Malta has been a fully-fledged European Union Member State since 2004. The rules governing the acquisition of immovable property situated in Malta formed an important part of the negotiations between Malta and the European Union. Malta’s position on acquisitions of property falling with the scope of Chapter 246 of the Laws of Malta was upheld and successfully negotiated. As a result of this agreement, the situation regarding AIP has been retained on a permanent basis notwithstanding EU freedoms permitting EU citizens to purchase property in any EU country (without restrictions).
During negotiations between Malta and the European Union, the EU acknowledged Malta’s uniqueness in terms of limited land resources and residential properties and the pressures from an ever-increasing local population. As a result, Malta has maintained its right to restrictions on acquisitions of secondary residence, on a non-discriminatory basis by EU citizens who have not legally resided in Malta for at least five years. This means that EU citizens seeking to buy a second residence in Malta will still need to apply for authorisation and satisfy certain conditions. Once an EU citizen has resided in Malta for a continuous period of five years they may than acquire a second property.
The five-year period as a residence requirement strikes a balance between the two diametrically opposed positions in Maltese and EU law. Under Maltese law, foreigners can never have full rights to buy property in Malta unless they obtain Maltese nationality. Under EU law, EU citizens would have full rights to buy as much property in Malta as they like without any need to reside in Malta. Malta has agreed to give equal rights to EU citizens to buy property freely in Malta only if they first resided here for a period of five years. In practice, this means that only those EU citizens who settle in Malta permanently can do so. This eliminates the possibility of unlimited buying of immovable property by foreigners in Malta which could potentially distort local property prices, which is an important sector to the local economy.