Urban Conservation Areas (UCA) in Malta
The Urban Conservation Area (UCA) scheme is a program that was designed to encourage people to buy and restore old properties in historic areas in Malta. It provides financial incentives, including tax breaks, cash grants, and VAT refunds, for homebuyers, making it more affordable to invest in older buildings than to construct new ones. Introduced in 2021, this scheme aims to preserve Malta's architectural heritage while easing the financial burden on prospective homeowners.
UCA Scheme Malta 2026
The Maltese government has extended the UCA scheme in the 2026 Budget, showing its commitment to restoring historic buildings and supporting people who want to own property in Malta. While the program itself has not changed much from last year, people who own non-residential properties can now qualify as first-time buyers. Also, the threshold for the 3.5% reduced tax rate on inherited properties has been raised from €200,000 to €400,000.
Key Incentives of the UCA Scheme Malta
The UCA scheme offers several incentives for prospective homeowners in Malta. Buyers are exempt from paying capital gains tax and stamp duty on the first €750,000 of the property value. For properties exceeding this amount, the stamp duty is also reduced to 1.5% on the first €200,000 of the total price.
Under this scheme, first-time buyers can get cash grants of up to €15,000 for properties located in Malta and up to €40,000 for properties in Gozo. If the property is worth €500,000 or less, you can also qualify for an extra €10,000 grant, which is paid in instalments of €1,000 for a period of ten years.
Additionally, the Maltese government provides VAT refunds for buyers renovating their homes in a UCA. You can receive up to €54,000 on the first €300,000 spent on restoration and finishing works. This refund covers things like painting, plastering, plumbing, tiles, doors, windows, and bathroom installations.
Sellers who are selling their properties solely to purchase a new home can get a stamp duty refund of up to €3,000 (or €5,000 for those with special needs).
Application Process
To apply for the UCA program, you need to:
- Be a Maltese citizen or resident
- Be an EU National
- Be 18 years old or above
- Own an eligible property
Your property also needs to meet one of the following criteria to qualify:
- Located in an urban conservation area (UCA)
- Built at least 20 years ago and vacant for at least 7 years
- New but built in traditional Maltese architecture
Here’s how to apply for the UCA scheme:
Check your eligibility: The first step is to confirm you qualify for the program. If you are unsure, you can request a UCA Declaration Letter from the Malta Planning Authority.
Collect the necessary documents: Gather the documents you may need for the application, such as a valid ID, title deed, proof of Malta citizenship or European residency, and other paperwork related to the property.
Complete your application: Go to finance.gov.mt/grants to download the online form. Fill out the form and submit it along with the required documents.
Receive your grant or refund: The Commissioner for Revenue will review your application and let you know if your grant or refund is approved.
This scheme only covers properties bought between January 1st, 2025, and December 31st, 2026
Note: The property must remain your private residence. You cannot split it into units, or you will need to pay back the grant. Also, you can apply only once for each property. Once you receive this grant, you can't apply for other restoration grants on the same property for the next 5 years.
Market Implications
The UCA scheme has continued to drive Malta's real estate market. Buyers can get stamp duty reductions, grants, and other perks, making investing in a restored or vacant property more affordable.
This scheme also increases the demand for UCA properties, allowing sellers to find buyers faster and quote premium prices for their homes. This creates new opportunities for property developers and investors. Instead of building from scratch, they can buy old, empty properties in UCAs, fix them, and sell them, which makes more financial sense considering the rising costs of materials and labour.
Investors can enjoy tax breaks, refunds, and cost savings, reducing the financial burden of acquiring a property and increasing their return on investment. Also, properties in UCA areas tend to appreciate over time and bring in decent rental income. This makes them an excellent option for those who want to make money from rents and build wealth through their property.
UCA Malta and Real Estate Opportunities
Malta's 2026 Budget confirms the UCA Scheme as an attractive route for homebuyers and investors. Not only are UCA properties less expensive, but they are also in high demand and go up in value with time. So, you can buy them and fix them for personal use or lease them out to earn steady rental income and grow your money.
For tailored advice on UCA properties or to explore current opportunities, contact the Arcus Estates advisory team. Our experts know the local real estate market inside and out and can guide you through every step of the property buying process.