Guide to Property in Cyprus

Cyprus has long been a favourite tourist and retirement destination. With the recent growth in the tourist industry due to increased facilities and an improved infrastructure, Cyprus is quickly taking on a new identity as a very sensible investment option within one of the fastest growing property markets in Europe. While the tourist industry in Cyprus is gaining momentum, Buy-to-Let investment in Cyprus is viable due to the increase in demand for rental property.

Real estate in North Cyprus is also becoming popular with property investors as it can also offer excellent returns. However it is essential that you understand the North Cyprus property land titles before you make any investment in Northern Cyprus.

Buying a property in Cyprus also appeals to many second home buyers who feel safe investing in a property market such as Cyprus, where the legal system is based on that of the UK. In addition, with full EU membership, Cyprus is highly regarded as one of the safest countries in which to purchase property in at the current time.

Property in Cyprus offers a stunning climate and some beautiful beaches, a very strong existing infrastructure and excellent travel options.

Propertyshowrooms.com and Property in Cyprus

You can take a detailed look at property for sale in Cyprus and the Cyprus property market in various sections on our website - this page continues with the main points to take into account when purchasing property in Cyprus.

Can Foreign Nationals Own Property in Cyprus?

Foreign ownership of property in Cyprus is unrestricted in the south and the purchase procedure is as straightforward as in any other EU country.

In northern Cyprus property ownership has limitations. Land is measured in donums. Foreign nationals cannot buy more than 1 donum of land (1,338 square metres or approximately 14,000 square feet) for one property. However this area of land will satisfy the majority of our clients. However should you wish to purchase a large piece of land, this can be easily be done by adding members of your family as the owners, or by forming a local company to buy the land in its name.

Why Should I Choose Cyprus?

• The property market is one of the fastest growing in European Union. Prices in some areas are increasing by an annual average of 20%.
• Property prices are still lower than in many other European countries, particularly in the north.
• Increase in the number of golf properties available. Golf property prices fetch up to 40% more.
• Comparatively low tax rate, including a Double Tax Treaty with southern Cyprus and the UK.
• Capital Gains Tax of only 20% and Corporation Tax for Cypriot limited companies (through which you can own your property) at only 10%.
• UK pensions can be received tax free in Cyprus.
• Foreign residents permanently residing in Cyprus pay only a 5% flat rate of income tax.
• 340 days of sunshine a year make it a comfortable and enjoyable place to live.
• High standard of living, with good facilities, including top class golf courses.
• Low cost of living.
• Comparatively low crime rate and friendly people.
• Excellent medical facilities, education and offshore business advantages.
• Tourism is predicted to grow by 4.6% over the next 10 years, contributing some 13.9% to the country´s GDP by 2014.
• British based legal system, where English speaking lawyers abound.
• British based banking system in southern Cyprus, making choosing mortgages and managing your money similar to “back home”.
• Member of the Eurozone from January 2008.
• Northern Cyprus is set to join the EU when Turkey meets the requirements.
• Very efficient land registry with straightforward and well administered procedures.

Range of Property Available in Cyprus

Depending on where one buys, north or south, east or west coast, Greek Cypriot or Turkish Cypriot territory, prices vary considerably, but the main resorts of Limassol, Paphos, Nicosia and Famagusta are probably the most expensive options. Still, even in Limassol it is possible to buy a detached luxury villa with swimming pool and three bedrooms for between 1.2 million and 1.6 million euros.

Some 30,000,000 euros buy a 9-bedroom detached villa in Amathus, historic Limassol, on the southern coast of Cyprus. It's a dream home fit for a king or even a goddess. Cyprus, so legend has it, marks the spot where the Greek goddess of love, Aphrodite, emerged from the sea to cause a little mischief among human men.

In Paphos, in south-west Cyprus, an investment of 105,000 euros can buy a small semi-detached town-house with two bedrooms, while 220,000 euros will buy a luxury 3-bedroom villa in Famagusta. Houses, rather than apartments for sale on Cyprus, offer typically the greater choice, as the island has long been a favourite with families and older buyers looking for a retirement home with a small garden and swimming pool. Developers tend to cater for the needs of these two groups.

For those with a smaller budget than that of a goddess or king, Famagusta in the north-east of the island is a good place to start looking for apartments for sale in Cyprus, as it is less expensive than Limassol. The latter serves as the island's commercial centre.

Most developments in Famagusta are built within walking distance of the town, beach and amenities. Apartment blocks are usually small, offer panoramic views from all properties, have en suite bathrooms in the master bedroom and a communal pool in the landscaped grounds.

Set in the Turkish part of the island, Famagusta is situated to the east of Nicosia, another property hot spot for foreign buyers. Famagusta boasts the deepest harbour on Cyprus and was the island's most important port in medieval times, trading with countries as far away as China, as it lay on the historic Silk Road.

