Buying Property in Cyprus

Buying property in Cypruscan be quite carefree and actually a pleasant experience if you follow some simple rules and make sure that you seek independent advise.

But first, let us take a look at why you would want to invest in the Cyprus.

Cyprus is a spectacularly beautiful island sitting in the Mediterranean with all year round sunshine, friendly people and a cost of living almost 50% lower than say Ireland.

The largest island in the eastern Mediterranean, Cyprusboasts diverse scenery and lush vegetation, from subtropical coastal plains to rich pine forests. Its mild climate is one of the healthiest in the world, with 340 days of bright sunshine a year and temperatures ranging from 16 degrees in January to 33 degrees in August.

Cyprus can offer its residents a low cost and yet a high standard of living, low taxation and excellent educational and medical facilities. Crime is virtually non-existent and English is widely spoken.

Cyprus has two international airports on the island, one at Laranaca and other at Paphos. There are daily scheduled and charter flights to world-wide destinations and air fares are set to fall once the Euro is introduced in January 2008.

Buyers Tips

We recommend that you think of the following before buying:

 How are you to fund the purchase of the Cyprusproperty?

What will you use the property for? A holiday home, an investment or a permanent base?

If you require a mortgage – you’ll need a steady income and a reliable source of income

Banks in Cyprus will take into account any remaining debts when applying for a mortgage.

Visit the island at least several times before committing to purchasing

Have an idea of the location and type of property

Familiarise yourself with the buying process and what is expected of you and what you would expect from the developer.

Purchase through a reliable and professional property company or agent, but use independent legal advise etc

Step 1: Location & Property Type

Of vital importance when buying or purchasing property is the location if you get this wrong you will not enjoy or appreciate your purchase or the island. Think about such things as your daily lifestyle, for example if you plan to retire to Cyprus you will probably want to select a quieter location, but in easy reach of all the amenities like shops and restaurants etc. If you intend to work in Cyprus I’ll want to be near or located where there are employment opportunities and good transport links.

Next decide if you want to be located inland or on or near the coast?

One of the things that may determine the location of course is cost, the reality is that coastal properties are more expensive than inland ones and the views from properties will also take the cost up if it as a sea-view for instance.

Properties in Paphos are more expensive than properties in or near Ayia Napa, this due to supply and demand (more people want to be located in Paphos than say Ayia Napa) but if you are looking for an investment than look at regions and locations that are up and coming.

There are many real estate and property companies operating in Cyprus and we suggest that you look at what is on offer through their websites or offices.

Step 2: Viewing Properties

Once you have decided on the budget, location and type of property, you’ll want to choose a real estate agent, property developer or a specialist property company like MRI to arrange viewings of properties. At this point make sure that the location and the surrounding developments and scenery are what you expected and are happy with (note: make sure that you know about any future development that may spoil your views or privacy)! One thing you should be aware of is that Cyprus building laws do not allow high rise building.

If you choose a new build or ‘off-plan’ of course you may only be able to view the shell or the artist’s impression of the completed development, however, new build and off-plan gives you the opportunity to have more input into the finishes and layout of the internal structures etc. One suggestion however is that you ask to view completed properties and developments by the same developer to check the standard of build and finish.

Remember to ask about extra costs in the build on any alterations you require or the finishes that are above the normal expected specification. One last thing you should also ask about any communal and annual maintenance costs of upkeep to the development.

Step 3: Reservation & legal stuff

The first thing to do once you’ve found the right property is to seek independent legal advise. Employ a solicitor who can advise you on all the legal matters surrounding the purchase. In most case your solicitor can also open a bank account in Cyprus for you to allow the funding of the property etc.

The solicitor will be able to apply for your mortgage.

You will need to pay a reservation fee to take the property off the market and to secure it and sign the appropriate paperwork. You are legally bound by this contract once you have signed it and if you do decide to back out you will lose your reservation fee and can in some circumstances be legally bound to pay some or all the deposit.

The usual route once the reservation fee is paid is that you will be required to pay a deposit of between 10 to 30% depending on the developer within 30 days after the reservation. 

Legal Information

Acquisition of immovable property by EU members

Although Cyprus is in the EU its property laws are still not completely harmonised with those of the other EU members. This is because they have been granted a grace period (up to May 2009) to comply - all restrictions on real estate will be lifted in accordance with the EU directives by this date.

As an immediate step, certain restrictions have been lifted and EU members will be able to buy two housing units and eventually acquisitions of property will be completely free.

Property ownership is fairly simple and Non-Cypriot buyers are entitled to a FREEHOLD ownership of a villa, an apartment or a piece of land , with maximum allowed extend of 4114 m2 (four thousand and fourteen square meters).

Mortgage Finance

All commercial banks in Cyprus are authorised to offer mortgage facilities to assist in the purchase of property:

The loan will be in a foreign currency

The amount ranges from 60%-80% of the value of the property with a repayment period ranging up to 20 years.

Easy terms of payment and long-term in house finance schemes are also available.

Title Deeds

Transfer of ownership from the vendor to the purchaser is undertaken by the simple process or procedure through the Cyprus Land Registry Office. This can either be done by the buyer in person or through appointed third party with the power of attorney.

Real Estate Transfer Title Fees

Real Estate transfer tax-fees are necessary in order to transfer FREEHOLD ownership to the name of the purchaser. This can be done once the relevant government authority has issued the title deeds and the purchase as been completed. The transferee is responsible for the tax payment.

Transfer fee rate

 Up to 50,000CYP                3%

From 50,001-100,000          5%

From over 100,000             8%

For example if the purchase price of the property is 70,000CYP

The first 50,000CYP 3% = 1,500CYP

The next 20,000CYP 5% = 1,000CYP

Total transfer tax-fee = 2,500CYP

However, should the purchase be in joint names (providing the purchase price is more than 50,000CYP) the effective value for calculation is halved:

For example if the purchase price of the property is 70,000CYP

The first 35,000CYP 3% = 1,050CYP

The next 35,000CYP 3% = 1,050CYP

 Total transfer tax-fee = 2,100CYP

Immovable Property Tax

The annual immovable property ownership tax is based upon the value of the property. Certain immovable properties are exempt:

Up to 100,000CYP                          Exempt

From 100,001CYP – 250,000          2.5%

From 250,001CYP – 500,000          3.5%

Over 500,000                                 4.0%