The rental market in Malta has enjoyed a boom over the recent years. At its peak, the average rental price for a comfortable two-bedroom in a popular area reached up to 2.500€ – depending on the area.
Therefore, it has become much more economical to buy property in Malta. In this way, you do not only invest in something that will be yours in the future but also reduces your monthly housing costs.
Ironically, the monthly rate for the home loan can be lower than the monthly rent – paid to your landlord rather than into your investment.
However, the current property prices in Malta do not always make buying property affordable. Thus, buying off-plan or rather buying a flat or property on plan can be an alternative.
However, the attractive prices often compensate for the risk of buying something that hasn’t been built yet.
The biggest pitfall when buying property in Malta is not doing your research. People rush in and buy, and are left to deal with the consequences.
Here are 8 must-know tips when buying an off-plan property that should make it to your pre-purchase checklist.
Do your research on developers!
When buying from a developer do your research on their background! The fact that they list appealing 3D visualizations of upcoming projects on their website or social media – does not reflect on how happy their buyers are.
Ask around on social media or contact people you trust to find out if they deliver on time and in compliance with the issued permit!
Find out whether previous developments are well-finished! If you can, go and visit one of their finished projects!
Ask for the permit!
Even Malta’s top developers such as JPortelli Projects market their projects without the mentioning of a permit. It is not the marketing without a permit that is illegal but the building.
Building without a permit is illegal and can incur daily fines. However, it is the developer who is in charge of paying the fines, whilst you are, however, left to deal with the consequences.
If your property has been built either without a permit or not in line with an existing one you won’t be able to apply for water and electricity. Even if your off-plan property is finished and ready to move in you might be dealing with a pending compliance certificate needed for this application.
Another consequence of a missing permit might be a change of the layout or any other kind of deviation from how the object has originally been marketed. Make sure you ask for an issued permit and double-check if this permit is in line with how your future property has originally been offered to you on the building plan!
Use a notary of your trust!
Only work with a notary that you trust or that has been recommended to you by someone you trust! Ask for advice on social media if you are unsure!
Get a written quote and do not work with a notary that charges more than 1% of the property value! It is your notary’s job to ensure that the contract you sign with the seller is legally flawless. The contract should at least include:
- the purchase price,
- a detailed description of the property,
- the address, name, and surname of buyer and seller,
- a description of what is included in the purchase price (balcony railing, main entrance door, letterboxes),
- compensation of possible defects or deviation from property description,
- payment steps for each milestone, delivery date, or date of key handover.
Your developer might offer you to share their appointed notary to get a discount on the fees for you! You are free to do so but would you use your ex-partner´s lawyer to guide you through a divorce?
Check the contract and pay per milestone!
Delayed delivery of your off-plan property can cost you real money. Do not pay the full purchase price upfront and agree on paying per milestone!
A common practice when buying an off-plan apartment in Malta is making the first payment for the deposit. The second and third ones will be made after the delivery of the shell form and the common parts!
You could even cover yourself with a late delivery and penalty clause in the contract which could sound like the following: “Should the Seller fail to make delivery on time as stipulated in the Contract, a penalty is charged at 0.5% for every seven days”.
Delays, however, are unfortunately not uncommon in Malta. It is therefore advisable to bear in mind that developers usually would refuse to pay the agreed penalty until buyers would open a court case – penalty clause or not.
If you do not have the energy for this kind of extra hassle, better agree in the contract to have your part of the next payment pending and/or to deduct the late delivery penalty from your next payment.
For this reason, it can be very useful to agree on paying per milestone and to get some legal advice in advance.
Keep everything in writing
During the negotiation and construction process, you will be in contact with the developer quite a lot – both via phone and/or in writing. It’s important that you additionally follow up everything in writing so that you have this to refer to in the future. Keep every kind of made agreement in writing!
However, developers in Malta are very slow in responding or ignore follow-up emails completely – either due to the high volume of incoming emails or to not commit to writing what has been said on the phone. It is very important to get some legal advice in advance to find alternatives to cover yourself.
Plan finishing in advance
When you buy property in Malta off-plan, you will be in charge of finishing the property. This will include the electrics, plastering, painting, flooring, kitchens, bathrooms, internal doors, and much more.
Be very clear with your developer about what is included in the agreed purchase price! To finish your shell form, you can either work with a contractor or hire your electrician, plumber, tiler, painter, etc. individually.
In this way, you might save money but in the long run, this could also result in extra hassle. Each work step has to be coordinated properly and obviously in a certain sequence (e. g. electrics before plastering or the tiles after the plumbing etc.).
This makes it more difficult to plan your individual worker´s time slots in advance. Plus, your workers are not necessarily available the day you happen to be able to proceed with the next step. Plus, postponed or no-show appointments can cost you time and money.
In this way, it can be beneficial to find a good contractor who coordinates his workers for you – even if contractors are said to be slightly more expensive. However, in the long run, you can save a lot of time and trouble.
You must agree on a delivery day, on a reasonable penalty as well as on paying per completed milestone in the contract. Plus, only work with contractors that have been recommended to you either by friends or on social media! It is also advisable to ask what contractors you should not work with.
Consider extra costs
Take extra costs into consideration that go beyond the finishing and furnishing costs! The costs do not end with paying the developer. Before you can get started, you need to appoint both an architect as well as a notary. Ideally, you also get some legal advice from a lawyer in advance.
It is also advisable to aim for legal expense insurance – if you happen to find one that covers building disputes. Plus, if you opt for a home loan, the bank will ask you for at least both life and home insurance that need to be paid yearly for the duration of the home loan.
After your property is ready to move in, you need to cover the yearly costs for administration, whilst the application fees for the electricity and water services can be as high as 645€.
Don’t fall for Clickbait!
If you prefer to work with a real estate agent to find you off-plan properties, you are free to do so.
However, know the current market prices and be hesitant if some adverts are too good to be true! Once you call, the potential bargain is usually “no longer available” whilst the agency offers you to create a profile using your private data so that they can call you when a similar offer comes up.
Only work with agents recommended to you and be careful who you give your private data to! It should be more than sufficient to work with one good agent who knows what type of property you aim for and guides you through the first step: the property hunt.