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Cyprus is the third largest island in the Mediterranean and is part of the European Union. It has proved to be a very popular place for investing in holiday homes or apartments. The 340 days of sunshine a year and relatively low cost of living, attracts more and more property buyers each year. European Union members and companies can acquire and invest in any type of property without any restrictions and are treated as Cypriots since 1 May 2004.
BUYING A PROPERTY IN CYPRUS
Owning a property in Cyprus combines a superb lifestyle, real value, good prospects and some hidden advantages
We often hear that there are two sides to a coin. This is very true in the case of Cyprus, where the recent financial crisis is leading to some welcome changes to the system and other sectors.
Especially for someone looking for a real estate bargain, the good news is that the new lower prices present outstanding opportunities for some very desirable properties. Larnaca and the Pyla area in particular provide some unique advantages over other areas of Cyprus.
The area’s development is only just starting
Larnaca and the Pyla area currently offer the best prices in the Cyprus real estate market with lower prices than other cities. Moreover, important planned projects such as the Port-Marina and Petroleum installations relocating will give a great momentum to the city. Such projects that are under construction and ones that were recently completed will soon add value to the real estate property buyer’s investment.
Cypriots and E.U members (and companies) are allowed to purchase real estate property without any restrictions.
Other foreigners and non – EU members (Aliens) are only given permission to purchase one of the following:
- Two apartments or
- Two houses or
- A building plot or land up to three donums (4.000m²) in which to build one or two houses
Offshore Entities may also acquire premises for their business (no limit on the extend) or for the residence of their foreign employees provided the residence is registered on the employees’ names. For the transfer of real estate on an alien’s name, the permission of the Council of Ministers is required (now the District Officer).
This Permission is obtainable by all bona fide cases, provided that the property is not intended for commercial exploitation. In certain cases, however, the Council of Ministers will grant the approval for acquisition for commercial purposes if the particular project will enrich tourism and employment. E.U members are exempted from such restrictions and are treated as locals as from the 1st May 2004.
The Cyprus Real Estate market has two main demand sources: the local and the foreign market. The foreign market comprises by approximately 50% by the British and 35% by Russians and the rest 15% by other nationals.
Cyprus has proved to be an increasingly popular place for doing business, retirement and/or for the acquisition of holiday homes by foreigners. Demand, which is continually increasing ( the current recession is regarded by real estate experts as temporary disruption to this trend), is forthcoming mainly from European Countries, mainly ex eastern block countries, plus the recent signs of an emerging demand from China.
In the long term upsurge of demand for property will continue despite recent setbacks. This is attributed to many inherent factors, including the relatively low cost of living and its high standard, not forgetting of course the low crime rate. In addition, the unique hospitality of the local population, the attractive climate, the increasingly important role of safety and security have played an important role. The recent measures for permanent residence permits and passports with estate acquisition will also drive demand from non European citizens.
The property buyer in Cyprus enjoys the advantages of the low corporate tax (12,5%), the low city taxes and low taxation of real estate. Also, in Cyprus one has the security of the very advanced state cadastre where the procedures guarantee the buyer. Urbanely Cyprus is divided in local plans with zones and the buyer knows exactly the type of land he or she is buying: in a residential area, in a tourism zone or agricultural plot – always with an accurate coefficient building rate.
The Cyprus Republic returns 5% of the tax to the first time buyers and buyers who spend at least €300.000 for estate are granted with residence permit in Cyprus. Also, with real estate buying worth 2 million euro plus private property worth at least €500.000, the buyer is granted Cypriot citizenship.
Permanent Residence Permit Details
The Republic of Cyprus has implemented a fast track procedure to acquire permanent residence permit. The policy implements a favorable treatment for Third country nationals (i.e. non EU citizens) who apply for Immigration permit, under section 5 of the Aliens Immigration Regulations of 1972, as amended.
Under this policy, the Immigration permit, will be granted to third country nationals who will acquire, by virtue of sale, a self owned property in Cyprus for self resident purposes in the Republic, for a minimum value of €300.000, excluding VAT. Additionally, all applicants under this category, would be required to show a secured income of sufficient amount, which must not come from activities or self employment in Cyprus, but from abroad. Each case is examined on its own merits depending on the personal circumstances of the applicant.
To obtain long-term resident status, a third country national must demonstrate the following attributes:
– Stable and regular resources sufficient for himself and his dependants to live in Cyprus without recourse to its social assistance system
– Health insurance which covers the risks usually covered by Cypriot insurance companies
– He is not a threat to public order or public security
– His residence in the territory under Cypriot Government’s control has not been the result of deceit or misrepresentation.
We help you through all steps for a smooth acquisition of your title deed.
MORTGAGE & FINANCE
All commercial banks in Cyprus are authorized to offer mortgage up to 40% and some up to 60% with a repayment period of usually no more than 20 years. All, EU and non-EU members will need to provide: valid passport, bank statement or a letter from your bank as proof of your address and your income (which must be in English).
CONTRACT OF SALE
The Contract is usually drafts by the solicitor. Such contract must contain all elements required by the Law for a valid and building agreement including the following:
1) The name and particulars of the Contracting Parties.
2) Full particulars of the immovable property to be sold, such as topographic plans with specifications, title did for the land.
3) Price of sale and terms of payment.
4) Date of delivery of freehold.
5) Insurants coverage and stamping.
Under Cyprus Law, such contract must be in writing and deposited at the Land Registry Office within two months of signing the contract. The Contract of Sale must be made in three exemplars (for District Land Office, the purchaser and the vendor).
Ownership in Cyprus is denoted by title deed issued by the District Land Office. Therefore, all contracts must provide for the transfer and registration of the property in the buyer’s name and to ensure title deeds are obtained.
The purchaser will be liable to pay the following transfer fees for the property acquired, when it is registered in one name (his or hers) at the Land’s Office.
Market Value or Sales Value Rate %
0 – € 85,430 ……………………………….…. 3 %
€ 85,431 – € 170,860 ……………………… 5 %
Over € 170,860 ……………………..……….. 8 %
If the property is placed in joint names (husband and wife or two individuals), then purchase value is split into two parts which results in reduced fees.
STAMP DUTY AND VAT
The Stamp Duty is one-off payment on the purchase of property in Cyprus and rates are dependent on the contractual purchase amounts and it must be paid to the Tax Authorities within 30 days of signing the contract.
Market Value or Sales Value Stamp Duty %
0 – € 170,860 …………………………………..….. 0.15 %
Over € 170,860 ……………………………………… 0.2 %
The VAT 17% is usually added on to the price of new properties only. The first time buyers will have 5% VAT. As to the properties which valid application for Planning Permit was submitted at the Town Planning Department before the 1st of May 2004 is fully exempted from VAT.