The Property Banks Buyers Guide to Cyprus
Property in Cyprus is registered on a
land registry, similar to that of the United Kingdom.
The first step is the signing of a preliminary contract. This is
binding to both the purchaser and the vendor on executing their
agreement as it was originally agreed. At this stage a holding
deposit is lodged with a Lawyer or a Notary. The purchasing lawyer
will carry out all the inquiries that are needed 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.
Non-Cypriot citizens require permission from the Council of
Ministers to purchase property in Cyprus. This normally takes about
8 to 14 months and without this permission Title Deeds cannot be
transferred to the purchaser. Although time consuming, this is a
quite easy and hassle free process and with the accession in the EU
this is not expected to take place for EU citizens.
The final contract is entered only if all the inquiries are proven
to be satisfactory. The contract is then lodged with the Land
Registry within two months if signed, to prevent the same property
being sold for a second time. Application is made at the Central
Bank at this time for the necessary permit for the transfer of
purchase funds. This application is not necessary if both the
purchaser and the vendor 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. If the property purchased is new,
then the title deed will take up to three years to be issued by the
authority in charge. The purchaser is however secured by having the
contract of sale with the vendor and that contract is registered in
the Land Registry. All the above procedures are usually handled by a
solicitor for a very small fee.
1) 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, for instance, 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.
2) Signing of 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 buyer. This is
similar to the English Term, "exchange of Contracts". Upon signing
the contract of sale, the purchaser has a 6 weeks grace period to
pay the first instalment to the vendor. If the purchaser fails to do
that, then the contact can turn void.
3) Possession of the property
Possession of the property will only be completed when the property
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.
4) Transfer of title deeds
If the property title already exists, then both parties immediately
proceed to the transfer of title deeds procedure for the the new
owners, and pay the remaining amount owed. If the property purchased
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.
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 below two certificates 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) A certificate from any person in authority in the country of the
applicant certifying his good character or clean criminal record.
b) A certificate from any financial institution as to the
applicant's good financial standing. Certificates referring to
minimum deposits of 35.000 Cyp to 40.000 Cyp are preferable.
* 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 on 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.
5) Property Taxes, Fees and Rates
Real Estate Transfer tax-fees 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.
The rates are on a graduated scale.
This can be done as soon as the relevant Government Authority has
issued the title deed and the purchase has been completed.
Value Of Property In CY Pounds (CYP) Transfer Fee Rate (Per 100%)
Up to 50,000 3
From 50,000-100,000 5
From over 100,000 8
Should the purchase be made in joint names (provided the price is
more than CYP 50,000) the effective value for calculation is halved.
Transfer of ownership takes place by a simple process of
registration at the Land Registry Office and the issuing of a title
deed after completion and delivery. This can be done either by the
buyer personally or by assigning Power of Attorney to a Solicitor. A
pre-requisite for registration, in the case of foreigners, is
evidence that the property has been paid for with foreign exchange
and approval by the "Council of Ministers of Purchaser's
application" to buy property in Cyprus . These formalities can be
taken up by the buyers lawyer on the buyers behalf. However, before
the registration of the completed property the purchaser should pay
the transfer fees to the Land Registry office.
Stamp Duty
The purchaser is liable to pay stamp duty at the rate of 1.50 CYP
per thousand up to the value of 100,000 CYP. thereafter the rate is
2.00 CYP per thousand. This must be paid within 30 days of signing
the contract.
Immovable property tax
The annual immovable property ownership tax is based upon the value
of the property. Certain immovable properties are exempt:
Value of property CY Pounds (CYP) Annual Property tax (rate per
thousand ‰)
Up to 100,000 exempt
100 ,001 250,000 2.0
250,000 500,000 3.0
Over 500,000 3.5
Important Note:
Immovable property tax is based upon the value of the property in
1980 which is much lower than the current market value. So there is
no immovable property tax for the majority of properties in Cyprus
Local authority taxes and rates
A rough guide could be approximately CYP 50 -150 per year depending
on the size of your property. This tax is for rubbish collection,
street lighting, sewerage, etc. The basic utilities, electricity,
water and telephone are payable individually in accordance with the
consumption and based on a meter reading.