The growth of the real estate industry in Malta has seen a rapid increase in the amounts of real estate agents, property brokers and property consultants whose role is to act as an intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land.
In an effort to formally regulate the way in which such agents, brokers and consultants conduct business, the Maltese Government has introduced the ‘Real Estate Agents, Property Brokers and Property Consultants Act, 2020’ which came into force by means of L.N. 291 of 2020. These new rules are intended to more effectively regulate this sector, also bearing in mind the importance of observing AML regulations. Under the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), real estate agents, even when acting as intermediaries in relation to the letting of immovable property where the monthly rent amounts to 10,000 euro (€10,000) or more, are deemed to be subject persons for AML purposes.
The Imposition of a Licence
Under the new Act, all persons carrying out the activity of a property broker or real estate agent or any other person that is employed or engaged as a branch manager or property consultant after the 31st December, 2021 must be in possession of a valid licence which is to be issued by the Licensing Board. The term “property broker” refers to any natural person who has a licence to act as an intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land in terms of the new Act and does not employ and, or engages (whether under a contract of service or a contract for services) any branch managers and, or any property consultants. On the other hand, the term “real estate agent” refers to any natural person who has a licence to act as an intermediary in the process of negotiating and arranging transactions involving the acquiring or disposing or leasing of land and employs and, or engages (whether under a contract of service or a contract for services) one or more branch managers and, or one or more property consultants.
It is important to note that not every person acting as an intermediary necessarily needs to be in possession of a valid licence when conducting such activity or service. If a person acts as an intermediary (in the same way as described above) on an occasional basis (not more than two (2) transactions per annum), then that person would not require a licence. Notwithstanding this exemption, such person shall still be required to submit a notification in the form prescribed by the Board to inform the Board of the intention to carry out such occasional activity and provide any other information which the Board may require.
Any person who does not comply with the requirements as prescribed by law shall be liable to an administrative fine (multa) not exceeding twenty thousand euro (€20,000).
Eligibility for Licence
For an individual to obtain a licence to act as a property broker, real estate agent or a branch manager, the following requisites are necessary:
Where the equivalence of the qualifications is deemed to be only partial, it shall be possible for the applicant to prove his competence in the areas where it is deemed to be lacking by means of an assessment set by the Board.
An individual will not be able to obtain or hold a valid licence if:
No licensee may exercise the activity of a property broker or of a real estate agent under any name unless the name has first been approved by the Licensing Board. The licence shall be valid for 5 years and may be renewed.
Licensees are required to make known to customers the fees to be charged for their services in advance. If the licensee was active during the negotiations between the parties but the transaction was not completed, a fair compensation would still be due and is to be determined by a court.
Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.