Think property investment and you do not necessarily think of Malta but it may be on its way to becoming a good tip.
Aside from year-round sun, a population of only 400,000 and 35 scheduled flights a week from the UK, the 316 sq km island just south of Sicily also offers several new developments targeting investment buyers.
The Maltese government encourages relatively affluent foreigners to use its country as a base and to own investment properties there. Foreigners are taxed on income derived within Malta and any worldwide income declared there but the tax is no more than 15 per cent if you register under the country’s Permanent Resident Scheme.
For Britons into sepia-tinged nostalgia, Malta is especially attractive. British rule finished only 40 years ago, English is the official language and the post boxes and some telephone kiosks look familiar. But locals like to stress the efforts to turn the capital, Valetta, into a city with a vibrant night life and its own Mediterranean feel.
The tourist authorities are starting a pan-European drive to encourage visitors from across the continent, which is expected to push up demand for holiday lets.
Depending on which estate agent you speak to, property prices have risen by at least 5 per cent over each of the past five years, and in some instances hit 10 per cent annual rises. Developments are reaching new highs in term of asking prices.
Before buying a home you will need an AIP permit for the Acquisition of Immovable Property. It is an easy process but involves credit and Interpol checks, which can take up to three months. The permit is tied to your chosen property, so line something up prior to application.
AIPs are rarely refused, except on historical properties or commercial premises. In Portomaso and the Cottonera, overseas buyers are permitted to purchase more than one property.
Developers will have their own arrangements, but if you buy secondhand it is customary to pay 10 per cent as a deposit and the rest on completion, normally within a strict three-month time limit.
Purchase fees include duty on documents of about 5 per cent, legal fees of 1 per cent, searches for about Ј200 and a Ministry of Finance fee of about Ј160.
If you buy a holiday home rather than permanent residence, mortgage brokers can get up to 90 per cent loans in Maltese lire or 80 per cent in sterling over a 30-year term for many borrowers.
So far so good, but you have to be quick to catch the bargains. Joseph Lupi of Frank Salt Real Estate on the island, says there was a 10 per cent increase in the number of investment properties bought last year, largely due to publicity surrounding new developments in popular areas and, of course, Malta’s imminent entry into the EU, which local economists pre dict will trigger rises in residential property prices.
If you want to be a permanent resident you must buy or lease an apartment valued at 30,000 or more Maltese lire (about Ј47,700) or a house worth at least LM50,000 (about Ј78,000). A purchase can be from an individual or a company registered in Malta with more than 75 per cent of its share capital owned by non-residents.
Many older Britons lease on Malta over the winter, aided by a reciprocal health agreement allowing medical costs to be reclaimed in Britain.
The Observer April 4, 2004