Because of this, Famagusta boasts many wonderful historic monuments, such as the magnificent Lala Mustafa Pasha Mosque, Palazzo del Provveditore (Royal Palace) or the many churches that remain to this day in a city that once had 365 churches at its peak. If you cannot find your dream apartment for sale in Cyprus, there's always the famous Othello Castle in which Shakespeare set his equally famous play. But that would bust most investor's budget!

What is the Economic and Political Situation?

Since 1974, Cyprus has been divided into the government-controlled southern two thirds of the island and the remaining one third in the northern part, administered by Turkish Cypriots. This governs the economic and political situation of the island.

Shortly after founding the Republic, serious differences arose between the two communities about the implementation and interpretation of the new constitution. The Greek Cypriots argued that Turkish Cypriot interests were obstacles the efficient running of their government. Since a military coup in 1974, UN peacekeeping forces have maintained a buffer zone between the two sides. Apart from the occasional demonstration or incidents between soldiers, the island has remained completely free of violent conflict.

Today, North Cyprus will need to reach political settlement with the south and Turkey will need to resolve the North Cyprus situation in order to enter the EU.

How do we Travel to Cyprus?

Travelers arriving in the Republic of Cyprus may enter the Republic only through the legal ports of entry: Larnaka and Pafos International Airports, or the ports of Larnaka, Lemesos (Limassol), and Pafos.

Border Checkpoints - As a peace measure to aid the unification of the Greek and Turkish Cypriots it was agreed that various crossings should be opened along what is known as the Green Line. The Green line is what serves as the current partition of Cyprus separating the Island into North and South Cyprus. At present there are 5 active checkpoints that can be used for crossing the Green Line in Cyprus. There are plans to open more but after the opening of the last crossing, Zohdia efforts to open new checkpoints have slowed considerably.

Is a Visa Required to Enter Cyprus?

Entry requirements for UK nationals: British nationals must have a valid passport. For holders of passports endorsed British Citizen or British Overseas Territories Citizen, a visa is not required for a stay of 90 days, provided the visit is for tourist purposes only. In all other cases a visa is required, and passports must be valid at least three months beyond the period of intended stay. However, it is advisable to hold a passport valid for six months beyond period of the intended stay.

Turkish residents can visit North Cyprus, but entry to South Cyprus is prohibited to them (unless they marry a Turkish Cypriot).
Entry to North Cyprus - The citizens of European Union nations, Turkey, USA, Canada, Mexico, Japan, Switzerland, Norway, Israel, Pakistan, Azerbaijan, Australia and New Zealand do not require a visa to enter the Turkish Republic of Northern Cyprus.

All other nationals should check the requirements with the nearest Turkish Republic of Northern Cyprus Embassy. Visitors have their passports stamped at the arrival checkpoints of Turkish Republic of Northern Cyprus. If you travel from North Cyprus to South Cyprus, a visa form needs to be completed and stamped at the border checkpoints. This paper visa form is loosely inserted into the passport and stamped either upon departure or arrival in North Cyprus.

Cyprus Property Buyer's Checklist

1. Identify Your Ideal Requirements in Cyprus

The first step should be to outline the what is required from your property in Cyprus. Obviously the reason you are looking for a home in Cyprus will help determine some of these factors. For example if its a retirement home you are looking for the areas you would probably consider may be more tranquil than a businessman who needs to relocate for work reasons and needs to be close to a major city center.

Also consider at this stage how many bedrooms and bathrooms are essential, if there is any member of the family that may require wheelchair access then this will need to be considered, in a similar way if its a retirement home then you must think about the future and long walks into a village or steep spiral staircases may not be a wise decision.

Of course we can help you, you can use our property in Cyprus section and get a feel for the different property types and start to make decisions on what will and wont be ideal for you. We will inform you about newly listed homes in your category as soon as they become available.

If you are looking for an investment property in Cyprus or you are in no hurry to re-locate then maybe Cyprus off-plan property may be an interesting option for you.

2. Finance Your Cyprus Property

Once you have outlined the features that are essential for your Cyprus property you need to work out exactly how money you can afford to spend in order to know the price range in which you can start to look.

Its often well worth requesting to speak to one of our finance advisors as you may well have more funds available than you think. Mortgages in Cyprus are usually fairly simple to arrange with loan amounts of up to 80% usually available.

3. Research Local Area Information

After knowing your exact requirements and how much money you can afford to spend, the next most important consideration is in which area to look for property. When you buy a property its not just a home you buy into its also the area. The area can also have a direct impact on what you can get for your money.

