The acquisition of immovable property in Malta by non-residents and the local legal regime

Abstract

This professional report focuses on Chapter 246 of the Laws of Malta ‘The Immovable property (Acquisition by Non-Residents) Act hereinafter referred to as the AIP Act. Information was gathered from practicing notaries by virtue of interviews to view their opinion on the Act since notaries are mainly the professionals who put forward the application of the purchaser who would require an AIP permit to acquire immovable property in Malta. An interview with the Government Officer in charge of the AIP section was also conducted to get an overview of the system and whether any issues with notaries exist. Reference to previous thesis on the acquisition of immovable property was made to understand the historical perspective of Chapter 246 of the Laws of Malta. The report concentrates primarily on individuals who are ‘non-resident’ and therefore ‘non-resident’ companies acquiring immovable property in Malta was not tackled in the study. In order to properly pave the way to the more analytical and argumentative area of this report, it is fundamental to begin with a concise review of the various salient features and definitions of the AIP Act. Particular attention is given to the development of the AIP Act and its evolution through the passage of time, particularly with Malta’s accession to the European Union, leading up to more recent amendments introduced. This will enable the reader to have a better understanding of the raison d’etre of the Act and to properly comprehend the arguments that are raised in the latter part of the report where a critical approach is adopted. The extensive research carried out elicits and delves into the identified weaknesses and shortcomings of the AIP Act, proposing possible reform to address the latter. Due to its small geographical dimension and its ever-growing population, Malta has always had certain limitations. The AIP Act was enacted in 1974 in order to prohibit the acquisition of immovable property in Malta by ‘non-residents’. The effect of Act XXXVII of 1974 was retroactive. The law was enacted on the 5th of August 1974, however Article 3 stated that it was to come into effect from the 30th of May 1974. The reason for this retroactivity was to invalidate a contract that took place between a Maltese company and a company with a significant Libyan shareholding. Anyone who had acquired immovable property in Malta whether by act intervivos or causa mortis, or who had entered into a promise of sale since the 30th May, 1974 and who was effected by this Act, had to apply to the Minister of Finance for permission. The government wanted to control the arrival of foreign bodies, as it did not want to risk being taken over indirectly by another power after having only gained independence a decade before.