Making an investment in assets or shares always involves taking a risk. Yet, with property prices soaring in the Maltese islands over the last few years, it’s a pretty safe bet to say that savvy buyers who invested in immovable property a few years ago have made a handsome profit in the last decade. Of course, the bottom line we’re trying to stress here is that if you’ve got the capital to invest in a property of your own or have the capability of getting a loan, you should definitely hop on the bandwagon and make an investment to reap the rewards. Below we go through all you need to know in a nutshell about investing in property in Malta. Read through our guide, then head to our property listings to find an investment property worth capitalizing on.
When is property in Malta considered to be an investment?
Property in Malta is considered to be an investment when the real estate being purchased is not intended to be used as your sole residence. Instead, it’s either being bought as a second residence or investment property.
The Process of buying an investment property in Malta
While there are tons of properties available in Malta, there are several properties which might lead you to making a bad investment. Needless to say, clever decision-making is the crux of making successful investments in property on the islands. Hence, it’s of vital importance for you to inform yourself about what can go wrong and to conduct some market research before you dive right into buying a place.
Establish a Budget For Your Investment Property in Malta
Prior to looking for a place to buy, it’s important for you to set a budget for yourself. If you don’t have the capital needed to cover the costs of your investment, head to a few local banks in Malta to get quotes for a loan. Once you’ve done so, you’ll be able to know how much you can afford to pay for your investment. On another note, don’t forget that you’ll also need to cover the costs of the 10% deposit, stamp duty and notarial fees. So don’t forget to factor these things into the equation too when considering your overall budget.
Take a look at Market Trends & the Best Areas to buy Property in Malta
Now that you know how much you can spend, it’s time to take a look at market trends and the best areas to buy property in Malta. You can do this by asking real estate agents, notaries or anyone who works in the line of property for their take on things. Other than this, you can also conduct your own research by going through some property listings and reading newspaper articles on the property market in your spare time to establish industry benchmarks for real estate prices in a specific area as well as in which location you’ll be able to turn over a profit quicker.
Always Determine Your End Goal
On a separate note, it’s also good to evaluate your end goal and how you plan on paying your loan off before you’ll be able to get some return on investment. Determine whether you’d like to rent your investment property or sell it as soon as you can to make a profit. Alternatively, you can also opt to rent it for a few years and sell it later on should you wish to purchase a property of a higher investment value. At the end of the day, your typical return on investment will ideally need to be at least between 3.5% to 6% of the total that you bought the property at. To help you understand how to do so, we recommend having a read through this guide.
Top Factors to Consider When Buying an Investment Property in Malta
Two of the most important factors to consider when buying an investment property in Malta are resellability and rentability. If you’re planning on selling your property after a few years of renovating it, you should definitely think about whether the place in question will rise in value after a few years. Of course, the location and type of property will strongly influence whether or not it will. On the other hand, if you think you’d rather rent it out and keep your investment in the long run, you’ll need to evaluate how much you’ll be able to rent it for and to who. Moreover, you’ll also need to determine the demand for the type of real estate in the specific town or city you’re thinking of investing in and your annual turnover.
Stamp Duty on investment properties
No matter if you’re buying your first home, your second home or an investment property in Malta, Stamp Duty must be paid on any property being bought. Stamp duty in Malta stands at 5% of the property value and is paid to the Inland Revenue Department. In certain situations, there are exemptions on Stamp Duty which are given as refunds after the duty has been paid. However, these generally apply to first-time buyers and second-time buyers, rather than people seeking to purchase a property for investment in the Maltese islands.
Notaries Fees on Investment Property
On buying any immovable property in Malta as an investment, you’ll need to pay the required notarial fees of your appointed notary public. This professional acts on behalf of the government to carry out research on the property being bought, draw up deeds and so forth. Typically, the fees of the notary public are between 1.5% to 2.5% of the total price of the property in question. The first fee is paid upon the signing on the Preliminary agreement. This is typically 33% of the total fee. The remaining balance that’s owed to the notary will be paid when the final deed is signed.
Our Advice: Seek Your Notary’s Help on Buying an Investment Property in Malta
Buying an investment property ultimately involves taking a risk. As we’ve stressed in our article, it’s important to do some of the leg work before making a decision on a property for your investment to emerge as successful. However, this doesn’t mean that you should be afraid of taking a step forward and reaching another milestone in your life by buying a second place. Although we’ve outlined some of the things you should look out for, we always recommend heading to your chosen notary public, real estate agent or even an architect to get some solid advice on the property you’re thinking of investing in. Sure, you might have to pay a few fees here and there, but it’s certainly worth doing to be able to make the right decision.