Guide to Buying Property in Cyprus

Buying a property is possibly one of the single most important purchasing decisions we make in our life. This involves finding the right property, negotiating and agreeing the price, arranging finance (if required), instructing independent lawyers to act on our behalf, completing the transaction, receiving the keys and moving in!

This may be an everyday transaction in your 'home country', so when applying the process to a different country, language and legal system, the need to protect our personal interests is both self-evident and even more important for your personal safety and well-being.

The process for buying a house, villa, apartment or land in Cyprus (known as 'immovable property'), is very similar to that of the UK. Naturally there are local working practices, costs and procedures when buying a property in Cyprus, and as a general guide and overview we have listed some of the steps below.

 

 

Step by Step Guide/Overview

Find your Property.


Using a reputable licensed company, identify properties that meet your selection criteria, decide which one(s) are your preferred options, inspect them, organise a survey is you wish and then choose your future home or holiday retreat.


Make an Offer/Negotiate the Purchase Price.


Once agreed in principle, the sale price along with any specific conditions such as moving dates, items included in the transaction, works required, etc, should then be formalised in writing.

It is common practice in Cyprus to pay a reservation fee or deposit to both secure the property and for it to be taken off the market and any specific terms that may apply to the purchase, for an agreed period of time. The figure of this non-refundable deposit varies and depends on the price range in question. Normally a sum in the region of €2,000 for an apartment or townhouse and €5,000 for a villa.

All payments for a Cyprus property should always be paid through your lawyer, using their client's account which offers you security as this payment is kept separate and use towards the purchase price and other expenses as the purchase progresses.


Instruct Solicitors.


Instruct an independent lawyer/solicitor/advocate, to act on your behalf in the agreed purchase, and ensure that the Power of Attorney is not too wide and in particular that you do not give access to your bank account.

As a matter of good business practice and to avoid any conflict of interest, we strongly recommend that you retain independent lawyers, who are not related or connected to the seller in any way at all. You may wish to visit the website of the British High Commission in Nicosia who maintain a list of lawyers (see the Consulate section). Also, ensure that all negotiations, promises and conditions are confirmed in writing to avoid any misinterpretation or problems at a later date.

Your lawyer should conduct searches at the local Land Registry (ask for an 'N50' search) to check the title (ownership) of the property and to ensure that the property is free from encumbrances (mortgages, loans or charges, which are known memos in Cyprus), and if there are, whether they will be redeemed or released upon completion of the transaction. The lawyers will draft contracts of sale for your approval and agree any additional contents that are included in the sale, with the seller or their lawyer.


Funding your Purchase.


If required, make a formal mortgage application from your chosen bank or prepare the transfer of funds for your purchase.

Foreigners buying property in Cyprus will need to exchange their local currency into Euros. Therefore, we strongly recommend that you use the services of a foreign exchange specialist or currency broker, in order to reduce costs and improve exchange rates. Thousands of pounds or Euros can be saved by moving your money more efficiently in this way.


Signing the Contract.


When ready, you will be required to sign the contract of sale and pay the first stage payment as detailed on the contract (after any deposit or reservation fee has already paid been paid). You can sign the documents in person, or give your lawyer Power of Attorney to sign on your behalf, however they will still require your written permission for any actions they undertake on your behalf.


Buying Off-Plan.


If you have chosen to buy a new property off-plan from a developer, you will have stage payments listed in the contract of sale. Release of these payments is usually linked to the progress of the building. For budgeting and planning payments, it is very useful to both date these payments AND have them performance linked.

Buying off-plan typically takes 12, 14 or 18 months. There should be a penalty clause in the contract for late delivery or completion of the property and usually this involves rent or accommodation equal to that being purchased as well as storage for your personal effects if they have already been shipped to Cyprus.


Specific Performance.


When signed and appropriate payments made, your contract of sale (signed by both seller and buyer) is deposited at the relevant Land Registry in Cyprus for the purpose of 'specific performance'. This means that the buyer is recognised as the 'beneficial owner' of the property who has a charge on the property until the individual title deeds are issued.

The Cyprus Land Registry is responsible for the transfer of Title Deeds that confer ownership from the Vendor to the Purchaser. The process is slower than in the UK, but this does not prevent you buying a property without having Title Deeds. In Cyprus, the 'Specific Performance' Law protects the interests of a Purchaser in such situations. Depositing the Contract of Sale at the Land Registry gives the buyer to right to seek 'specific performance' of the terms and conditions detailed in the Sale Contract and thereby register the property into the buyer's name. No encumbrances or loans can affect the right of specific performance after the Sale Contract has been duly deposited with the Land Registry.

