Since the Republic of Cyprus joined the EU back in 2004 the property buying process has become even simpler for EU based real estate investors. This is a guide to the real estate business in Cyprus for non-Cypriot purchasers and it features details of the fees, taxes and costs associated with making an investment into property in Cyprus.
Unless investment property in Cyprus is being bought via a company structure, a foreign investor is currently only permitted to purchase a single property in Cyprus with surrounding land not exceeding 4,014 square meters. These rules should change for EU residents as Cyprus is now a full member of the EU but currently these rules still stand. As stated, the property buying process in Cyprus is simple and straightforward.
Once an investor has located the ideal property to meet his investment requirements he should make an offer to the vendor via his estate agent. This offer should detail the price he’s willing to purchase the land or real estate for as well as any stipulations for the sale - such as the inclusion of carpets and curtains, the completion of repairs or maintenance work or even the completion date if the property is being bought pre-construction. Once the terms of the sale have basically been agreed upon the property investor is required to pay around a 1% holding deposit which will allow the vendor and estate agent to remove the property from the open market. This deposit is often paid via the property investor’s solicitor and held while the contracts are drawn up and title searches are conducted. As is critical in any property transaction, an international property investor purchasing real estate in Cyprus requires the assistance of an independent lawyer. The lawyer will conduct all the necessary checks on the property or land and represent the purchaser’s interests throughout the sale process.
In Cyprus it is common only to sign one contract rather than a preliminary and final contract. The solicitor usually draws up the contract whilst conducting title searches etc., and therefore an investor should only sign the contract when he is sure all checks on the property have been concluded satisfactorily. The contract is signed by both the vendor and the property investor and depending on the nature of the real estate being purchased either a stage payment is then due or final monies are due. Off plan properties are commonly bought in Cyprus by investors and these types of property require stage payments to be made by the purchaser throughout the build period. Otherwise if the property being purchased is complete already, the final balance is due upon contract closure. It is possible to arrange a mortgage locally in Cyprus for the purchase of investment real estate with amounts available to borrow ranging from 60 - 80% of the final purchase price. Non-status mortgages are typically the easiest to arrange but the majority of good estate agents in Cyprus can advise further on this matter. Expect to pay a mortgage arrangement fee in the region of 1% of the amount being borrowed.
Within 30 days of signing the contract all taxes and fees apart from the transfer fee are due, these costs are detailed below. Once the contract has been signed it is stamped and registered with the Land Registry office in Cyprus, this enables the purchaser to have secure possession of the property while their solicitor applies to the Council of Ministers for the investor’s permit to own property in Cyprus. This particular process of application is deemed a mere formality nowadays as it is incredibly rare that permission fails to be granted. However, as the process can take a lengthy period of time it is necessary to secure the property with the Land Registry so that the vendor cannot attempt to resell it. Once permission to own property is granted the title deeds are finally transferred to the property investor’s name and the transfer fee becomes due for payment.
An investor should speak to a lawyer or estate agent in Cyprus about the fees, charges and taxes he will be liable for before he commits to purchasing property in Cyprus.