Are you considering purchasing a home in Cyprus? PrimeLocation has partnered up with AIPP, an international property trade group, to deliver you all the information you’ll need.
A crucial distinction must be recognized before we begin discussing Cyprus. Cyprus has been divided since the Turkish invasion and occupation of Northern Cyprus in 1974. Greek Cyprus (in the south of the island) is a member of the European Union, but Turkish Cyprus (in the north of the island) is neither a member of the EU nor is it recognized by the UN.
Because purchasing property in Northern Cyprus may result in legal complications over the right of vendors to offer specific residences for sale, AIPP does not accept companies who represent property for sale in Northern Cyprus as members. As a result, this guide only covers property in Greek (southern) Cyprus.
What should I do first?
If you’ve decided to invest in a foreign property, Cyprus is a good choice. Following decades of British control, Cyprus has a special bond with the United Kingdom, which makes certain features of the island feel quite familiar. The Cypriot people are friendly to the British, and it is estimated that 60,000 Cypriots live in the United Kingdom.
Cyprus has a legal system similar to that of the United Kingdom, and purchasing property is often simple. However, before you begin, ask yourself these three basic questions:
- Why are you purchasing this property in the first place?
Is it a vacation home, a financial investment, or a place to retire to?
- What do you intend to do while you’re there?
This could be resting with your partner, entertaining family and friends, participating in sports and leisure activities, or even working.
- Which of these matters the most to you?
Is it the price, the location, the type of property, or the amenities?
After you’ve gotten these responses, you’ll have a better idea of what you’re looking for and may go on to the details.
Where should I buy in Cyprus?
You’ll be spoilt for choice in practically any section of Cyprus, with breathtaking landscape, lovely villages, and kilometers of immaculate beaches. Historical villages brush up against throbbing party towns, as they do in many small island destinations, and each offers an entirely distinct experience. So, where do you begin your search for a home?
Paphos, in south-west Cyprus, and its neighboring villages are one of the most popular destinations for British expats; in fact, the number of expats here exceeds five figures. Paphos is rich in history and culture, and its golden beaches offer a diverse selection of accommodations, restaurants, and recreational opportunities, as well as its own airport.
If you want to be right in the middle of things, the rapidly developing Kato neighborhood on the Paphos waterfront is ideal, while Coral Bay is a little further out of town but still vibrant, with plenty of rustic tavernas and a magnificent Blue Flag beach.
Tala and Peyia, which are located within the hills inland from the beach, provide breathtaking vistas as well as some reprieve from the summer heat. Both have sizable expat populations.
The settlements to the east of Paphos, such as Konia and Anavargos, have a less’resort’ vibe but yet have all the amenities.
Polis, on the north-west coast of Paphos, with its gorgeous port, clear waters, and protected natural reserve, is well worth considering if you are looking for absolutely picturesque and don’t mind a little journey.
Cyprus’ primary international airport is located in coastal Larnaca on the other side of the island. Beaches, high-end shopping, and a diverse selection of housing options are also available in the city. In recent years, numerous significant constructions have been completed around the city’s waterfronts and streets.
If city life isn’t for you, check out Pervolia, which is free of large resort hotels and full of Cypriot flavor while still being tourist-friendly. Oroklini, a little further up the coast, is another option.
Limassol, which was traditionally the island’s largest port, is located halfway between Larnaca and Paphos on Cyprus’ southern coast. It is known for its carnival and wine festival, and it now has a vast new marina, as well as a diverse selection of restaurants, cafés, and shops, as well as numerous upscale projects along its sandy shores.
Erimi, Kolossi, and Episkopi, all about a 10-minute drive outside Limassol, have a more “villagey” atmosphere. Consider the calm Pissouri on the Paphos side of the island if you wish to play golf as well. It offers amazing sea views and is close to the famed Aphrodite Hills recreational area.
Because of its proximity to the Turkish-controlled northern border, Cyprus’ Famagusta enclave has received mixed assessments as a potential property acquisition location. However, if you are relocating to Cyprus for employment, you will be in close proximity to Ayia Napa (Agia Napa), a flourishing party town where housing is quite affordable.
