Buyers Guide

Buyers Guide

Property For Sale Cyprus Buyers Guide | Cyprus Property Investment


Once you have found your ideal properties in Cyprus it is essential that you fully understand the complete buying process. Below is a guide to buying a property in Cyprus.

Property in Cyprus is registered on a land registry, similar to that of the United Kingdom.The first step is the signing of a preliminary contract. This is binding to both the purchaser and the vendor on executing their agreement as it was originally agreed. At this stage a holding deposit is lodged with a Lawyer or a Notary. The purchasing lawyer will carry out all the inquiries that are needed at the District Land Registry to ensure that the vendor of the property is indeed the owner and ensures that the purchaser obtains good title to the property. Non-Cypriot citizens require permission from the Council of Ministers to purchase property in Cyprus. This normally takes about 8 to 14 months and without this permission Title Deeds cannot be transferred to the purchaser. Although time consuming, this is a quite easy and hassle free process and with the accession in the EU this is not expected to take place for EU citizens.

The final contract is entered only if all the inquiries are proven to be satisfactory. The contract is then lodged with the Land Registry within two months if signed, to prevent the same property being sold for a second time. Application is made at the Central Bank at this time for the necessary permit for the transfer of purchase funds. This application is not necessary if both the purchaser and the vendor are foreigners. The transfer of the title deed is then completed, the full price is then paid and vacant possession is given by the vendor. If the property purchased is new, then the title deed will take up to three years to be issued by the authority in charge. The purchaser is however secured by having the contract of sale with the vendor and that contract is registered in the Land Registry. All the above procedures are usually handled by a solicitor.

1) Reservation Deposit Agreement
The first step is the signing of the Reservation Deposit Agreement . This takes the property off the market for a specified period of usually one month. Within this reservation period, the appointed lawyer will carry out required investigations at the District Land Registry to ensure that the vendor of the property is indeed the owner and ensures that the purchaser obtains good title to the property. In Cyprus the reservation amount is usually €6000. The reservation deposit will be “subject to contract” i.e. it is non-refundable, but it is returnable, for instance, if the searches are not successful.

Searches before Exchange of Contracts
* Planning Department Search – This ensures a building permit exists and that the developer can legally build and sell to other entities.
* A company search – A detailed company search demonstrates that the developer has the legal capacity to enter into contracts of sale, and that it is not been served a liquidation order.

2) Signing of the Contract of Sale
Once all searches have been successful the next step is the signing of the Contract of Sale by both the vendor and the buyer. This is similar to the English Term, “exchange of Contracts”. Upon signing the contract of sale, the purchaser has a 30 day grace period to pay the first instalment to the vendor. If the purchaser fails to do that, then the contract can become void.

3) Possession of the property
Possession of the property will only be completed when the property is actually delivered to the purchaser. At this stage the purchaser pays for all the utilities to be connected and he establishes all rights in this country such as: residence, tax, driving, duty free and domicile.

4) Transfer of title deeds
If the property title already exists, then both parties immediately proceed to the transfer of title deeds procedure for the the new owners, and pay the remaining amount owed. If the property purchased is new, then the title will take up to three years to be issued by the official authority. In this case the remaining amount owed is repaid to the vendor with the delivery of the property. During that time, legal security to the purchaser is provided when a valid contract is signed, stamped and registered with the land registry.

Important Information:
* Non Cypriot citizens require permission from the council of ministers to purchase property in Cyprus . This normally takes about 8 to 14 months. In the meantime the purchaser can buy the property and live in it while waiting for the application to be approved. This requirement will be abolished in accordance with European rules in 2009.
* All payments should be effected through official channels (Banks) and money brought in cash should be declared at the airport or sea port on arrival.
* The majority of properties in Cyprus are sold freehold.
* The Cyprus legal system is largely based on Britains and provides many safeguards to protect the rights of the purchaser.

5) Property Taxes, Fees and Rates
Real Estate Transfer tax-fees are paid once to the land registry and are necessary in order to transfer freehold ownership to the name of the purchaser. The Transferee is responsible for the tax payment. The rates are on a graduated scale.
This can be done as soon as the relevant Government Authority has issued the title deed and the purchase has been completed.
Value Of Property In Euro Transfer Fee Rate (Per 100%)
Up to €85,430 – 3%
From €85,431-€170,860 – 5%
From over €170,861 – 8%
Should the purchase be made in joint names (provided the price is more than €85,430) the effective value for calculation is halved.
Transfer of ownership takes place by a simple process of registration at the Land Registry Office and the issuing of a title deed after completion and delivery. This can be done either by the buyer personally or by assigning Power of Attorney to a Solicitor. A pre-requisite for registration, in the case of foreigners, is evidence that the property has been paid for with foreign exchange and approval by the “Council of Ministers of Purchaser’s application” to buy property in Cyprus. These formalities can be taken up by the buyer’s lawyer on the buyer’s behalf. However, before the registration of the completed property the purchaser should pay the transfer fees to the Land Registry office.

Stamp Duty
The purchaser is liable to pay stamp duty at the rate of €2.56 per thousand up to the value of €170,860, thereafter the rate is €3.42 per thousand. This must be paid within 30 days of signing the contract. This is usually taken care of by the purchasers’ lawyer and charged later.

Immovable property tax
The annual immovable property ownership tax is based upon the value of the property. Certain immovable properties are exempt:
Value of property Euro Annual Property tax (rate per thousand %)
Up to €170860 exempt
€170,861 – €427,150 – 2.0%, €427,150 – €854,300 – 3.0%, Over €854,300 – 3.5%

Important Note:
Immovable property tax is based upon the value of the property in 1980 which is much lower than the current market value. So there is no immovable property tax for the majority of properties in Cyprus.

Local authority taxes and rates:
A rough guide could be approximately €100 – €250 per year depending on the size of your property. This tax is for rubbish collection, street lighting, sewerage, etc. The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.

Capital Gains Tax

As from 1 August 1980 Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property by individuals. Gains arising on disposal of immovable property by individuals are exempt as follows:

€17086 on disposal of any property.

€25629 on disposal of Agricultural land

€85430 on disposal of residence

The allowance granted is one of a lifetime benefit, unless it has not been exhausted at the first sale in which case the balance in your favor is carried forward.

Recommended Housing Loan for Cyprus Investment Properties

Most of the property purchasers coming from abroad are eligible to acquire a housing loan from Cyprus banks and financial institutions under the following conditions and benefits:

A) Required age limit: Up to 70 years
B) Minimum deposit, 20% of sale price
C) Repayment period of up to 30 years
D) Grace period of up to 2 years or until completion of property where the purchaser will have no repayments or interest payments to make.
E) Interest rate: you can apply for a multi currency housing loan, where you can choose any currency, enabling you to take advantage of lower interest rates.

What is required by the bank or financial institution:

1.) Bank reference from your bank .
2.) Bank statements from your bank.
3.) P60 or any other evidence of your income.
4.) Contract of sale stamped and lodged to the land registry.
5.) Proof of payment of the deposit (min. 20%).
6.) Copies of passports.
7.) Power of attorney given to your Cyprus solicitor.
8.) Bank account with the bank you will be applying for the loan.
9.) Tangible security that the property will be provided by the