“If you want to invest profitably, you should pay attention to Cyprus property,” say many experts. And in many ways they are right. The value of Cyprus real estate is rising, and it is profitable to rent out property and get a solid return. Also by buying real estate valued over €2.5 million, an investor has the opportunity to apply for Cypriot citizenship. The attractiveness of Cyprus real estate is evidenced by the consistent rise in sales prices: in 2016 – by 43%, in 2017 – by 24%, in 2018 – by 21%, in 2019 – by 12.2%. Let’s find out how to become the owner of Cyprus property.
The process of acquiring property in Cyprus has been significantly simplified so as to attract investors, and can be broken down into seven basic steps:
- Search and selection of real estate
Typically, investors in Cyprus search for property on specialized Internet websites, in local media, and at exhibitions and real estate fairs that are periodically held in different countries. Help may also be obtained from professional realtors or developers.
- Opening a Cyprus bank account
In Cyprus, all payments related to the purchase of real estate are carried out by bank transfer. Therefore, the buyer must open a bank account in euros at one of the Cyprus banks. This is generally very straightforward.
- Establishing a preliminary sales agreement
Once a property is selected, and to ensure that the seller withdraws the property from sale, a preliminary sales agreement is drafted. A validity period of up to one and a half months should be allowed, because that is how long it will take to organize a transaction. The preliminary sales agreement is sealed with an advance payment of up to 10% of the sale price, depending on the agreed terms. At this stage, the buyer and seller should agree on all the conditions of the future transaction.
- Preparation of a sales contract
Depending on the terms of the preliminary sales agreement, the property is locked into the agreement for the entire validity period. During this time, lawyers for both buyer and seller will scrutinise the transaction documents, and the seller’s lawyer is required to obtain a Tax Clearance Certificate. Once the lawyers are satisfied that all requirements are met, a draft sales contract is prepared and agreed by both parties.
- Signing of the sales contract
On a pre-determined date, the parties to the transaction will sign a legal sales contract. Two copies are created and both must be signed by both parties. They are prepared in English, but if necessary, a copy/copies may be made in Russian or another language.
After signing the sales contract, the buyer is required to transfer an agreed portion of the sales price (for example, 50%) into an escrow account. From this, the lawyer pays stamp duty of up to 0.2% and registers the contract of sale at the Land Resources Department. The lawyer also applies to the Council of Ministers of Cyprus to obtain permission to purchase real estate (relevant only for non-EU citizens) and prepares an application for the special concessionary VAT rate of 5% – which is only applicable when buying a home in a new building.
Having received approval, the buyer pays the balance of the standard VAT amount of 19% VAT, of which 14% is then refunded by the tax authorities. It should be noted however that only one property is eligible for the concessionary 5% VAT rate and this property must have an area of not more than 200 square meters.
- Title Deed
Not later than 60 days after the conclusion of the sales contract, the buyer’s lawyer must register it with the Department of Land Resources (District Land Registry Office). Information on the new owner of the property is entered in the register, which guarantees the buyer all rights to the property. The registration of title for a new property may be a very protracted process, and may take several years. This delay should not concern a buyer as once the sales contract has been registered and a serial number allotted and obtained, the buyer’s ownership is legally confirmed.
The entire property buying process in Cyprus normally takes no longer than one to one and a half months, and can be undertaken remotely through a notarized power of attorney, without the need for the buyer to be present.