If you want to get away from the crowds (and the heat), the Troodos Mountains in central Cyprus provide a completely different perspective on the island. During the summer, you may visit the Louvaras, Palaichori, and Platanistassa local craft villages, which are full of cobblestone lanes, orchards, and vineyards. Skiing in the shadow of Mount Olympus is also feasible between January and March.
What kinds of Cypriot properties are available, and how much do they cost?
Part of the allure of owning property in Cyprus is that the homes are completely different in style – and significantly less expensive – than what you would find in the UK.
When imagining a new life abroad, many foreign purchasers fantasize of a sun-drenched home. The good news is that these can be found all around Cyprus. A typical Cypriot villa will have a pool, terraces, and gardens, and will be located on the outskirts of town or in a smaller development.
A three-bedroom villa with a pool in Pervolia’s exclusive gated complex will set you back around €550,000. In Peyia, a similar-sized villa will cost around €300,000.
Townhouses are a wonderful alternative to villas since they provide ample living space while requiring less land. A decent terrace and roof top area are frequently included in the outside space. Expect to pay roughly €130,000 for a two-bedroom townhouse in Kato Paphos with a shared pool and close proximity to amenities.
The single-story bungalow is a popular choice among retirees. A three-bedroom detached bungalow with a private pool in Pissouri costs around €250,000.
Stone village cottages and farmhouses are more common in the more rural parts of Cyprus. Renovations for those in need will cost anywhere from €15,000 and €70,000. Expect to pay between €60,000 and €200,000 for a habitable home that has been restored or requires modest remodeling.
The bulk of buildings will have flats of various sizes that have been specifically designed for the tourist market. They are particularly popular among Brits due to communal amenities such as swimming pools and gardens, as well as shared maintenance costs.
The disadvantages are mostly ‘other people’ — congested during the holiday seasons and close proximity to neighbors – but they do provide a ready-made community on the other hand.
Apartment prices vary by region, but a new two-bedroom at Coral Bay with sea and mountain views can be purchased for around €75,000 as an example. A similar apartment in a popular Paphos resort, on the other hand, will cost around €300,000.
Another option is a resort property on a leisure complex, such as a golf course. You don’t have to play the sport to appreciate the breathtaking views and first-class amenities offered by these high-end buildings. They also have a high investment potential. A two-bedroom “junior” villa in a prime location on a resort like Aphrodite Hills will set you back over €500,000.
How can I get a loan to buy a house in Cyprus?
If you’re buying a home in Cyprus with cash, either from current money or a remortgage of your UK home, skip ahead to our section on currency conversion. If you don’t, you’ll have to think about your borrowing possibilities.
You won’t be able to get a mortgage from a UK bank to pay for a home that is located in another country. Non-residents, on the other hand, are allowed to take out mortgages on Cypriot property from a Cypriot bank; a professional overseas mortgage broker can assist you in finding the best prices.
Mortgages are commonly available in Cyprus, and the terms are comparable to those in the United Kingdom. A deposit of at least 30% is required, and the loan is typically repaid over 15 years, depending on your age.
A property value will be required for all mortgage applications before the loan can be authorized. The greater your deposit, the better your rate will be, however mortgage rates are currently between 3% and 4%.
Keep in mind that borrowing in the same currency as the loan’s repayment is a good idea. Currency swings will not work against you as a result of this. If you’re paying your mortgage with a UK paycheck, for example, borrow in pounds. If you want to finance your purchase by renting out your Cypriot house, you might choose to borrow in euros because that’s what you’ll get paid in.
Get the most bang for your buck
- While moving big sums of money, even a minor difference in rate can result in a significant loss or gain — a 1% difference in rate when converting £500,000 can mean £5,000 in either direction!
- Banks’ FX (Foreign Exchange) rates are often lower than those offered by professional FX providers.
- Keep in mind that FX firms are not covered by the Financial Services Compensation Scheme (FSCS), so do your homework and ask plenty of questions.
- With the help of a currency converter, you can find out how much your money is worth today.
What other expenses are there?
