PROGRAMME 5
CYPRUS

In 1974 Athens encouraged a coup against the Cypriot government, Turkey invaded to protect Turkish Cypriots. Turkey declared the north of the island the Turkish Federated Republic of Northern Cyprus and thousands of Greek Cypriots were driven out.  The southern Republic of Cyprus remains the only internationally recognised Cypriot government. In 2003 Cyprus’s application to join the EU was accepted and Northern Cyprus eased restrictions on border crossings.

Since 1974 prices have never gone down.The biggest increase in property prices has been in the last 5 years.

In order of desirable areas, top of the list would be Paphos, then Limassol, Larnaca, and lastly Ayia Napa/Protaras/Paralimini

Three years ago the average house price would have been about €90k. The average property price now is about €150,000. (Agents reluctant to agree on this though). Undoubtedly Cyprus being granted membership of  the EU last year has had a massive impact on the property market.
Three years ago a three bedroom villa with a private pool would have cost about €209,000 in Paphos , (€156,000 in Limassol, €139,000 in Larnaca, €122,000 in Ayia Napa/Protaras/Paralimini)  respectively). Today the same house would cost €262,000 in Paphos ( €217,000 in Limassol, €174,000 in Larnaca and €156,000 in Ayia Napa/Protaras/Paralimini)

There tend to be three types of properties in Cyprus:- 1-2 bed apartments, 2 bedroom maisonettes/townhouses and 3 bedroom villas. 3 bedroom apartments are not common anymore.

Bargain properties ie – one bed apartment start at about €86k. These could be resale apartments or new builds off plan with a communal pool.

Top end of the market - For a detached house with a large plot and private pool you would expect to pay between €350k –  €520k.

There are quite a few properties on the market, more so than in demand and this means that for the last 6 months the market has been stable. However agents expect prices to have risen by 10% by the end of the year.
Problems when buying are delays in obtaining Title Deeds due to back-log in the land registry office. Therefore, difficulties arising in obtaining loans on resales without Title Deeds in Cyprus.
There are well over 1000 Irish people living in Cyprus and many more with holiday homes.

Buying in northern Cyprus, however, is a more fraught and complicated affair: after the Turkish invasion thousands of Greek Cypriots fled south. Since then, the Turkish Republic of Northern Cyprus has issued title deeds to land and property that no one else recognises.

Purchasing Property in Cyprus

Legal System
The legal system in Cyprus is mainly based upon the British Legal System.  The Cyprus Land Registry is probably one of the most advanced and reliable systems in the world.  Purchasers of property in Cyprus will therefore be far more secure, with regard to their Title Deeds, than they might be in another country.  Furthermore, legal fees/costs are reasonable and much lower than in other European countries.  All contract and other paperwork is in English.

How much property can be purchased?
As an EU citizen there is no longer any restrictions on how many properties you may own if you register them in a company.

Approval of the Authorities of the Republic of Cyprus
Having signed a “Contract of Sale” for your property, as a formal procedure, it will be necessary to make an application to the Authorities of the Republic of Cyprus to grant that a non-Cypriot may acquire immovable property.  This procedure may take up to three months or more, but in the meantime, there is no restriction in taking possession of the property.  The main information required for completing the application is:

• Personal details of the applicant(s) and their financial standing
• Particulars of the property
• Particulars of the present owner, the “Contract of Sale” & terms of payment
• The way of acquisition, i.e., whether Freehold, Long Lease, by Share etc.

Mortgage and Finance
All commercial banks in Cyprus offer mortgage facilities.  Loans can be in a chosen currency and the amounts range from 60-70% of the value of the property, with repayment periods repayment period up to 15 years (age related). 

Taxes payable
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 1st January 1980, therefore is much lower than the current rate and is as follows:

Market Value (CYP)                       Annual Tax                                     Total Tax per year (CYP)

Stamp Duty
Unless otherwise stipulated in the contract, the purchaser is liable for the once only payment of stamp duty at the rate of 1.5 per thousand of the value up to CYP100, 000.  Thereafter, the rate becomes 2.0 per thousand.  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.

Land Transfer Tax

Property transfer fees are payable once only to the Land Registry Office either personally or by a Power of Attorney to your Solicitor.  The amount payable is based on a sliding scale, as shown below and is borne by the purchaser.  The fee is due when the Title Deeds are transferred into his/her name:

Other possible, approx costs involved after purchase of property

• Electricity connection CYP 75.00
• Water connection CYP 32.00
• Telephone connection CYP 100.00

The above amounts are approx deposits for security reasons only and are refundable with termination of the service.

Local Authority Rates – these are between CY50-150 per annum, depending upon the size of the property.  This tax is for refuse collection, sewerage, street lighting etc.  The basic utilities are payable individually in accordance with consumption and based on meter readings.
The electricity in Cyprus is 220-240 volts; appliances from Ireland can be used in Cyprus without an adaptor.

Household and Personal Effects

Having purchased a property, non-Cypriots are allowed to import all their household goods, furniture and personal effects – duty free! The only charge is a small fee levied on used electrical items, which is payable at the port, at the time of entry.

Acquiring the Title Deeds
The Title Deeds are transferred into the buyer’s name as soon as they are issued by the Land Registry Department.  The relevant cost is borne by the purchaser, as detailed in the Land Transfer Tax section (above).  For the purchaser’s protection, the Land Registry Department provides a simple and effective legal instrument called “Specific Performance”.  Once the “Contract of Sale” is signed and a deposit paid, the Contract is registered at the Land Registry.  The Contract is then in the hands of the Land Registry and therefore cannot be leased, sold, transferred or mortgaged.  This procedure protects the purchaser’s ownership rights until the Title Deeds are issued and transferred into his name.

Buying in Cyprus today you are not simply ending up with a beautiful residence in the Mediterranean enjoying the local lifestyle and sunshine.  But you benefit from your investment for many reasons:

Firstly prices of property compared to rest of Europe are still much lower therefore experts are predicting a rise in prices to fall in line with European levels.

The positioning of the island on the eastern edge of Europe has proved to be quite advantageous for offshore companies, who have already decided to use Cyprus as a base.  This has created a huge market for rented properties thus maintaining high rental incomes.  At the moment depending on the location of the property rented income is from 6-8% per annum of course if you have exceptional luxury villas or beach front properties it can be much higher.

Selling Property in Cyprus

When selling your property, any outstanding property taxes must have been paid and a certificate obtained from the Inland Revenue. Capital Gains Tax is payable at the rate of 20% on the gain with the first CY10, 000 (ten thousand Cyprus pounds) being exempt for each person.  There is an indexation allowance and a further allowance regarding the transfer fees paid.  There are double taxation agreements with most countries, contact us for more details.

Gains from the sale of the house are exempt up to CY50, 000 (fifty thousand Cyprus pounds) in total if the owner resides in it for at least 5 years prior to the sale.  The sale proceeds can be repatriated immediately, including any amounts spent on improvements and/or additions to the property, which have been paid for with imported foreign currency.  Profits can also be repatriated, but note should be taken of the exchange rate at the time of transfer of funds.