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The buying process in Gozo is quite simple and consists of two stages. Once a price is established between vendor and purchaser all parties concerned meet at a notary (normally appointed by the purchaser) for the first stage of the sale. This stage is called the Preliminary Agreement or Promise of Sale. All the conditions of the purchase must be documented in this agreement. It is normal that a 10% deposit is paid which further proves the commitment the buyer is putting in the purchase. This agreement is binding to both parties and once signed none of the parties can back out. If the purchaser decides (for a reason not valid at law) to back out the deposit is forfeited in favor of the vendor. The purchaser is also protected by law, if the vendor decides to pull out of the sale, the purchaser can force the vendor to sign through the Maltese court.
If the purchaser is a non-Maltese national the Preliminary Agreement is subject to the purchaser obtaining the AIP (Acquisition of Immovable Property) which is a permit issued by the Ministry of Finance permitting foreigners to buy a property in Malta and Gozo. Here are instances when and AIP permit is required. - If purchasers are not citizens of the European Union.
- Citizens of the European Union who have not resided continuously in Malta or Gozo for a period of five years.
The AIP permit is normally issued within two months and is subject to the following conditions;
- The value of the property being purchased must be at least €104,510 for an apartment or €174,132 in the case of a house. These values might vary on a yearly basis according to inflation. If the property is bought in an unfinished state for less than these amounts, the improvements made must be enough to increase the value of the property to the above amounts.
- Purchaser must not own another property in the Maltese Islands unless it’s in a special designated area where one or more property is allowed. If the applicant already owns a property in Malta or Gozo this property must first be sold.
- The applicant must not have a criminal record.
EU citizens who have resided in Malta for a period of five years will not need an AIP permit. This is also true for EU citizens buying a property to take up residence in Malta or Gozo. After the signing of the Preliminary Agreement the notary can start the title searches on the property to ensure that the property has a clean title. The AIP permit if needed is applied for by the notary. If it is found that the property does not have a clean title (very rare) or the AIP permit is not issued the sale cannot go ahead and the deposit, in this instance, will be returned to the purchaser. If good title is established and the AIP permit is issued the final contract of sale will be signed. This document is more or less the same as the Preliminary Agreement with all the conditions previously agreed.
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