The cost of buying a home in Cyprus varies depending on whether you are buying a new build or a resale property. As a general rule, you should budget up to 10% of the buying price. The following is a breakdown of the charges:
- VAT (Value Added Tax): This is due at the usual rate of 19 percent on new-build property. It’s frequently included in the purchase price of a home.
- Duty on stamps: In the range of 0.15 to 0.20 percent
- Charges by the bank: This includes the mortgage valuation cost, which you’ll have to pay even if your loan is denied.
- Fees for surveyors: A survey isn’t required, but it’s a good idea.
- Fee for the Land Registry: At the time the deeds are transferred, there is a transfer fee that must be paid. It is calculated on a sliding scale from 3% to 8% of the purchase price, depending on the property’s value. (It’s worth noting that fees are lower when buying in joint names because the purchase price is split between the two parties.)
- Fees for Legal Services: These will vary depending on the property’s valuation, but a qualified lawyer is well worth the extra money.
Who should I contact for assistance with my purchase?
Using a solicitor is the usual in Cyprus because the conveyancing process is remarkably similar to that in the United Kingdom. However, a good independent lawyer who will just work for you and protect your interests is also suggested.
Ascertain that your lawyer has no ties to the agency or developer. Even if your agent recommends a fantastic one who “they usually work with,” be cautious because there’s a chance they have a financial relationship. One method to get around this is to hire a lawyer first. Check out the AIPP website for a list of property lawyers with a Cypriot focus who are based in both the UK and Cyprus.
Now it’s over to your representative. You might have found one at a property show or online, but it’s still important to do your homework. The Estate Agents Registration Council regulates and licenses estate agents in Cyprus. However, there are still unregistered sales agents working in Cyprus, so make sure your agent is a member of a trade group like the AIPP. This gives you the right to file a complaint with a property ombudsman and receive cash compensation.
A surveyor isn’t required by law, but if you’re purchasing a property that’s had a lot of work done to it or needs a lot of work done, it’s an excellent way to avoid unpleasant surprises. As a general rule, if you’d commission a survey on a property you’re buying in the United Kingdom, you should do the same in Cyprus.
Finally, if you’re moving your belongings, you might need to hire a moving company. It is important to find an insured company that is a member of an organisation, just as it is in the UK. When transporting your items to Cyprus, specialist overseas removal specialists will guide you through the procedure and advise you on storage, sea transit, and any rules you may be ignorant of.
What can I anticipate from the judicial system?
The legal system of Cyprus is straightforward and, in reality, is based on UK law. Here’s a step-by-step guide to what to expect:
Step One: If your offer is accepted, you may be requested to sign a reservation agreement, which, while not legally binding, demonstrates your intent to purchase. If you want a mortgage, the vendor should now withdraw the property from the market while your lawyer conducts some basic due diligence and the bank conducts its own valuation.
A small holding deposit is commonly required these days, and this is frequently paid directly to the vendor. You risk losing money if you just “alter your mind,” so have a receipt set up by your lawyer saying that the deposit is “subject to satisfactory checks,” which will protect you. The buyer’s and seller’s lawyers’ information is then exchanged.
Step 2: Your lawyer will now conduct checks to confirm that the property is clear of any outstanding debts. (It was standard practice in Cyprus in recent decades for developers to take out land mortgages and not repay them – in this situation, you would effectively own the home but not the land it sits on.)
A title search will be performed by the lawyer to ensure that the seller is the legal owner of the property and has the right to sell it. Boundary searches will be conducted, and all planning permissions will be confirmed.
At this time, a volunteer Plan Search at the local council can be good to see whether any other development is proposed in the vicinity. Although you won’t be able to ensure that a property will not be built directly in front of yours in a few years, it will assist to lessen your risk.
Step three: If you’re happy to proceed with the surveys and your lawyer hasn’t raised any concerns, you’ll go on to the Contract of Sale. This is the same as a contract exchange in the United Kingdom, and all relevant facts must be recorded.
If you are unable to go to Cyprus, you must provide your selected representative power of attorney to sign on your behalf. A non-refundable deposit of between 10% and 30% will be required, so make sure you’re completely satisfied with the specifics before signing.
