Negotiations with the European Union
Malta is now a full member of the European Union. During pre-accession negotiations, Malta successfully reached an agreement with the EU regarding the acquisition of immovable property. As a result of this agreement, the situation regarding AIP will be retained on a permanent basis even after membership even though EU law allows EU citizens to purchase property in any EU country without restrictions.
During negotiations, the EU agreed that considering the limited number of residences in Malta and the limited land available for construction, which can only cover the basic needs of the present residents, Malta may maintain restrictions, on a non-discriminatory basis, on the right of EU citizens, who have not legally resided in Malta for at least five years, to acquire and hold secondary residences.
This means that EU citizens seeking to buy a secondary house in Malta will still need to apply for authorisation and satisfy conditions as is now. They will also not be entitled to buy more than one property unless they reside in Malta for at least five years.
The five-year period as a residence requirement was the balance that was struck 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.
Instead, Malta 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 was done in order to eliminate the possibility of foreigners freely buying as much property in Malta as they like. More important, Malta wanted to reduce the possibility of an increase in property prices because of EU membership.