A Brief Guide to Buying in Cyprus

Compared to other European Countries buying new property in Cyprus is a relatively simple and fast process, and with all the paperwork in English a great deal less stressful. Approx. 95% of Cypriot law is based on English law and therefore the buying process is similar to that of the UK.

All our advertised properties are sold as Freehold with Title Deeds and with no previous owners involved, matters are straightforward.

Price and payment terms
Solicitors
Banks
Specific Performance
Approval of the Council of Ministers
Selling your property
Capital Gains Tax
Inheritance Tax
The Cost of Purchasing and On-Going Expenses
Property Transfer Tax
Stamp Duty
On-going expenses
Maintenance charges
Home insurance
Living expenses
Personal taxation
Retirees
Income tax and NI

Price and payment terms

Overview:
20% Deposit required, paid in 2 stages:
15% (of gross purchase price*) Deposit on agreement to purchase.
5% (of gross purchase price*) Deposit on Completion of the Build.

On Purchase, once you have chosen your property you will be required to pay our UK property consultant an initial holding deposit of £2,000 (British Pounds) to secure the property. This is usually paid by cheque and will be made payable to the developer Alpha Panareti, this will be deposited in their UK Bank Account . This makes the agreement legally binding, so that no "gazumping" can take place.

Within 4 weeks of this payment the balance of the 15% Deposit will be required, again this can be paid by cheque as above.

During the building process staged payments will fall due, but subject to your Mortgage being approved, these will be made for you by the Alpha Bank of Cyprus, interest on stage payments is added to your loan. Re-payment commences only on completion of the development.

On Completion
Once the property is completed the balance of the deposit payment will fall due.

You will be required by law to pay for your property from "external funds", i.e. from outside Cyprus.

* Gross Purchase Price

This is the total property value, including VAT @ 15% and any added items such as Furnishings and White Goods where applicable.

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Solicitors

You must have a solicitor in Cyprus in order to complete a purchase.

Your solicitor must be reputable and will play a vital role in the purchase of your new property.

In general, they will charge a fixed rate for your property purchase, agreed in advance.

The solicitor will do any necessary searches on your property, draw up the contract and carry out the "Specific Performance" and Council of Ministers application.

Your solicitor will also be able to take your Power of Attorney if you do not intend to live permanently in Cyprus, in order to carry out official business with banks or government authorities. This can be done during the purchase process, which then enables them to deal with all official duties on your behalf, this means you do not need to visit Cyprus in order to make your purchase.

Please ensure that the solicitor you choose is reputable and speaks a good level of English, as this will help when communicating with them.

We have elected a panel of Solicitors from which you can choose, if you do not have a specific solicitor in mind.

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Banks

You will need a bank account in Cyprus in order to complete your purchase, probably with both a Sterling account and a Cyprus Pounds account. This will allow you to transfer funds from the UK and then make payments as required.

You can also use it for transferring pension, investment or other income out to Cyprus.

Banks in Cyprus have very modern, up to date systems and provide a wide variety of services, including Internet banking that can be accessed from the UK. Opening accounts is a simple process.

We have a relationship with a major bank in Cyprus, they will open an account on your behalf, if you decide to take their Mortgage Offer.

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Specific Performance

This process prevents the seller / developer from re-selling a property to another buyer and provides an absolute safeguard to the buyer until the application to the Council of Ministers has been made and approved.

The Contract of Sale must be deposited at the Land Registry within two months of being signed and stamped. Your solicitor will do this as part of his duties.

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Approval of the Council of Ministers

Once you Contract has been agreed and signed, it is necessary for you to make an application to the Council of Ministers to grant its approval for a non-Cypriot to acquire what is known as "immovable property". Your solicitor will make this application on your behalf.

At this date, no UK citizen has ever been refused this approval.

This is a routine procedure that can take up to 12 months to complete, but there is no restriction on you taking full possession of your property pending the granting of the approval.

The system provides for the following:

(1) You can live in your property from the moment you take delivery of it, prior to the Council of Ministers granting approval.
(2) You can re-sell your property during this time and inheritance rights are not affected by the process.
(3) Should approval not be granted, you can re-apply.
(4) Should approval not be granted, you will have seventeen (17) years in which to sell your house.

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Selling your property

You may sell your property at any time after the Contract to purchase has been signed.

You may then immediately repatriate all proceeds, provided the initial purchase was paid for in properly imported foreign currency.

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Capital Gains Tax

Capital Gains Tax is levied at 25% on profits arising from the sale of a property.

At first glance this might appear a high figure, however, when "foreign" owned property is sold, there are generous allowances and exemptions from the tax. the "gain" also takes inflation into account.

