This is a brief guide in the process of purchasing a property or land in Southern Cyprus. This information will give you the basic elements from finding your home to moving in and beyond.

 

Paying for your property.

Firstly you will need to decide how you are going to pay for your property. There are three options.

1. Buy for cash:- The most straightforward option.

2. Re-mortgage main residence. (If purchacing a second home) This is also a fairly straightforward option, as the only third party involved is your present mortgage lender.

3. Cypriot Mortgage:- This can be in the currency of your choice, but will involve set up costs.

 

Perpare for initial costs.

Whether you are buying with cash, or with a mortgage there are other costs that will need to be taken into consideration.

1. A reservation fee:- This is a fee of around €2000. This is paid once the price and payment terms have been agreed on the property you would like to purchase. (This is a deposit and obviously this fee is taken off the overall cost of the property or land. Although is usually non refundable if you were to withdraw from the sale prior to the signing of the contract). 

2. Legal fees:- Be prepared to pay in the region of 0.75% of the purchase price for legal fees. If you are purchasing a new build property DO NOT use the developers lawyer. Even if they are offered to you free of charge! There will also be Stamp Duty on the contract price to be paid. This is not anywhere near the price of UK Stamp Duty. It is calculated as 0.15% of the value of the property up to €170,860.14 and 0.2% over €170,860.14. (E.g A property of €200,000 will be €314.57) Also Note that the contract should be in English if you are from the UK, and english is your native tongue.

3. Agency Fees:- The vendor pays any agents fees. You should not be asked to pay anything extra.

 

Mortgage costs in Cyprus.

Mortgage deposit:- The minimum deposit will depend on your residency.

CYPRIOT RESIDENTS:-It is possible for a 90% mortgage with 10% deposit.

EU RESIDENTS:- Minimum deposit of 20%, although 25-30% is more usual.

NON EU RESIDENTS:- The minimum deposit is usually 30%. 

Arrangement fee:- All the banks charge an arrangement fees.most charge between 0.75% - 1.0% of the amount of the mortgage. It is advisable to check first.

Repayment Term:- This is usually between 10-15 years although longer is now available.

Qualifying for a mortgage will require:- 1, sufficient income to service the mortgage, and 2, the suitability of the property.

 

Purchasing the property

Once you have found a property you would like to purchase and an offer has been accepted by the vendor the reservation fee will be required.

Once this fee has been paid, the property is immediately withdrawn from sale, thus giving you piece of mind until your lawyer is ready. You now have up to 28 days to do any searches, surveys, and appoint a lawyer to prepare and agree a contract, and any legal checks that are needed to be done.  

Your lawyer will check the title to the property to ensure that you will own what you are buying, and that the land is free from any mortgage and it also has a building licence.

 

The contract of sale

The purchasers lawyer will normally prepare the contract of sale in English. Before signing it DO check that ALL the details and conditions are correct, such as:-

***Details and identities of the vendor and yourself***

***The full description of the property***

***The surface area of the property and land***

***The purchase price along with how and when it will be paid***

***Details of any fixtures and fittings to be included within the sale***

REMEMBER THIS IS A BINDING CONTRACT!

On the day of signing the sale contract you will be required to pay the deposit to the vendor. (This may just be the initial reservation fee already paid).

Now the contract is signed completion is usually 28 days but can be longer or shorter by prior agreement.

If the property is under construction, there will be a schedule of payment dates following the usual 30% deposit on signing.   

 

Completion day.

This date would have been decided on the day of signing the contract. It is your responsibility to have the remaining funds available for this date.

You would have had a bank account opened prior where the funds would have been transfered in good time for the completion date, and buildings insurance should have been put on cover to also start from this date.

Property in Cyprus is Freehold:- You own the property and the land it stands on absolutely. This applies to houses and flats (in the case of flats, you own a share of the land).

When the title deeds are issued to you , Transfer Tax will need to be paid. This is calculated at 3% on the first €85,393, 5% on the next €85,393, and 8% on the remainder. If purchasing in joint names then each person has the tax on their half share.

 

Property Taxes and Related Topics 

There are only small taxes on residential property. The local authotities (the Municipality), and the district authority.

The Municipality collects Municipal Tax which covers the cost of refuse collections, street cleaning, and street lighting. This is about €100 per year. 

The District authority collects an ANNUAL PROPERTY TAX. These taxes are only collected from any property that would have been valued in excess of CYP£100,000 in the year of 1980. Thus most property is therefore exempt.

If you own a property such as an apartment within a complex where there are common facilities, there are maintenance and service charges to pay. You should consider these charges before signing any contract. Also remember that your buildings insurance is usually included within this cost. These charges also vary according to the size and quality of the complex, and whether there are lifts, swimming pool, gardens, and any other facilities.

 

Inheritance Law

Cypress succession law applies to properties in Cyprus, even if the owners are not Cypriot nationals. Under Cypress succession law you are not able to leave your assets to anyone you please. Property on death must pass to your spouse and any children equally. You should take advice from your lawyer.

An exception exists for British citizens who can leave their property as they wish if they have made a will. This stems from the time when Cyprus was a British Colony before 1960 and an allowance was made from the local system of leaving property to the children.

 

Capital Gains Tax

Capital gains tax is imposed on gains from the disposal of immovable property at a rate of 20%. There are certain allowances along with indexation relief allowed.    

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