Buying Property in Cyprus
Practical Information for Buying Property in Cyprus
Top 10 Tips
1. Property prices are much cheaper than in the Western Mediterranean, especially in the Turkish part of the island.
2. Rental returns are not as high as other Mediterranean destinations.
3. The Cyprus Tourism Organisation (CTO) to have your property certified for holiday letting.
4. The legal system is very similar to Ireland.
5. Ensure the property is not the subject of an ownership dispute especially relating to the Turkish invasion.
6. If you plan to renovate an old property, check on access to utilities and services.
7. Legal fees will be about CYP1250
8. You will have to ensure your property is registered with the Land Registry.
9. Transfer fees are levied on the purchaser based on the property’s market value
10.You are likely to need the services of a Cypriot lawyer with good English.
The Cypriot Property Market
Before buying in Cyprus, determine your budget and if you are obtaining a mortgage from an Irish financial institution, make yourself aware of the sum available to you and any terms and conditions applying.
After strength growth in the lead up and after EU entry in 2004, the market has slowed a little with the exception of the Turkish part of the island, especially around Famagusta, where prices have been cheaper and major construction projects are underway. (Note: be careful that you do not buy property which is the subject of a dispute since the time of the Turkish invasion). Being a Mediterranean island and with tourism still the biggest industry, foreign buyers are warmly welcomed in Cyprus. It is increasingly popular with those wishing to retire there or spend part of the year in the sun. Investment returns thus tend to be more limited than other locations.
How to Find a Property Agent
There are some agents in Ireland who assist in buying Cypriot property and occasionally advertise on the web and in magazines and supplements in Ireland. It makes sense to contact such agents before you travel to an area to look at property. Most Irish buyers tend to buy as part of a new development scheme.
You will need to decide on the type of property for which you are looking. Is it a holiday home to be used a few weeks in the year, a more permanent residence or a rental investment? A holiday home ideally will require little maintenance. Check facilities in the area. Many parts of Cyprus lack the social and recreational infrastructure of other Mediterranean resorts.
Make sure that you make appointments with agents in Cyprus in advance. Give the estate agent a clear understanding of what you seek in a property. Be prepared for the types of property you are viewing i.e. wear appropriate clothing. Take a good local map and have a list of questions prepared.
The Legal Issues
The legal system is similar to Ireland and if acquiring a property in Cyprus operates in broadly the same way. You should still look at employing a local solicitor with good English to perform all necessary searches on the property, ensure it is free of charges and has the necessary planning and building permission. In addition to the normal legalities associated with property purchase, your lawyer will secure a permit for the Council of Ministers allowing the registration of the property in the name of the purchaser and secure the central bank certificate allowing registration, These are mere formalities and do not affect your right to occupy the property.
With accession by Cyprus to the E.U., virtually all previous regulations regarding property that a foreign national could acquire have been or are in the process of being lifted. Some restrictions do apply if you do not intend to live permanently in the country and in particular, if you intend to purchase more than one property. If you have a criminal record, some restrictions may also apply. Expect to pay around CYP1250 for legal services.
Before buying, carry out a full examination of the location and price of the property.
Most important is to have the house inspected carefully, if not by oneself, then by a knowledgeable person in the area. This can be a broker or someone with relevant expertise.Any renovations or repairs of damages need to be checked. The roof should be examined by an expert or a good eye before buying.
When you have found your desired property, an initial contract will be drawn up and you are expected to make a deposit of around 10% of the sales price, the amount being decided between the contractual parties.
Under the law, all such contracts must be in writing. It is also advisable that contracts of sale be deposited in the relevant District Lands Office within two months after the signing of the contract so that the purchaser’s right to pursue the remedy of specific performance in the event of breach can be protected. Leases exceeding 15 years can be registered and registration should be affected within 3 months of the signing of the lease.
Transfer of the title of the property can be affected once permission to acquire has been granted and the Central Bank has certified the import of foreign funds. Transfer fees are payable by the purchaser on the sale price of the current market value.
Always review the contract carefully and have it translated if necessary. Prepare any questions you have in advance, don't hesitate to ask them and allow sufficient time for getting full answers.
The Land Registry records legal title over real estate. The estate agent or your lawyer requests the registration of the property on behalf of the buyer. The data kept by the Land Registry Office can be relied upon to ascertain and establish ownership over real estate.
While buying property is not a problem, there are some restrictions placed on foreigners when it comes to letting property. Many foreigners let their properties to vacationers anyway, whether knowingly or in ignorance of the law.
A legal way to let your property short-term to vacationers is by applying to the Cyprus Tourism Organisation (CTO) to have your property certified for holiday letting (the property must be detached in order to even be considered as possible tourist accommodation).
Certification can be a long process, and once your property is certified you’ll have to pay the CTO 3 percent of the expected income from the property each year (you’ll be charged for this independently of how much money you actually make from letting the property).
Insurance
From the signing of the final contract the buyer is responsible for the insurance of all the buildings on the property.
Taxes, Fees and Charges
Transfer fees are levied on the purchaser based on the property’s market value. The fees are levied at the following rates –
- Property value up to CYP50,000 - 3%
- CYP50 – 100,000 - 5%
- Over CYP100, 000 - 8%
The purchaser is also liable for the payment of stamp duty at the rate of 0.15 % of the market value of the property up to CYP100.000 and 0.20 % for over CYP100.000.
Capital Gains Tax is also levied on the sale of investment properties.
Expect to pay around CYP1250 for legal services.
Planning Permission
Check with the local authority where you plan to build or renovate.
Old properties to renovate can often be very cheap but sometimes can be without any electricity or mains water, so one has to look carefully into the costs of getting these services to your house.
Search for a property for sale in Cyprus >>