You need to consider the type of area you wish to live in and also what type of amenities you require. Obviously another major consideration is whether the property should be in a city center, near a beach or in a more tranquil location.

Now that you have your list of needs and wants and you know how much you can afford to spend, it's time to look at some houses! An important consideration is the area in which you want to live. People don't only buy the house; they buy the area the house is in too.

Where children are concerned schools have to be considered, workers need easy travel to and from work, choosing a location is a huge job. You can take a look at our guide to property in Cyprus to get a feel for some of the major areas. If a major reason for your purchase of property in Cyprus is for investment then you should check out our investment research in Cyprus section for the different areas of Cyprus.

4. Search for Property

You can click this link to start your search for property in Cyprus or in the top left corner of our website within the Cyprus section.

If you would prefer to submit your criteria to us and be recommended property that suits your requirements then let us search for you!

5. Property Inspection Trip

When you have located some suitable property that you would like to inspect you need to plan an inspection trip. Its important if buying an existing property to see exactly what your buying. If you are buying off-plan then request as much information as possible to give yourself the best possible idea of the property. Also find out as much about the exact area and surrounding areas as possible, sometimes a trip is worthwhile even if the property is not built, just to get a feel for the area.

If you decide to travel to Cyprus then our agents will be happy to accommodate you and assist you in booking flights and accommodation. When in Cyprus they will show you around the properties and help to pinpoint the perfect property for you.

6. Making an Offer

Once you have decided on the home or property you would like to purchase then you will need to make an offer. Our agents will help you with this entire procedure. Almost all aspects of this procedure are negotiable and you must decide with the advice from the agent what you are prepared to pay for the home.

Some of the things that you may have to negotiate are:

• The price
• Terms of Payment
• Repairs that need to be done
• Appliances and fixtures
• Landscaping
• Painting
• Occupancy time frame

Obviously this process has to be considered from both the buyers and sellers angle to reach an agreement that works for both parties.

7. Closing the Sale

Once the negotiation process is over and a price has been agreed, you will need to pay the reservation fee which is about 1% of the sale price. The reservation fee will enable the owner or estate agent to take the property off the market so no one else can put an offer on it. Its at this stage you will also need to contact your solicitor to make sure that all the necessary documents are being prepared, and that they are complete and accurate. If you prefer our agents can recommend a proven and reputable Lawyer for you.

The contract is then drawn up by your appointed solicitor, and they will take into account among other things the points mentioned below:

Reference to the vendor Reference to the purchaser The subject matter has to be described as accurately as possible. If it does not exist at the stage of signing the contract, for example if it's a Cyprus property to be built in the future, reference to subject specifications must be determined accurately The purchase price The terms of payment The delivery date and The transfer date for the title deeds

8. Additional Costs

You will need to ensure all local services such as electricity, water, and telephone set up. Our agents will help with these administration tasks.

Other fees that you may need to be aware of include, management committee fees, landscaping costs, and annual communal expenses all should be budgeted for throughout the year.

Once you have found your ideal property in Cyprus, it is essential that you fully understand the purchase process. Below is a brief outline of the differences between North and South Cyprus property purchasing.

Southern Cyprus

• 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 at 1% of the property price. The reservation deposit will be “subject to contract” i.e. it is non-refundable, but it is returnable 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.

Signing 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 purchaser. This is similar to the English term, "Exchange of Contracts". Upon signing the contract of sale, the purchaser has a 6 weeks period to pay the first installment to the vendor. If the purchaser fails to do so, then the contact can become null and void.

Possession of the Property - Possession of the property will only be completed when it 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.

Transfer of Title Deeds - If the property title already exists, then both parties immediately proceed to the transfer of title deeds procedure for the new owners and pay the remaining amount owed. If the property 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.

Property Taxes, Fees and Rates - Real Estate transfer taxes 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.

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 get approved.

The two certificates below should be acquired by the applicant in his country and sent as soon as possible. These two certificates will be attached to the application form:

A certificate from any person in authority in the country of the applicant certifying his good character/clean criminal record. A certificate from any financial institution as to the applicant's good financial standing. Upon the repayment by the purchaser, a permit from the Central Bank of Cyprus is required for the transfer of the purchase money. This permit is not necessary if both the purchaser and the vendor are foreigners. All payments should be effected through official channels (banks) and money brought in cash should be declared at the airport or sea port upon arrival.
All properties in Cyprus are sold freehold.
The Cyprus legal system is largely based on Britain's and provides many safeguards to protect the rights of the purchaser.

Northern Cyprus

To purchase a property in northern Cyprus, the process is similar to that of southern Cyprus. However, there are a number of checks carried out by the Ministry of Interior and this will inevitably mean the sale will take approximately 4-8 months to be completed.

