Malta: Tempted by flights of fancy

Low-cost airlines have opened up Malta's luxurious, laid-back lifestyle to all. Laura Latham discovers slick apartments and picture-postcard palazzos

Malta's location at the heart of the Mediterranean has guaranteed it a special status. For centuries, the island was fought over by European armies, and it was only given independence by the UK in 1964. It's now seeing an invasion of property buyers taking advantage of its year-round sun, pretty beaches and cosmopolitan culture.

The recent decision to open up Malta's skies to low-cost airlines has led to unprecedented amounts of investment since the island joined the EU in 2004. After ownership restrictions were relaxed for EU citizens, buyers moved in, snapping up old townhouses, restoration projects and seafront apartments, sparking a development boom and a hike in property prices.

"Prices rose 40 per cent over two years," says Anna Farrugia of Harlon Property. "After years of the property market being static, it was too quick." But it didn't stop Malta and its sister island, Gozo, being sought after by those looking for a Med holiday home.

Prices have settled down to appreciation of around 10 per cent, but that may change. "When you get low-cost airlines, you get people buying for investment," says Vanessa Lupi of local agency Frank Salt. "It's also easier for those who buy for their own purposes, since their holiday homes will be more accessible."

A programme of new development is bringing a variety of sophisticated accommodation into existence. The residences on the waterfront at Saint Julian and Sliema sell from £100,000 for a one-bedroom apartment without a sea view, but can go up to £500,000 for a frontline pad with three bedrooms, incredible views and often a private yacht mooring.

"Malta and Gozo boast different types of property, ranging from townhouses to secluded farmhouses and character properties as well as grand palazzos, which have been beautifully restored," says Lupi.

It's rare to find a detached villa, bungalow or terraced home for less than £225,000, but seafront apartments in resorts such as Mellieha and St Paul's Bay can be found for £70,000. Attractive little houses in the back streets of places such as Cospicua are also available from under £100,000.

Gozo has a more rural feel. The island's homes are pretty stone houses with walled gardens and swimming pools, which are very popular with tourists. "Gozo is better value for farmhouses," says Farrugia. "You can find unrestored houses with two bedrooms for £120,000." A restored property of this type would cost more than double that. But Lupi warns: "Gozo doesn't suit everyone because of its aura of tranquillity."

For those who want sea breezes, a warm climate and a vibrant community, Malta is hard to beat. "Malta is a small island," says Farrugia. "It has a good cultural mix and is a comfortable place for people from the UK to be." But its small size and popularity is pushing up prices. "There's a lack of land and they won't allow building to go on in the green areas. Land is becoming very valuable." She predicts this will cause a 15 per cent rise in prices over the next three or four years.

But Lupi discounts fears that Malta will become like overdeveloped Spanish or Portuguese resorts. "Malta and Gozo can't be compared to places like Spain and Portugal. When people buy here, they buy much more than just the property, they buy the lifestyle."

Frank Salt Real Estate Ltd: 020-7935 5333, www.franksalt.com.mt;

Harlon Property: 020-8942 9558, www.harlon.co.uk

Buyers' guide

* Non-nationals who are not becoming residents need a permit to buy. This is only granted on condition that the property is for the use of the owner and not for letting. Neither are they allowed to own more than one property apart from in designated areas.

* Property for non-Maltese buyers must cost more than £60,000 for an apartment or £103,000 for a house.

* If you plan to rent your property a letting licence must be obtained. This will only be granted if the property is recognised as first-class standard, known as Classification A.

* You will need a preliminary contract, a 10 per cent holding deposit upfront. Final contracts are signed in the presence of a notary once searches and legal procedures have been carried out.

* If you live full-time in Malta for three consecutive years you won't have to pay capital gains tax if you sell.