FAQ - Buying Property In Cyprus

Since joining the EU in May 2004, all European Citizens who are permanent residents of Cyprus (i.e. residing in Cyprus for a minimum of 185 days a year) are free to acquire property without restriction.

At present, EU citizens who are not resident in Cyprus can only acquire one of the following:

• 1 Apartment
• 1 House
• Unlimited building plot or land

It is expected however that these restrictions will be lifted once EU accession is complete. The EU granted Cyrpus a five year transitional period in relation to property purchase laws. This period will expire in 2009 at which point all EU citizens will benefit from the freedom of rights currently enjoyed by Cypriots.

There are three options available to any person purchasing property in Cyprus:

1) Cash purchase. A straightforward option

2) If you are currently a homeowner, you can release equity from your current mortgage or re-mortgage your current property. This allows you to deal directly with your current lender or to secure one mortgage from a lender within your country of primary residence. If you do not keep up with mortgage repayments however your home may be at risk of repossession.

3) Obtaining finance for a property in Cyprus with a Cypriot bank is very straightforward. Due to the country's history, the majority of people speak fluent English and the banking system is based on the British system. Cypriot banks will lend non-residents between 70%-80% of the value of the property. The base rate of interest charged is specified by the Central Bank of Cyprus and currently is 5.5%. The term is in the majority of cases fixed at 10-15years, although it is possible to negotiate on this point.

1) Legal Fees
It is recommended to have solicitor's advice for the purchase of your property. The fee charged by any good independent Cypriot lawyer should be in accordance with the regulations issued by the Bar Council of Cyprus. The fee is usually based upon the property value and the amount of work undertaken. The "average" figure is in the region of €1,700 + VAT at the prevailing rate of 15%.

2) Stamp Duty
Unless otherwise stipulated in the contract, the purchaser is liable for the payment of stamp duty at the rate of 0.15% on the value of a property up to €170,000. Thereafter the rate becomes 0.20%.

3) Mortgage Fees
The registration fee of a mortgage is 1% of the amount secured, plus the relevant stamps.

4) Transfer Fees
When purchasing a property the District Land Registry Office will charge transfer fees based on the market value of the property at the time of purchase. There are calculated as follows:

• Up to CY£50,000: 3%
• CY£50,001 -CY£100,000: 5%
• CY£100,001 + : 8%

Transfer fees are charged accumulatively and are payable at the time of issue of title deeds.

5) VAT
Since accession to the E.U., VAT must be paid when buying a house in Cyprus. If an application for a town permit was filed before the 1st May 2004 however the property is exempt. For properties where applications were filed after this date VAT applies on the sale price. Rates are set at 5% for Cypriot 1st Time Buyers and at 15% for all other purchases. VAT on land sales will be introduced this year.

6) Annual Property Tax
For residents there is an Immovable Property Tax based on the value of the property at a rate of 0.2% between CYP100,000 and CYP250,000; 0.3% up to CYP500,000; and 0.35% over CYP500,000. The first CYP100,000 is exempt. Annual taxes are paid to the Municipality according to the size and value of the property. This tax covers all essential facilities and services. It ranges from CY£50 - CY£150 per annum per unit property.

It is recommended to have solicitor's advice for the purchase of your property. The fee charged by any good independent Cypriot lawyer should be in accordance with the regulations issued by the Bar Council of Cyprus. The fee is usually based upon the property value and the amount of work undertaken. The "average" figure is in the region of €1,700 + VAT at the prevailing rate of 15%.

The work undertaken by a lawyer will normally include the following:

• All relevant property searches at the District Lands Office.
• Negotiation and preparation of contract of sale (drafting or reviewing), stamping and lodging same with the District Lands Office within the required timeframe.
• Preparing application to the Council of Ministers with supporting documents and any amendments that are subsequently made.
• Advice & assistance on the buying process.
• Negotiations on the purchaser's behalf.

Buying a property in Cyprus is relatively straightforward. In many ways it is similar to purchasing a property in Ireland. If an offer is accepted a reservation fee (between €1,700 and €3,400) is requested to reserve the property, bind the owner, have the property taken off the market and secure it at that day's price. Unlike in Ireland however this creates a legally binding contract between the seller and the purchaser.

Upon payment of the reservation fee the purchaser is given 28 days to carry out searches, surveys and to appoint a lawyer.

Contracts are drawn up and exchanged. Upon signing the purchaser must pay at least 20%-30% of the value of the property. A completion date will be agreed and all funds must be made available for that date. Insurances should also be arranged at this point.

Title deeds will be issued in your name after you have obtained the Council of Ministers consent. This is merely a formality for EU citizens. Once the deeds are received transfer tax must be paid.

No, a valid passport is sufficient for entry into Cyprus for a period of up to 90 days

If you are purchasing your property for investment purposes we can offer you a complete 'Buy to Let package' including furniture packages, a property management company and additional services. The current rental market in Cyprus is extremely strong and with current tourism levels it is expected to remain so for the foreseeable future. With 340 days of sunshine a year, Cyprus offers all year round tourism and so investors do not need to worry about off season, low rental yields. Current potential rental returns are in the region of 6-9% depending on the area.

Should you decide to sell your property, Cyprus Law allows the full purchase amount, in the foreign currency of the original purchaser, to be transferred abroad at the time of resale. The equivalent of the full purchase price and any increase in the value of the property may be transferred immediately. Property sales in Cyprus are subject to capital gains tax at the rate of 20% on the gain, however, the first CY£10.000 of gain are tax-exempt. If a couple jointly owns the property, CY£20.000 of gain are tax-exempt.

When you sell for the first time your private residence of which you were the owner for at least 5 years, then it is tax-exempt up to CY£50.000.