Cyprus is a fantastic country for purchasing a vacation house or even raising children due to its pleasant climate, good living standards, handy geographic location, and numerous Blue Flag beaches.
Prior to examining various factors of buying a property in Cyprus, it should be recalled that the island has been divided between Northern (Turkish) and Southern (Greek) Cyprus since the Turkish invasion and occupation of Northern Cyprus in 1974. Northern (Turkish) Cyprus is not a member of the European Union and is not recognized by the United Nations.
For potential buyers, the majority of homes on Northern Cyprus territory come with a significant level of risk. Current occupants and legal owners who were forced to vacate these properties during the conflict of 1974 are arguing about their current rightful title and, as a result, their right to sell such assets. While there is currently no solution to this situation, many Greek-Cypriots from the southern side believe the selling of houses in Northern Cyprus by Turkish inhabitants to be unlawful, making such property acquisitions extremely perilous for potential buyers.
Purchasing a home in Cyprus is a complicated process
Fortunately, there are plenty of lovely home alternatives on the European side of Southern Cyprus. Purchasing real estate in Cyprus is a pretty simple process. However, using the services of a qualified independent lawyer who has no ties to the seller or developer of the property being purchased is highly recommended. The lawyer will confirm that there is no loan or other claim on the property, that it truly belongs to the selling party, that all relevant planning and building permissions are in place, and will review the Sale Agreement on your behalf to ensure that there are no underlying issues for the buyer and that the agreement is legally binding. It’s also crucial to make sure there are no issues with the title deeds. Non-European citizens must additionally seek formal approval from the Council of Ministers to purchase property in Cyprus, which is normally easy to obtain. Following the signing of the agreement and payment to the seller, the agreement must be taken to the local tax office for stamp duty payment, which must be done within one month of signing the Sale Agreement to avoid a fine. In addition, the Sale Agreement must be presented to the District Land Office within two months of its signing to officially register the purchase and ensure the buyer’s legitimate possession of the land.
Citizenship in Cyprus is obtained by investment.
Residential property must be purchased for a minimum of EUR 500,000 + VAT under the Cyprus Investment Programme. Above that, the programme demands an extra EUR 1,500,000 investment in one of the program’s specified ways of the investor’s preferred choice, one of which being real estate. As a result, several investors have decided to contribute an additional EUR 1,5 million to the acquisition of houses, driving up prices in the luxury segment of the real estate market in Cyprus. Since the establishment of the Cyprus Investment Programme in 2013, there has been a significant increase in construction on the island, with luxury villas and multimillion-dollar flats in high-rise buildings with direct sea views.
Limassol, which has seen prices skyrocket in recent years, sells some of the most costly residences. Limassol has been flooded with build-to-suit-investment-requirements real estate, making it a favorite among international purchasers and Cyprus Investment Programme applicants. Paphos, which has seen the erection of luxurious private villas with private pools and gardens, is closely observed.
Property prices in Cyprus vary greatly depending on location and, most significantly, the buyer’s ultimate goals. In many regions, a home with an asking price of around EUR 100,000 is easy to find, but the sky is the limit, as some of the most costly properties are sold for millions of euros.
Government investment programs have a significant impact on property prices in particular locations.
Investment-based residency in Cyprus
Cyprus’ Residence by Investment Program is another driver of real estate prices. Non-European candidates are eligible to live in Cyprus provided they can demonstrate a stable source of income from outside and purchase a property worth at least EUR 300,000 + VAT. Obviously, far more homes fall within the price range of somewhat more than EUR 300,000 + VAT than the EUR 0.5 mil. or even higher necessary for the Cyprus Investment Programme, while EUR 0.3 mil.+ VAT can still buy a very appealing property on the island.
Real Estate Prices in Cyprus Vary
The choice is greater for European citizens who can afford to make their property pick without adhering to any minimum investment limits. Prices in Cyprus can vary greatly even within the same city.
