the right to visa-free travel within the Schengen Area, which includes 27 European countries.

• Tax advantages. Residents are only taxed on income remitted to Malta, with no wealth or inheritance taxes imposed.

• High quality of life. With its warm climate, rich history, and excellent healthcare system, Malta consistently ranks among the top destinations for expats seeking a comfortable lifestyle.

• Business opportunities. As a member of the European Union, Malta gives its residents various business opportunities available throughout Europe without facing restrictions on cross-border trade or investments.

The Maltese real estate market is constantly growing due to the demand from both tourists and expats.

Most objects attractive to investors are located in Special Designated Areas. They are places where both EU and non-EU nationals can own properties under the same conditions.

Investors buy properties in the country to earn money and obtain permanent residency in Malta.

The investor must rent or buy real estate to participate in the Malta permanent residency program and pay several fees. The minimum investment under the program is €150,000.

With Malta permanent residence, you can benefit from visa-free travel within the Schengen Area, tax advantages, high quality of life and business opportunities.