Malta lures non-EU nationals with property-focused golden visa

Malta’s residency by investment scheme attracts mostly Chinese applicants, channelling money to its property sectors, and the scheme’s set-up does not provide effective safeguards against potential conflicts of interest, new research by the Daphne Caruana Galizia Foundation has found. The research report, “Malta’s Golden Visas: What Problem Are They Solving and Who Benefits?”, reveals that with these clear risks, the golden visa sales’ net benefits to society are questionable.

In 2022, the European Parliament condemned the lax regulation surrounding citizenship and residency by investment in the EU. MEPs demanded “in-person interviews with the applicants and a thorough verification of how the applicant’s wealth was accumulated and is related to the reported income”. They also called for stricter and more harmonised regulation of golden visa procedures and of intermediaries – law firms, consultancies, and other companies that guide prospective visa buyers through the process.

One of the newly elected Maltese MEPs formerly sat on the board of Malta’s golden visa authority, Residency Malta Agency, and one former MEP election candidate is still on this board. The authority’s head was selected without a public call. The authority’s consultant went on to work as a licensed golden visa agent, and its former CEO is now a golden visa intermediary. Another golden visa intermediary company unsuccessfully tried to make a payment to Malta’s former prime minister, Joseph Muscat. A former Maltese consul in Shanghai is now on trial in Malta, accused of illicitly profiting from visa sales (he denies the charges).

According to Freedom House, the political system in Malta is known for “nontransparent lobbying, undue influence, and an opaque relationship between the public and private sectors”, and marked by “lack of appropriate supervision and enforcement of rules on lawmakers’ declarations of assets, interests, and outside activities.”

Residency Malta Agency, the Malta government agency that manages the residency visa programme, estimates that in 2023, the golden visa programme directly generated approximately €55.8 million for the Maltese economy. Since golden visa buyers are required to buy or rent residential property, much of the financial benefit flowed into the property sector, but with little positive impact on the ground. According to a recent KPMG report, despite the property boom in Malta, workers’ salaries in the sector are declining. An analysis by The Daphne Caruana Galizia Foundation shows that golden visas significantly stimulate expenditure in the rental market – but rather than spending on high-end properties, visa buyers compete with low and middle-income residents.

Transparency watchdogs around Europe criticise golden visas for insufficient scrutiny over who benefits from guiding applicants through the process and holding their investment in the target countries. Property, they note, is also a convenient vehicle for money laundering. Other golden visa countries offer visa buyers options to direct their investment into high-added-value sectors, including start-ups and universities. But in Malta, all golden visa buyers must buy or rent a property.

If they choose to rent in the South of the main island or the smaller island of Gozo, the spend can be as low as 10,000 euros per year – the sum that a middle-income family must expect to fork out for a liveable property, according to data from Malta’s Housing Authority. Various golden visa promotion blogs call Malta’s golden visa “affordable” and easy.

Nearly nine in ten of golden visa buyers in Malta come from China. The total number of visa buyers from China is much larger than the total number of Chinese nationals in Malta as registered in the 2021 census, suggesting that at least half of them are not using their golden visa to reside in Malta.

Malta’s Ministry for Home Affairs, Security and Employment, under whose remit golden visas fall, did not respond to a request for comment about the findings.

The Daphne Caruana Galizia Foundation conducted this analysis using publicly available data and after reviewing exclusive unpublished industry data. The full report can be found here.