The Process for Buying any Freehold Property

Secure property and agree the price. Contract drawn up by solicitor, setting down the terms of sale, i.e. price, time scale, vendor, purchaser and any special conditions. Vendor and purchaser sign the contract Purchaser provides 10-20% deposit, pending legal checks on the property. Solicitor applies for a Purchase Permit from the Council of Ministers, (takes 4 to 8 months). As soon as the purchase permit is received, the remaining balance remains due from purchaser. The purchaser pays the balance and the vendor signs title deed into the name of the purchaser. Sale is completed.

The Costs Involved

Solicitors cost, including; drawing up of contract, power of attorney, purchase permit application and seeing sale through to completion = approx. £1,000.

Propertyshowrooms.com will gladly put you into contact with a reputable English speaking lawyer or other professional to assist you with your property purchase in Cyprus.

Mortgages in Southern Cyprus

Mortgages in Cyprus are widely available and the terms are similar to those in the UK. However, you may require some help from our experts with the process of applying for your mortgage. We will gladly give independent advice and assistance with your mortgage application from a Cypriot bank.

Most commercial banks in Cyprus are authorized to offer mortgage facilities to locals as well as foreign nationals. Loans are based on the purchaser providing a minimum deposit of 30%, although today some financial institutions will fund as much as 100% of your purchase. Repayment mortgages can be acquired in any foreign currency, eg. U.S. dollars, British pounds, Euros and Swiss francs. A Euro mortgage avoids capital loss through currency exchange should you rent out your property. It is important to research who you will be renting your property in Cyprus to, what currency they will be paying in and plan your mortgage accordingly. For a loan in foreign currency, the maximum period of the loan is 15 years. Loan payments can be made in monthly or quarterly installments. Life insurance will be required when taking out any mortgage in Cyprus. Cypriot interest rates are currently around 4% and it is possible that they may drop further in the near future to the European Central Bank's base rate.

Should you need to raise funds in addition to the bank loan granted, you may apply for a loan to cover it by using an equity release option on your existing home.

Documents Normally Required by Cypriot Banks

Personal details, including copies of passport Employment contract and P60s, or business accounts from your accountant. Documentation regarding existing debts, regular outgoings and details of any other mortgages in operation. Bank reference from your bank. Completed personal income declaration form. Original of Purchase Agreement Copies of your bank statements for the last three months Copies of receipts for deposit payments made to the vendor for the property You will need to open and activate a bank account in the same bank you obtain your mortgage from. Acquisition Permit from the District Authorities to allow the mortgage to be released by the bank.

Taxes in Southern Cyprus

Real Estate Transfer Tax to transfer the freehold into the purchaser’s name. This is levied on a progressive scale starting at 5% for up to CYP10,000, increasing in five steps up to a maximum of 8% for above CYP75,000.

Immovable Property Tax for residents, based on the value of the property at a rate of 0.2% between CYP100,000 and CYP250,000; 0.3% for up to CYP500,000 and 0.35% for over CYP500,000. The first CYP100,000 is tax exempt.

Stamp duty is charged at a rate of 0.15% on the first CYP100,000, and 0.2% above this threshold.

Local authority taxes, depending on the size of the property, range from 0.1% to 0.5% per annum to cover refuse collection, sewerage, street lighting etc.

Capital gains tax charged on disposals of real property and shares in companies owning real property in Cyprus. The first CYP10,000 of a gain is tax exempt. This exemption limit rises to CYP50,000 if the seller has lived in the property continuously for the previous five years.

In certain circumstances, further allowances are granted for transfer fees, inflation and improvements made to the house, but the total exemption cannot exceed a CYP50,000 limit.

Taxes in North Cyprus

Main taxes involved in property purchase in Northern Cyprus:

15% VAT is charged on most new build properties and is payable at the time of transfer of title.

3% Purchase Tax is also payable upon transfer of title and it is based on the Land Registry Valuation of the property. This valuation is usually considerably less than the selling price as only bricks, mortar and size of land are taken into consideration, not fixtures and fittings.

Local council taxes of 1% of the 3% Belediye are also payable.

There is generally no Capital Gains Tax payable on a property purchase, as the vendor is usually liable to pay this, unless otherwise stipulated in your contract.

If you are selling your property, Capital Gains Tax will be calculated based upon whether you are a private individual or a professional vendor. Every individual in Northern Cyprus has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, making you a professional vendor. For professional vendors, there are no tax exemption rights and Capital Gains Tax is payable on every sale at a rate of 6.25%.

Capital Gains Tax is not payable if you sell the property before taking on the title in the case of an off-plan purchase. However, you will have to pay stamp duty on the contract at 0.5% of the contract value. This amount is doubled if you pay within 2 to 6 months of signing the Contract and is tripled if you pay after this period.