Owning a leisure pad in a sought-after sun- or snowbelt appears to have lost none of its allure for the super rich.
But the world’s wealthy are no longer buying second homes solely for lifestyle or currency diversification benefits.
They also look to own property offshore as an insurance policy against political, security and economic risk at home, according to British property group Knight Frank.
South Africans are no exception. Real estate agents say SA investors are looking to buy offshore property in countries where they qualify for residency.
While Mauritius and the Seychelles have until now been top of the list for most South Africans keen to buy a crossborder bolthole, a number of other countries have in recent years also introduced schemes that offer foreign real estate investors a second passport.
These include Cyprus, Monaco, Austria, the Bahamas and the Eastern Caribbean islands of Saint Kitts and Nevis.
However, the Mediterranean archipelago of Malta, traditionally the preserve of wealthy British retirees, is set to become the next destination of choice for South Africans seeking dual-residency status. That follows the introduction by the Maltese government this month of the Malta Global Residence Programme.
Malta consists of three islands: Malta, Gozo and Comino. The island’s investorfriendly tax regime, reasonable cost of living and relatively affordable property prices are seen as key attractions. The fact that Malta, a British colony until 1963, is one of the few EU countries where English is an official language — alongside Maltese — is another drawcard.
Malta’s new residency scheme replaces the previous programme known as the High Net Worth Individuals Tax Residence Scheme. Mel Roberts, consultant to international legal, tax and fiduciary advisers Maitland in Malta, says the new legislation is far more investor- and taxfriendly.
The minimum entry level for foreign property buyers has also been reduced: from à400000 (R5,4m) to à220000 (R2,97m) in Gozo and the southern parts of the Maltese islands and to à275000 (R3,71m) in the more up-market central and northern areas.
The minimum amount that foreigners can rent for to qualify for residency is à8750/year (R118 125/year) and à9600/year (R129600/year), again depending on area.
Roberts says the introduction of Malta’s new residency scheme coincides with the introduction of more stringent requirements for Southern African applicants who want to obtain a Schengen visa for travel to EU countries.
“A key benefit of the new Malta scheme is that once residence status is granted, South Africans will no longer need to obtain a Schengen visa to travel in Europe.”
Roberts says this is likely to be a major attraction for South African investors who travel frequently to Europe on business or pleasure, as they can do away with the onerous process of having to apply for a Schengen visa each time.
Roberts says the scheme’s tax benefits include a flat 15% tax rate on income remitted to Malta, zero capital gains tax on assets sold outside Malta, no inheritance tax and no rates and taxes on property owned in Malta. Foreigners, however, pay a minimum tax of à15000/year (R202500) per family.
Foreign applicants must buy or rent a property in Malta within 12 months of being accepted into the scheme. Once residency is granted, foreign investors have to spend at least six months of the year (182 days) in Malta.
Joseph Sullivan, director of estate agency Fine & Country in Malta, says foreign buyers tend to favour the upmarket areas of Sliema and St Julian’s Bay on Malta’s main island, where modern, luxury apartments with sea views will typically sell for around à350000.
Tigne Point in the new capital of Valetta and the medieval town of Mdina, Malta’s old capital, are also regarded as popular areas to live, with easy access to restaurants, shops and beaches. Apartment prices typically range from around à200000 to à500000.
Investors who let their units can earn a gross income return of around 4%5%/year. Modern, three-bedroom apartments with sea views, normally fully furnished with kitchen appliances, rent for R9500-R10500/month.