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Quick Guide To Buying Property In Cyprus

Here are a few important things you should know if you are planning to acquire property in Cyprus.

Property in Cyprus is registered on a land registry, similar to that on the UK. The purchase process generally follows that of the UK but with some differences.

Firstly, an option is signed. This binds both the vendor and the purchase to buy and sell the property on terms and conditions that have been mutually agreed. This is subject to the purchaser being able to receive good title to the property and obtaining the necessary permits from the Cyprus government.

A non-Cypriot citizen requires permission from the Council of Ministers to purchase property in Cyprus. If this has not been yet obtained then the purchaser should now apply to the council for the permission. This normally takes between 8 and 14 months to be granted, and without this the Title Deeds of the property cannot be made available to the purchaser.

The final contract is only entered into when the searches have proved satisfactory. The contract in then longed with the Land Registry within two months if being signed which will prevent the vendor from selling the property on a second time, and will be a charge on the property pending completion.

Application is made at the Central Bank at this time for the necessary permit for the transfer of purchase money. This application is not necessary if both the purchaser and the vendors 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.

Solicitors' fees - as in the United Kingdom, these will vary according to the amount of work carried out by your solicitor. As a guide one or two percent of the purchase price is normal.
Estate agent fees - non are paid if you are buying directly from us.

Capital Gains Tax

There is no Capital Gains Tax where the property was acquired by the importation of foreign currency. Otherwise CGT is levied at 20% on gains in excess of CY 5,000.

WILLS + INHERITANCE

Property owners in Cyprus are advised to make a will in Cyprus to cover their Cypriot estate. A Cypriot will speed up the process of obtaining probate in Cyprus.

Inheritance Tax is payable on a Cypriot estate and rates are on a sliding scale depending upon the value of the estate. Full professional advice should be obtained with regard to making a Cypriot Will and Inheritance Tax planning.

GENERAL INFO ON CYPRUS PROPERTY

Foreign citizen is allowed to buy the following:
One apartment, or One house or villa, or One office, or One plot of land not exceeding donums (about 4,010 sq.m)

Sale of property:

No restrictions exist for the sale of property purchased by an alien.
The proceeds of sales can be taken out of Cyprus as follows:

• the amount equal to the purchase price
• any profit exceeding original purchase price in yearly instalments of 50.000,00 CYP commencing from the year following the year of sale.

An alien can sell the property to an alien and the sale proceeds to be paid abroad and above-mentioned restrictions do not apply.

A.     CYPRUS THE LEGAL SYSTEM AN OVERVIEW

The structure of Government is similar to other western democracies where human rights, political pluralism and private property are safeguarded. There is a multi-party system of democracy based on proportional representation.

The legal system is based on the same principles as those applicable in the United Kingdom and all statutes regulating business matters and procedures are based essentially on English law, which makes property purchase and other legal transactions understandable to most expatriates. The Continental system of administrative law, according to which the legality of administrative decisions can be judicially controlled, has been introduced and applied by virtue of the constitution.

2. Amendments to Legislation

Cyprus is successfully facing the challenge of harmonization with the EU directions and the continuous and persistent preparation for accession to EU:

The initial idea of establishing the EEC was to facilitate free trade and to protect the citizen, therefore in order to succeed it was necessary to achieve the uniformity in the laws of member states. The concept of harmonization emerged.

1. In order to comply with the idea of free movements of people and goods certain restrictions have been lifted. Citizens of the EU may enter Cyprus without restriction even with only their National identity card, provided there is a photograph.

2. There are still some restrictions in acquiring property in Cyprus by a non-Cypriot, however developments are so fast and with the joining the EU in May 2004 the restrictions are most likely to be lifted or in the worst case scenario be more relaxed.

3. Inward Investment

There are no exchange control restrictions applicable to direct and portfolio investments by natural or legal persons from EU member states. However, in the banking sector the non-resident participation is restricted to 50% of the equity capital. There are also restrictions regarding the acquisition of property, the establishment of radio and television stations and the provision of utilities.

B. PROCEDURE & APPLICATION for FOREIGN NATIONALS & EXPATRIATES PURCHASING PROPERTY

(1) Regarding purchasing properties in Cyprus, at present a non-Cypriot may acquire a house or may buy a plot of land up to a maximum of 3 donums (4000 sq,m), to be used as

(a) Foreign non-residents are required to pay the purchase price with foreign exchange.

The regulations apply to foreign companies as well as companies controlled by foreigners and natural persons who are not citizens of Cyprus, (except persons of Cypriot origin and the wives of persons of Cypriot origin).

a. Council of Ministers Application

For transfer of the property into an alien’s name, permission from the Council of Ministers is required. The Council of Ministers has authorized the District Officers to grant approvals on its behalf. The criteria taken into consideration in the process of examining an application for the purchase of property include, inter alia, the applicant’s family status, financial situation, occupation, the purpose of acquiring the property, its location, etc. Approval is granted in all bona fide cases.

Applications for the acquisition of more than one residence in Cyprus are not approved, except under very exceptional circumstances.

b. Seeking Expert Advice

Expert advice should be sought before entering into any transaction for acquiring property in Cyprus. However the following points shall be noted:

c. Application to the Central Bank

On receiving the approval of the Council of Ministers to acquire the property in question, an application should be submitted to the Exchange Control Officer for the purpose of confirming that the purchase was made in foreign exchange. However as the Exchange Control restrictions are being relaxed approval of the Central Bank is required only when the purchase price is over Cy.£60,000. The approval should be submitted together with the following documents:

d. Application of Transfer to the District Lands Office

The transfer of ownership is affected by a simple process of registration with the District Lands Office. The prescribed application form should be completed for submission in person to the District Lands Office together with:

The information that is required to complete this application is the following:

During the course of the registration procedure, the value of the property will be reviewed for the purpose of determining the amount of transfer fees payable by the District Lands Office valuers, who may or may not accept the purchase value stipulated in the sales contract. The purchaser is liable to the payment of transfer fees on the basis of the value of the property as assessed by the District Lands Office valuers (the basis is the open market value of the property on the date of the original transaction/sales contract). The purchaser and seller may give specific powers of attorney to any third party to attend and affect the transfer on their behalf. If all documentation is in order, the transfer procedure takes a few hours.

