Investment in property has been recognized as the unfailing means of acquiring wealth. The phrase 'safe as a house' is clichéd. Yet, it is the only truth in the context of return on investment scenario. Return on investment in property is a slow process.

However, it is an investment that never fails. History also testifies to the fact that investment in property is a minimal risk investment. The return from the property, services the investment. The net worth grows over time and generates income for further investments in property.

Like any other investment, Property investment is a skill which has to be learned. The investor must be aware that there are risks attached to any kind of investment. He must also consciously acknowledge the fact that during the process of investment the risks attached seem to be magnified. He must also accept that, the right choice of property, combined with considered management are absolute essentials in any property investment. Property investment is a serious business that requires the right kind of commitment.

Before actually launching into the purchase of a property, the investor must be clear as to the purpose of investment. If investment may be for:
1. Personal use
2. To buy and Let
The purpose will determine the type and location of the property. In the former instance property may have to be located close to the place of work or near an educational institution. The type of property may not per se be of importance. Its location may be important. In the latter case all aspects of the property assumes importance. It is a property purchased as an investment and the investor expects a return on property investment.

Investment Property should be selected keeping in mind the following environmental factors:
1. High employment area
2. Attractive buildings and surroundings
3. Public Transport facilities
4. High capital growth
5. Developing areas
6. Low maintenance costs
7. High demand by letting agents

The Return on Investment (ROI) expected will include factors such as
1. Appreciation of the asset
2. Regularity of rental income
3. Long term stable tenants
4. Care by property managers.
5. Tax benefits

Investing in foreign countries requires an understanding of the laws and systems as it impacts on investment by foreigners. It also requires an understanding of the socio-economic fabric of the country as it will have a bearing on the value of the property. Therefore, investing in property in a foreign land requires the investor to stay in the country for some time or a study of the socio-economic-demographic and political setup of the country in so far as it impacts on foreign investment in property.

The Investment environment in Malta
Malta has an excellent business infrastructure and good telecommunication facilities. The widespread use of English also makes it attractive to the English speaking peoples of the world. The Government welcomes foreign investment in Malta with 100% ownership of enterprises in almost all sectors. More than 200 foreign companies have set up business in Malta.

Property investment in Malta is a goldmine for the investor. The costs of property are low and the returns are comparable to returns from property anywhere in the world-including London. Service taxes and maintenance charges are also very meagre. Rental properties are in great demand and it is easy to find tenant for the property in a matter of a few months as Malta attracts Britons, Italians and retired people who spend their winter there. The island also has a well established business community and multinationals such as Vodafone and Microsoft have invested funds there. This boosts rental demand. Properties in Sliema or St Julians facing the Sea front are in great demand and old 'houses of character' with pools in Gozo are snapped up immediately.

Malta is all set to enter the European Union and this will again improve the investment environment in Malta. The property sales market is also steady and is showing an uptrend and the property prices tend to rise 8% per annum on the average. The level of growth is expected to continue for some years. The Government has launched a scheme to attract funds held by Maltese nationals abroad. This is turn has increased the amount of investment being made in property and resulted in property prices increasing. On the whole the market is healthy and buoyant.

Restrictions on Foreigners acquiring immoveable property
The European Union has exempted Malta from the application of the rule of unrestricted property purchase in consideration of its size and population density. Foreigners can buy any number of properties in Malta or Gozo in designated locations. The designated areas where property can be purchased by foreigners are: Gozo, Portomaso in St.Julians and Cottonera in Vittoriosa.

In these designated areas properties are being built to very high specifications and are more expensive than in the rest of the country. In these areas foreigners can buy any number of units and these can be purchased through a trust or a company. Rentals restrictions too are minimal and the rents are higher. Properties are yielding a return of 5-6 percent gross and the capital appreciation is around 15%.

Foreigners can purchase only one residential property in Malta or Gozo in places other than the designated areas. The investor must acquire a permit known as the Acquisition of Immovable Property Permit(A.I.P) from the Ministry of Finance. This is normally issued within three months of application.

The conditions pertinent to purchase of property by foreigners are:
1. The price of the property must be greater than Lm 30,000 in the case of an apartment and Lm 50,000 in the case of a house.
2. There must be evidence that the funds for the purchase of property has originated from abroad.
3. Evidence that the property is for the residential use of the owner or his family or guests accompanied by the owner.
4. The residence may be rented out if the property has a swimming pool or has the right of enjoyment of a swimming pool and it is licensed as holiday accommodation by the Hotels and Catering Establishments Board or if it is a property purchased in the special designated areas.

Mortgages and Loans
Loans for purchase of property is available from local banks such as HSBC Bank Malta, Bank of Vallletta plc, APS Bank Ltd and Volksbank Malta Ltd. The current rate of interest on these loans is 5.75% for a maximum period of 20 years. Home loans in designated foreign currencies carry a 2% extra interest over the respective 6 months LIBOR and the same will be adjusted at the end of the 6 month period. The sum borrowed can be up to 70% of the property value if it is availed in Maltese Liri and 60% if availed in any other designated currency. More finance can be obtained if additional security is offered. A number of organization offer financial portfolio management services in Malta.

Taxes and Concessions
Resident status enjoys a 15% tax rate and minimum liability of Lm1800 per annum. A resident individual must also have a minimum income of Lm 10,000 per annum and a proven capital of Lm 150,000. This capital need not be brought into Malta but the value of the property purchased in Malta may form a part of the capital requirement. Therefore, investment in property by foreign companies would provide them with the concessions under the tax laws.

Proceeds from the sale of property may be repatriated.

Malta does not have inheritance tax but the beneficiary is liable to 5% transfer tax on the value of the immoveable property inherited on death of the original owner. If the property is jointly owned and one of the members pass away, 5% is leviable on the portion owned by the deceased. Legal fees would be roughly 1% of the value of the property. The Ministry of Finance levies a fee of Lm 100 on application for transfer of property.

Malta has signed a number of double taxation agreements with Western Europe, Canada and Australia. The residents in Malta can claim tax exemptions or refunds of tax from their countries based on these agreements.

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