For example, in the tourist resort of Ayia Napa, a two-bedroom apartment can be acquired for less than EUR 100,000 or more than EUR 1,5 million, depending on construction duration, quality of the residential development, closeness to the beach, and other factors. Having said that, even some of the island’s lower-cost houses often provide a high standard of living in comparison to many other European countries, and there are always good bargains to be had.
When purchasing a home, additional costs such as fees and taxes should be factored in. Purchase-related expenditures such as legal and surveyor’s fees, stamp duty, and land register fees should account for up to 10% of the purchase price, according to experience. In addition, new built properties in Cyprus are subject to a VAT tax (from 5 percent ).
In Cyprus, where can you buy?
Making the correct geographical option requires careful evaluation of the buyer’s long-term aspirations. The following are some of the factors to think about:
- Is the buyer planning to stay in Cyprus indefinitely?
- Is the property solely going to be used as a vacation home for the buyer?
- Is the buyer planning to rent the home out?
- Is the buyer need to meet minimum purchase price requirements in order to qualify for the Cyprus Investment Program or the Residency Program?
- The buyer’s personal tastes, for example.
Limassol and Paphos real estate
Many people coming to Cyprus permanently chose Limassol as the most busy and cosmopolitan city, with a diverse range of foreign schools and a thriving business community. In addition, if you want to rent out your house to renters, properties for rent in Limassol are now in great demand due to a lack of supply and rising demand in the mid-market price range. Living in Limassol, on the other hand, is more expensive.
Nearby Paphos has an airport and is normally cheaper, but because many jobs are in Limassol, some people choose to reside in Paphos to save money on living expenses and commute to Limassol on a daily basis. In compared to Limassol, Paphos offers a more relaxed atmosphere, with the majority of properties currently on the market being private homes rather than flats (like in Limassol).
Properties in Nicosia, Larnaca, and other tourist destinations
Nicosia, Cyprus’ capital, also boasts an excellent range of private schools and a good potential for property rental due to steady demand from the local market (many Cypriots work in the capital). Nicosia, on the other hand, is located inland and lacks direct sea access, making it unsuitable as a vacation property or short-term rental.
During the summer, many other coastal vacation destinations bloom, while the winter months see them stall in expectation. Such cities may be suitable for more modest vacation houses during the high season, but they are unlikely to be suitable for year-round living. Examples include Ayia Napa, Paralimni, and Protaras.
In compared to Limassol or even Paphos, Larnaca offers closeness to Larnaca Airport (1 of the country’s 2 airports), a beach position, and very reasonable housing rates. Because it is much smaller than, say, Limassol, some local real estate professionals believe the city is currently undervalued as an investment prospect.
Renting out your Cyprus property
Tenancy regulations in Cyprus can be complicated. If you plan to acquire a home in Cyprus that you plan to rent out, you should seek competent legal advice and explore the rental rules that apply to this specific property before making any purchasing decisions. Tenancies in Cyprus are separated into two types: free market tenancies and statutory tenancies. Both have significantly different laws when it comes to essential aspects of the tenancies, such as the eviction process (should you wish for tenants to quit the home at some point in the future and they refuse), or future rent increases.
Risks for Landlords in Cyprus with Statutory Tenants
Many international and Cypriot landlords alike find themselves unable to take ownership of their properties or increase the rent in line with current market rates if the tenancy they are tied into comes under the category of Statutory Tenancy.
One of the key legal conditions for a tenancy to be considered Statutory is that the structure be created before December 31, 1999, making it a safer choice for future landlords to purchase homes developed after that date. In the case of resale homes, your lawyer will be able to obtain documentation of construction date from the developer who built the property originally, as well as confirmation from the Electricity Authority Cyprus of when the property was first connected to electricity (usually when it was constructed).
Renting out your house in Cyprus can give a solid cash flow, but you must plan ahead of time. For the best results, it is highly recommended that you discuss the above-mentioned intricacies with an independent lawyer before purchasing a property.
Whether your objective is investment, relocation, or ownership of a vacation house, Cyprus has it everything, and with adequate due diligence performed with the help of a lawyer, properties in Cyprus can prove to be lovely homes and profitable investments for many years.