Buying - All Aspects

All aspects of buying property - Legal & Financial

Cyprus is currently "the" place to purchase Property, be it a permanant or 2nd Home or a Holiday home.
The tremendous increase in demand is attributed to many factors, including:- value for money
low cost of living and high standards, the hospitality of the local people, a warm climate, safety and security, and driving as in the UK [on the left side of the road ]- English is widely spoken and now with Cyprus as an E.E.C. Member Country - Medical Services under E121 are available to U.K Citizens

Restrictions

Some still remain for UK / EEC  Nationals, but these are disappearing fast.
[by 2007/8 most will have disapeared with full E.E.C integration]
At present restictions remaining are:

Purchase of "ONE"

• Apartment or HouseHouse
• Building plot or land [max approx three donums] (4,013sq.m).
• Registered Offshore Companies can purchase Office Premises for their business and "homes" for their Non-cypriot employees.
• The Council of Ministers may grant approval to acquire more land, if this is for/to the benefit of the Tourist Industry (ie. a hotel or complex) especially if located   where Tourism is to be developed. This also applies to other 'selected/approved' Commercial ventures.
  

Non Cypriots

[Notwithstanding changes now Cyprus is an EEC Member] - Any person who is not a Citizen of the Republic 
[even if an EEC Citizen] and including Foreign Offshore Company personnel.
Excluding wives of a Cypriot citizen.

Definition of Acquisitions
Acquiring of Property / Real Estate involves  

• Transfer of Registration
• Leases in excess of 33 years
• The acquisition and Company Share Control of Real Estate, if such acquisition results in  control by Non-Cypriots
• The establishment of a trust or similar established for the benefit of a Non Cypriot

Council of Ministers Approval
The acquisition of real estate / property by Foreigners requires approval of the CyprusCouncil of Ministers [Law Cap 109] this is readily and freely issued, on submission of :

Application Form Data Required

• Applicants Personal details 
• Financial standing - Bank Reference [evidincing sufficient Funds]
• Details of the Property to be acquired  
• Details of the present Owner /Developer
• Payment Terms for the Property
• Nature ( Freehold, Lasehold, shares etc)
• Copies of Official Registered Government Plans
• The Completed application form is lodged with the relevant  District Officer where the
  property is situated.
  They will prepare a report and submit to Council of Ministers via the Minister of Interior
  

Approval issue, can take six to nine months, during this period there is no restriction in
taking possession of the property.

Approval granted will be for:

• The house to be be used for own residence and the building plot or land does not exceed three donums
• For professional or commercial business if an Registered Approved Co
  for Manufacture if in an area "approved" for the benefit of the Cyprus Economy and or the production of products related to the use of new technologies
  

The Approval Permit will normally be conditioned:

• Transfer within 1 year from the date of the permit or within three years in case of construction of a building on the property
• All costs to be paid in foreign currency
• All taxes to be paid
• For the specific property and designated use only
  

Central Bank Certification
The Central Bank will issue a Certificate evidencing purchase in foreign exchange on submission of form EC/NR/01 together with

• Contract of Sale
• Copy of Concil of Ministers Approval
• Certificate from the commercial bank evidencing import of FX
• Registration Certificate of the property this is a ver IMPORTANT document especially necessary in the event of any subsequent re-sale

District Land Office Application
Transfer of ownership is effected at the District Land Office on submission 
(or by appointing a third party by Power of Attorney) of :

• Application form N.270
• Property Registration Certificate
• Copy of  Council of Ministers approval
• Central Bank's approval
• Evidence of payment of all Property taxes due
  

Central Bank Exchange Control Requirements

• All purchases made in "imported" Foreign Currency via an authorised dealer (i.e. a Bank]
• On Re-Sale an amount equal to the original Purchase Price paid in FX may be repatriated immediately. The remainder placed in a blocked account with a Bank. Each year an amount of C£5000 per annum plus interest earned during the year may be repatriated.
•  Non-residents selling their property to another other non-resident  under an agreement outside Cyprus may receive the entire proceeds abroad without prior Exchange Control permit. However the new non-resident owner, when he disposes of his property shall not have the right to receive foreign exchange but the entire proceeds from  such sale shall be directed to a blocked account with releases of Cyp 5,000 per annum plus interest.

 

Applications for 1st Rebates

To the Central Bank through the authorised Bank supported by:

• Copy Title Deed
• Original Purchase and subsequent Sale Contract 
• Certificate of importation of Foreign Exchange
• Confirmation of the Bank that the Owner is considered for exchange control purposes as non resident
• Clearance Certificate from the Inland Revenue confirming that no Taxes are due by the account holder
  

Capital Gains Tax

On disposal of the property, capital gains tax at the rate of 20% on any gain                   
apart from the first Cyp 10,000 [exempt] There is also an indexation allowance.
There is no tax if the property was acquired between 1st August 1980 and
13th July 1990 with foreign exchange imported into the Republic.

Estate Duty

NONE - on death in the case of a "retirement home"

Transfer Fees

Upon being registered in the name of the purchaser by the Land Registry Office Transfer Fees.  
The Fees are payable as follows:

Value of Property                   Transfer Fee per £1000
Up to CYP 50,000                               3%
CYP 50,000 to CYP 99,999                5%
CYP 100,000 and over                         8%

If the Purchase is made in Joint names[ie husband & wife,
the Tranfer Fees are efectively 'halved'. 
All Fees are based on the value of the property as assessed by the
District Land valuers.

Stamp Duty
The Purchase Contract should be stamped within 30 days of its signing at the rate of 1.5 per
thousand  up to C£100,000 and thereafter at the rate of 2.0 per thousand  [or a Fine will be levied]

Mortgage Fees

1% of the amount secured, plus the relevant stamps on the various documents.

Mortgage Finance
Many Banks offer mortgage facilities to assist purchase. Maximum amount borrowed is the equivalent of 60% to 70% of the Purchase Price. [subject to Valuation] Facilities in FX Periods from 7 - 10 years now even 15 + can be considered Interest Rates normally in the region of 2.00 to 2.5% above
sterling base rate or L.I.B.O.R.
For further information on these or any other  questions - please contact us:-

Recomended Action

• Seek Advice from a qualified, independant professional and trustworthy property consultant
• Check the land is suitable and 'approved'  for building, ie. no zoning restrictions, building regulations
• There is access to an official road, availability of water supply, electricity and telephone lines
• The Seller has a valid title to the property and that there are no encumbrances restricting transfer of ownership to you 
• Vital to check the Seller/Developer has secured all building permits and can deliver with vacant possesion 
• Legal advice/services should be retained 
• Check in the contract of sale - for a clause that all monies paid must be refunded should the Council of Ministers "refuse" application 
• Copy of the contract of sale must be filed with the District Land Office 
• Check the reputation/performance and reliability of the Developer/Builder  
• Request a final Retention Payment until all work agreed has been completed to your satisfaction and the Sale Contract
  

Buying Off-Plan - Recommended for seriousconsideration]
Can save from 10% to 20% of Purchase Price
Can permit "limited" alterations / choice - tiles/kitchen equipment electrical fittings etc
After the Reservation Fee Payment [normally Cyp 2,000] 
A With Order/Contract Payment of 30% is normally required then Stage Payments as work progresses according to agreed schedule [to be checked/verified] with a final Rention Payment released when all work is finished according to Contract Agreement

Solicitors Fees
Covering searches - Contract douments/drafting, preparation of title deeds, assistance with Council of Ministers application etc - according to Property type  size As a guide in region of Cyp 1,100 [+ or -]

For further information on any of the above or Property queries regarding Cyprus please fill in the "Contact Us" form and send to us