PROPERTY OWNERSHIP

Cyprus is popular as a place to buy a holiday home, a retirement home or property for investment. Here the prices are affordable and people can buy a villa, a maisonettes or an apartment.

Property in Cyprus is registered on a Land – Registry system, similar to that in the UK.

Foreign buyers, who come from countries outside the EU, are entitled to the freehold ownership of a villa, an apartment or a piece of land with maximum allowed area of about 4,014 sqm. Legal entities owned by non Europeans may also acquire premises for their business or for residence of their foreign employees.

CITIZENS OF THE EUROPEAN UNION

With Cyprus joining the EU, the restrictions on real estate purchases for citizens of the EU are being lifted gradually in accord to the EU directions.

Citizens of the EU can purchase:

- Pieces of agricultural or residential land without any restrictions.
- Houses, maisonettes, flats, villas etc, without any restrictions if they reside in Cyprus and they have a valid temporary residence permit.
- One house, or villa, or maisonettes, or apartment, if they do not reside in Cyprus after they obtain a permit from the District Administration of the District where the property is located.

All restrictions regarding the purchase of properties in Cyprus by citizens of the European Union are expected to be abolished in 2009.

The gradual abolishment of the restrictions is one of the factors, which contributed in the increase of demand for real estate.

THE PROCEDURE

The purchase process generally follows that of the UK, but with some differences. Firstly the Purchaser’s lawyer carries out the searches at the district Land registry to ensure that the Vendor of the property is indeed the owner and to examine whether there are any outstanding debts or charges on the property and/or other legal encumbrances. The purchaser’s representative may also find out whether the Vendor had obtained planning permission for the buildings he erected.

If the Purchaser is satisfied with the property, a formal contract is signed. This binds the Vendor and the Purchaser to buy and sell the property on terms and conditions that have been mutually agreed.

Formal requirements of a contract:

The Contract of Sale must contain with certainty the following provisions:

1. The name of the Vendor, who has to be the owner of the land, where the construction takes place.
2. The correct name of the Purchaser.
3. The purchase price.
4. The date of delivery of the property to the Purchaser.
5. The date for the transfer of the property to the Purchaser if possible.
6. A plan showing the property with the specifications for the construction.


Within two months from the time the contract is signed, it can be lodged with the Land Registry according to Sale of Land (Specific Performance) Law. This is something that the Purchaser is advised to do for the protection of his own best interests, because:

1. Filing the Contract with the Land Registry is an impediment on the Vendor’s property.
2. The Vendor cannot dispose of the subject matter of the Contract without the Purchaser’s consent.
3. It allows the purchaser to require specific performance of the Contract with a Court Order if the Vendor unreasonably fails to do so.

TRANSFER OF TITLE DEEDS

Transfer of Title Deeds can take place when the time stipulated in the Contract comes and provided the Vendor is ready to do so (when separate Title Deeds for newly build premises are issued by the Land Registry).

For off-plan properties the Title Deeds are not available at the time when the contract is signed.

After completion of the construction the Vendor applies for the ‘certificate of approval’. If there is no deviation from the original plans of the project, the Planning Authority issues the mentioned certificate.

With the certificate of approval in place, the Developer applies for separate title deeds, i.e. one title per apartment or maisonettes or house.

The Land Registry issues the separate title deeds in the name of the Developer. It is a time consuming procedure and it can take place only after the construction is completed.

If the title deeds are ready, transfer of ownership from Vendor to Purchaser is undertaken by a simple procedure through the Cyprus Land Registry Office, either by the buyer in person or by appointing a third party with Power of Attorney.

The government transfer fees, which are payable to the government upon transfer of the property, are on a graduated scale. Basis for the calculation is the market value of the property at the time of the transfer. For the first CYP 50,000 the transfer fee rate is 3%, for the amount from CYP 50,001 to CYP 100,000 the transfer fee rate is 5% and for any amount exceeding CYP 100,000 the rate is 8%.

If a property is in joined names the effective value of the calculation is halved. For example, if a property of CYP 200,000 is in joint names, each person is considered as buying a property of CYP 100,000, therefore each purchaser pays 3% for the first CYP 50,000 and 5% for the remaining CYP 50,000 of the share; thus, the total taxation for each individual is CYP 4,000 or CYP 8,000 for both.