You or your lawyer will have a receipt for the lodged contract which is a certified copy of the original 'stamped' sale contract. Stamp Duty has to be paid before the sale contract can be lodged at the local Land Registry (see 'definitions' below for calculating costs).


Completion / Delivery


The balance of payments is payable on completion or delivery of the property to the purchaser.

Your lawyer will finalise the transaction with the seller's lawyer, land registry and arrange for the release of any mortgage funds with your bank. The seller will need to produce a 'Tax Clearance Certificate' upon completion, to show that all property taxes, capital gains tax, personal taxes, etc have been paid in full before the transaction completes.

You (the buyer) will need to transfer the various services / utilities into your name. This can be done by you at the relevant authorities, or you can request your lawyer to carry this out on your behalf (using his/her power of attorney), however they may charge a fee for this.

Move into your new home and enjoy living in Cyprus!

 

 

Useful Information, definitions or recommendations;

Solicitors Fee


A solicitor will charge a fee to act on your behalf in the purchase of property in Cyprus. Typical legal fees at 0.5% + vat of the purchase price, however you are advised to ask for a quote and confirm the legal fees before appointing any solicitor.

Your solicitor will most likely have trained or studied in the UK and have very good spoken & written English. Your solicitor should be a registered member of the Cyprus Bar Association (similar to the UK's Law Society).


Stamp Duty


A government charge, Stamp Duty is payable when your contract of sale is lodged or 'stamped' at the Land Registry. Cyprus Stamp Duty is calculated as a percentage of the purchase price / value of the contract, as below;

The first €170,860 of a purchase price is charged at 0.15% (€1.50 per €1,000).

The portion of a purchase price between €170,860 and €8,543,007 is charged at 0.2% (€2.0 per €1,000).

Stamp Duty is capped for higher purchases at a fixed amount of €17,086


Transfer Fees


The larger government tax which is calculated on the purchase price (or the estimated value by the District Land Registry Office at the time of signing). This registration fee is charged then the Title Deeds are 'transferred' in to the name of the new owner.

The first €85,430 (per purchaser)is charged at 3%

€85,430 to €170,860 (per purchaser)is charged at 5%

Over €170,860 (per purchaser)is charged at 8%


Mortgage Fees


If you have a mortgage in Cyprus to purchase a property, you’re bank will likely register this mortgage / charge on the property at land registry. Mortgage fees may apply, which are typically 1% of the mortgage value.


Wills


Although it can be a depressing thought, it is essential to plan ahead for what 'could' or 'might' happen in the future. It is always advisable to have a Will in the country that you have any assets or property. The little time & expense it takes now could save a lot of problems, delays or expenses later. We recommend you ask your lawyer to draft a Will for your Cyprus assets.


Immovable Property Tax


Immovable Property Tax (IPT) is an annual tax payable by all property owners in Cyprus, irrespective of their residence status. However, the charge is calculated based on the value of a property in 1980.

The initial price band (up to €170,860) is exempt, therefore most property owners will have nothing to pay, as only large or expensive properties today, would have been worth over Cy£100,000 (€170,860) in 1980.

However, if you are buying a property which is part of a development / pre-separate Title Deed, you might be charged a portion of the developer's accumulated IPT, as their total property portfolio value in 1980 could fall into the chargeable bands. Therefore, depending on the wording or clauses in your contract of sale, IPT is charged as below.

Up to €170,860 is exempt (0%)

€170,861 - €427,150 is charged at 2.5%

€427,151 - €854,300 is charged at 3.5%

Over €854,300 is charged at 4%


Local Authority Taxes / Refuse Collection


Property taxes vary in each village of Cyprus and are levied by the local municipality, charged annually for refuse collection, street lighting, etc. Examples below.

2 bedroom apartment in Paphos town is approx. €128 per year.

3 bedroom villa in Souni, Limassol is approx. €175 per year.


Communal Expenses


If you purchase a property on a complex / development or block of apartments, it's most likely there will be a charge for the general upkeep of the communal facilities, such as swimming pool, lifts, cleaning common area, lighting, etc. This charge varies from development to development depending on the amount of facilities and number of residents / units.

The complex / development or block will be run or administered by either the developer, their appointed managing agent or a residents association.


VAT Refund


Vat was applied to 'new' properties in Cyprus where the application for the Town Planning Permission was submitted after 1/5/2004.

People who have purchased a new property and paid VAT within their purchase price can make an application for a refund of a portion of the VAT paid. Please note: This is subject to various conditions, the main being; it must be the applicant's main residence.

 

 

Disclaimer: Whereas these pages have been read and approved by independent lawyers in Cyprus, we cannot accept any responsibility for the accuracy. The details are provided for guidance purposes only. Any decision to sell or purchase a property should be based on advice and verification from your lawyer.