Also remember to keep evidence of improvements to your property after taking possession of it, such as invoices, as these will be useful when the "gain" is calculated.

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Inheritance Tax

There is no inheritance tax (Death Duty) in Cyprus

There is a double taxation agreement between Cyprus and the UK, but we recommend you take out a Cypriot will to ensure no confusion over the future ownership of your Cypriot property on death, and this will help remove the property from probate.

Your Solicitor can arrange this for a small fee.

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The Cost of Purchasing and On-Going Expenses

Your fixed purchasing costs are likely to be made up as follows:

The cost of the property plus any mortgage fees and interest

The solicitor's fee - around CYP 900 to CYP 1,000

Council of Ministers Application: CYP 100 - 200.
Normally included in your solicitor's fee.

Property Transfer Tax - see below

Stamp Duty - see below

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Property Transfer Tax

The payment of Property Transfer Tax is required in order to transfer the Freehold ownership to your name and is payable once the property is registered in your name at the Land Registry Office. This process cannot be completed until after the Council of Ministers approval has been received. In reality, this means that it will up to three years from purchasing your property before you actually pay the tax.

The tax is payable once only to the Land Registry and is calculated as follows:

Method of charging: if a property has been bought jointly by two or more people i.e. if their names are on the Contract of Sale, then the cost of the property may be divided equally between those owners. The tax will then be charged to each owner for their portion, meaning that the individual cost will fall into a lower price band. The grand total.

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Stamp Duty

The purchaser is liable for Stamp Duty, but this is a very small amount in Cyprus.

This is charged at the rate of CYP 1.50 per thousand up to the value of CYP 100,000 and thereafter at the rate of CYP 2.00 per thousand. This duty should be paid within 30 days of signing the contract and your solicitor or the property developer will help you deal with it.

Example:
Purchase price of property CYP 155,000

CYP 100,000 at CYP 1.50 per 1000 - CYP 150
CYP 55,000 at CYP 2.00 per 1000 - CYP 110
Total Stamp Duty? CYP 260 (Approx £310)

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On-going expenses

These charges are based on the current market value of the property as at 1st January 1980. In practice therefore, this means that you are unlikely to be liable for the tax as the law stands at present, as most properties would have been valued below the 100,000 exemption rate.

Should you be liable, the registered owner of a property is liable for an annual tax, based on the value of the property.

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Maintenance charges

If you buy a property within a complex with shared facilities, such as communal swimming pools, gardens etc., you will be liable for an annual fee to cover the maintenance of these facilities.

An on-site Management Agency will be on hand to help with this facility. The Management Agency will be appointed by the developer initially, but the homeowners' association, will take-over this relationship once the development is complete.

Please be aware of this potential fee obligation when you purchase the property although the annual fee may not yet have been fixed as yet.

We can offer guidance on example cost, if required.

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Home insurance

Cyprus law obliges you to take out fire and earthquake insurance on your property, even if it is an apartment within a large block.

You will also need, of course, to take out full home and contents insurance on your property, once you have taken delivery of it.

There are many, many schemes available some from UK Insurers.

If you are planning to rent out your property, ensure that the insurers are aware of this, so that public liability is covered.

As a guideline, you should anticipate paying between CYP 1.00 and CYP 2.00 per thousand pounds insured.

If you accept the Mortgage offered by the Alpha Bank then they will be able to offer advice in this area.

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Living expenses

The utilities - electricity, water and telephone - are all billed every two months by the relevant authorities, normally based on metered usage.

Costs will vary widely depending on the amount of equipment in use and the time of year, but ‘average’ bills for a permanent household may be:

Electricity – CYP £30 every two months
Water – CYP £10 - £20 every two months

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Personal taxation

The following are very brief notes about the most obvious forms of taxation – you are advised to seek professional advice to confirm this information and for more complicated personal situations, including self-employment or running a company.

Double taxation agreements exist between Cyprus and the UK.

Individuals permanently resident in Cyprus are taxed here on the following types of income:

•  Employment income for work performed in Cyprus.
•  Profits from a business activity, which is carried out though a permanent  establishment in Cyprus.
•  Pensions in respect of employments exercised in Cyprus (except for  pensions paid from a fund established by the Cypriot Government or any  local authority).

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Retirees

Foreign retirees are taxed at a flat 5% per annum on pension and investment income brought into Cyprus, with exemptions totaling CYP £4,000 per person.

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Income tax and NI

A person living and working permanently in Cyprus will have their income taxed as follows:

Employers and employees are required to make National Insurance Contributions at the rate of 6.3%.

Permanent Resident status can be achieved through a Certificate obtained locally.

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All of the above information is published in good faith and is correct to the best of our knowledge, but please check the details with independent sources before relying on it.