How tough is it to acquire a home in Cyprus?
Foreigners can buy one property in Cyprus and own land freehold, however there is a three-donum restriction on land ownership (4,014 sq m). A permission from the government is required to register a property, although this may be readily obtained through a lawyer. However, there have been proposals to de-restrict the housing/property sector since Cyprus’s admission to the EU on May 1, 2004. The plans provide for the acquisition of unencumbered property to be permitted by 2011.
Prior to the EU talks, no foreigners were allowed to rent out property. Non-EU property owners are still unable to rent out their properties.
After the offer is approved, a small deposit of up to CY£ 2,000 is made. Because this deposit is binding, there will be no gazumping. The contract is then drafted, and upon signing, the buyer is required to pay 20% to 30% of the property’s worth, with the balance paying according to the contractual conditions agreed upon. Within two months of signing, the contract must be recorded at the land registration.
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A non-Cypriot buyer must then apply to the Council of Ministers to purchase immovable property, which is essentially a formality, including bank references, criminal records, the amount of the land, and a statement that this is his only residence in Cyprus. Though the procedure can take up to a year, there are no restrictions on using the land in the meantime, and if approval is not given, the buyer can re-apply and, in any case, has 17 years to sell the property. In addition, the absence of permission has no bearing on inheritance rights.
Footnotes to Transaction Costs Table
The round trip transaction expenses encompass all costs associated with purchasing and subsequently reselling a property, such as lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, and so on.
Currency: 1 Euro = 0.578449 CY£ as of 16 February 2007.
Transfer Tax: A progressive transfer tax is applied. The transfer tax is calculated based on the property’s purchase price or market value as established by the Land Registry department. If the property is held in joint names, the property value is cut in half, resulting in cheaper transfer fees.
If the transfer of immovable property is subject to Value Added Tax, no transfer fees are due (VAT).
Buyers of new real estate are required to pay Value Added Tax (VAT), which is imposed on the purchase price or market value of the property. VAT is charged at a normal rate of 19%.
A lower VAT rate of 5% may apply to the purchase and/or building of first-time buyer houses having an area of less than 250 square metres. For the following 10 years, the lower rate may also apply to the acquisition and/or building of houses for use as the primary and permanent residence.
Legal Fee: Although the services of a solicitor are not needed, they are strongly recommended. Legal expenses are usually flexible and range from €850 and €1,730.
Stamp Duty: A stamp duty is imposed on papers pertaining to Czech Republic property. Stamp duty is charged at a progressive rate based on the acquisition price of the property. The maximum amount of stamp duty is €20,000.
Real Estate Agent Fee: Real estate agents generally charge a fee of 5% of the purchase price. The minimum agent’s fee is required by law to be 3%.