The transfer fees are charged on the value of the property each person acquires, for example for a property of Cyprus £100,000, if it is purchased by two persons, it is understood that each person will pay transfer fees on CY. £50,000, thus saving money on the transfer fees.

e. Transfer fees

The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in their name at the District Lands office. The fees are charged on the property’s market value at the date of purchase.

f. Immovable property tax

The registered owner of the property is liable to an annual immovable property tax calculated on the market value of the property as at 1 January 1980. The tax is imposed on the value of the whole of the immovable property someone owns, so a Purchaser may have to pay immovable property tax prior to the transfer of the property to his name which can be claimed back with the actual transfer of title deed to his name.

g. Raising Money

It is possible to assist with the purchase of the property in Cyprus by mortgaging the property. Most Banks offer a loan up to 70-75% of the purchase price, to be repaid within 15 years.

h. Stamp duty and mortgage fees

Unless otherwise stipulated in the contract, the purchaser is liable for the payment of stamp duty at the rate of 0.15 per cent of the value up to Cy.£100,000. Thereafter the rate becomes 0.20 per cent. Although the non-affixing of stamps does not invalidate the contract, the stamp duty plus a fine will be payable when the document is produced to the court or any Government department. In order to avoid the payment of a fine, which could be substantial, the documents should be stamped within 30 days of their signing.

The registration fee for a mortgage is one per cent of the amount secured, plus the relevant stamps.

i. Depositing Contract with the Lands Office

The title deed of the property as non-Cypriots will not be transferred into your name immediately as the approval of the Council of Ministers has to be obtained first – which can take up to 1 year to be granted. Furthermore in big projects, it is a complicated procedure to separate title deeds for the property you are buying, which takes a considerable amount of time (approximately 3 years) is required before the individual title deed can be issued.

However, the above scenario does not represent an obstacle in buying property, nor can it undervalue the interest you have in the property provided you take the right advice and all the appropriate steps.

Depositing the contract with the lands Office within 60 days of the signing of the contract is your protection – if you do not deposit the contract and the seller goes bankrupt or changes their mind about the sale, your only remedy for breach will be damages, whereas if you deposit the contract you can claim specific performance. This is ask for a Court Order for the property to be transferred into your name. Depositing the contract also acts as a charge on the property.

c. OBTAINING RESIDENCY IN CYPRUS

a. Immigration Permit

This procedure is straight forward and no action need to be taken before coming to Cyprus.

In order to obtain residency in Cyprus a meeting must be arranged with the Immigration Department and the following documents must be produced:-

1. Passports

2. 4 passport photographs each

3. Contract of purchase of a property in Cyprus or a lease agreement

4. Bank statements, one of which must be with a Cyprus bank

5. Source of income such a pensions, rental income, dividends etc.

It is essential that you are able to prove to the Immigration Department that
you will be fully supported by external funds.

b. Work Permits

It will be difficult to secure a work permit, however being a EU national it is getting easier as you are now allowed to establish your own business through a local Cyprus company in which you will be 100% shareholder and director, then your own company applies for your work permit and it will be granted. That means it is possible to establish your own business in Cyprus and have your own local company. This is most certainly the best and easiest way to obtain a work permit.

c. Wills

It is imperative that expatriates have wills which are appropriate to the national laws of the country in which they are living.

Needless to say, English law is not entirely the same as the law of Cyprus jurisdiction. Owners of holiday homes outside the UK are sensibly advised to make a local will to deal just with that property, either for reasons of local law, or because it makes things easier, when the time comes to wind up the estate, to deal with a property under a local will.

It saves a great deal of time and effort later on if you now review your English will and make a separate Cypriot will dealing with your affairs in Cyprus
You need to insure your property and its contents.

If you make a foreign will, and subsequently change your English will dealing with the rest of your estate, it is essential that your solicitor knows about the foreign will, and sees that it is mentioned in the new English one. The practice in drawing up English wills is to include a provision that automatically revokes all earlier wills, and without adding the reference this could inadvertently revoke the foreign will with quite unintended consequences.

d. Estate duty

Estate duty has been abolished since 1st January 2001.

ARE THERE ANY OTHER THINGS I SHOULD DO AT THE SAME TIME AS I BUY A PROPERTY?

You need to apply for a telephone and may need to take out health insurance.

IMPORTING GOODS AND PERSONAL EFFECTS

There is not generally much of a problem for a EU citizen importing furniture for their house in Cyprus, it is however usually better to have a professional removal firm deal with the move unless you are only taking a few “special” items.

To bring pets into Cyprus you must obtain an import permit from the Cyprus Veterinary Services. They must be kept under quarantine for six months (home quarantine in a previously designated area where the Veterinary Services Department can inspect them at intervals is possible). Quarantine has been lifted for pets when certain documents or certificates such as the following have been submitted;

The following breeds cannot be brought into Cyprus: American Pit Bull or Pit Bull Terrier, Japanese Tosa, Dogo Argentine Fila Brasilero.

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