Step four: After both parties have signed the Sales Contract, your lawyer will file it with the District Land Registry Office. This precludes the seller from refinancing or selling the property to anybody else until the Title Deeds are obtained. This is called as Specific Performance Law, and it protects you in some ways until the deeds are issued.
Along with your registration, you will need to present bank and character references. You will also need to apply for a permit from the Council of Ministers as a non-Cypriot. Keep in mind that this could take a few months to complete.
Step Five: Funds must now be put in place in order to complete the sale. If you’re paying with a mortgage, your lender will handle the transfer of funds to the seller. If you pay in cash, the transfer will be handled by your currency exchange firm or bank.
Step Six: Because getting the final Title Deeds in Cyprus can be a lengthy process, this is where the Cyprus system differs from the UK system.
The Title Deeds may be available for instant transfer into your name in some situations. If this is the case, the transfer fee is paid to the Land Registry, and you have “finished” in the sense that we use in the United Kingdom.
In other circumstances, however, it may take months or even years for the Title Deeds to be issued. However, in Cyprus, it is still usual practice to complete the transfer, pay the remaining, and live in the home while you wait. Consult your lawyer to see if this is appropriate in your situation — new legislation have recently been introduced to ensure that Title Deeds are given directly to buyers.
Note that if you are purchasing a new property, you may be required to pay the purchase price in installments rather than all at once. Make sure you get bank guarantees for each payment in case there are any issues with the construction.
What should I be careful of in terms of potential pitfalls?
The procedure of buying a home in Cyprus should go easily if you choose an independent lawyer. Nonetheless, it’s a good idea to start with these typical blunders:
Purchasing a home on land that is still encumbered by a mortgage or does not have legal title
Despite the fact that the Cypriot government is working hard to prevent this from happening, it is still possible. Your lawyer must conduct thorough due diligence and background investigations on your developer.
Not paying attention to the state of your fixtures
Although the house is supposed to be sold “as is,” astute developers have been known to swap out more expensive furnishings in the “display home” for more basic ones. Before signing the contract of sale, double-check that everything is in functioning order and that nothing has been substituted!
Failure to comply with the terms of the contract of sale
The Contract of Sale must be deposited and stamped by the Land Registry within a certain timeframe, according to Cypriot legislation. If you do not follow this, you will lose key legal rights.
Failure to appropriately calculate the exchange rate when calculating the total transaction price
The value of a currency fluctuates all the time. While this may be OK when purchasing vacation funds, it might become a major issue if the ultimate price of your property differs dramatically from the time you made your offer. Fixing your rate with a specialized foreign exchange business is an excellent idea.
Restrictions on renting
Non-resident owners who rent their home on a short-term or holiday basis are subject to rigorous regulations in Cyprus. When you apply to the Council of Ministers for approval to acquire, you must state that the property will not be utilized for “commercial reasons.” It’s advisable to seek legal guidance before purchasing property to rent out to the holiday market.
Is there anything else that I should think about?
The expenditures and considerations don’t end once you’ve finished building your home in Cyprus. To avoid any unpleasant surprises, make sure you calculate in future living and operating expenditures for your home. Take into account the following:
Taxes–Everyone who owns property in Cyprus, regardless of their status, must pay an annual Immovable Property Tax (IPT). Certain revenues, including pensions, are subject to taxation in Cyprus. Always seek the guidance of a certified tax professional.
Wills – A ‘forced heirship’ clause exists in Cypriot law. So, if you want your property to be handed on to someone who isn’t a part of this arrangement, make a formal will as soon as feasible.
Prepare for the unexpected – What if you or your partner becomes extremely ill or dies? Are you able to return to the United Kingdom if you are needed immediately? It’s critical to think beyond the initial home acquisition and implement programs like these.
Home Insurance – Think about how you’ll use your home in Cyprus (for example, sole occupancy or rental), and make sure you have enough coverage. Long-term vacant properties necessitate particular insurance.
If you follow these instructions, you should be able to start enjoying your new life in Cyprus as soon