This section deals with things that you should be aware of when considering investing in property here in Cyprus.
The law
The law in the Republic of Cyprus is based upon English Law. In fact many of the practising lawyers actually trained in the UK.
Title Deeds.
The Government of Cyprus have measures in place that “Guarantee” your right to title provided you follow the very clear system laid down for your protection.
Title deeds normally take between 4 and 5 years to be issued after the completion of a specific project.
This does not prevent you from selling your property provided you have carried out the necessary transaction through a reputable solicitor and that the contract drawn up between yourself and the developer is correctly completed.
In the event that you decide to sell before Title Deeds are issued the “contract of sale” acts as a temporary title deed.
Freehold/Leasehold
There are very few locations/property that are not freehold. Those that are leasehold are basically owned by the Church and other organisations that are not permitted to sell land. Make sure to ask the question.
Specific Performance
In order to protect your investment you should instruct your lawyer to lodge a “Specific Performance” claim with the Government Land Registry. This will protect you and your investment and will ensure that in the unlikely event of a problem that you will receive priority in terms of financial matters. Failure to insist on this procedure will leave you financially exposed. This has to be done within 60 days of the contract date.
Payment Structure
The Central Bank of Cyprus has instructed developers and banks that the standard deposit that is acceptable is 30% of the purchase price. The remaining 70% can be financed through a mortgage with any bank.
Mortgages
These are now readily available in a batch of currencies that reflect the fact that Cyprus is now a fully fledged member of the EU. You can choose various currencies from Swiss Francs – GB£.
Mortgages are normally available for a period up to 15 years. This can be extended by a further 5 years depending on the bank and the particular circumstances of the purchase. Borrowers must have the ability to repay the loan by their 70th birthday.
Property can be purchased in single, joint or multiple names.
Charges
There are various charges that are linked to the purchase of property. Brief outlines of these are:
Lawyers Fees – For drawing up the contract of sale, lodging in the Land Registry and checking that all documentation pertaining to the development, such as licence to build, any Mortgages on the Land, the Legal Owner(s) of the land are correct and in order.
Stamp Duty – Stamp Duty is due at the time that you sign your contract of sale. (This is normally paid by your lawyer and claimed when you make payment for service rendered.
Immovable Property Tax
This a yearly tax imposed by the government similar to the Poll Tax but nowhere as severe and ranges between CY£60 and 120 per year.
Capital Gains Tax
Should you decide to sell your property at some point in the future you could find yourself liable to Capital Gains tax. This will depend on the price paid and the actual selling price. There is an allowance of CY£10,000 before tax for an individual property owner if the spouse is also a joint owner then the amount becomes CY£20,000.
The taxable rate on any profit made above this is at 20%.
Real Estate Transfer Tax-Fees.
When the title deeds are ready to be issued in the name of the owner you will be required to pay for them based on the following rates:
1st C£50,000.00 3%
From CY50, 000 – 100,000 5%
Over C£100,000 8%
These rates are based on an individual buying alone. In the event that the purchase is in joint names then the 1st CY£100,000 are charged at 3%.
TERMS
Off Plan
This indicates that the project is being sold off paper. All procedures are in place to take the project forward but work would not normally have started at this stage. Purchasing Off Plan is a good way to maximise your return on the value of the property.
The system works on the basis that the developer will market the project when he starts to sell and reaches a certain level of sales he will increase his prices. Normally prices in the Cyprus property market are increased 4 times a year. By the time that the project is delivered there will be a big difference between what you will have paid and the going rate at that time.
Under Construction
As the name implies the project is actually being built. The length of time required to complete a project will depend on the size and complexity of the work involved. For Apartments and Townhouses large projects can take up to 18 months to complete.
Villas can normally be constructed in a period of 15 months. For larger projects there is a longer period required.
Re-sale
A Re-sale will take place when an owner wishes to dispose of his/her property in the market. Re-sales can be sold with or without title deeds.
In the event that title deeds are available then the purchaser will be required to pay the Transfer Fee Tax in order to get the title transferred into their name. Note that this is payable at the time of the transaction and is over and above the purchase price.
Payment For Property In Cyprus
Due to the tightening of existing regulations within the EU and by the Government of Cyprus all monies used for the purchase of property have to be brought into the country and accounted for. It is not possible for example to turn up with GB£100,000 in your briefcase and pay this over to a developer and obtain an official receipt.
There is a limit of around CY£5000 that can be brought into the country in cash without having to declare to customs where this money came from. If you are stopped by customs they may well ask you to tell them the source of the funds and the reason for bringing such large sums in cash with you.
Bank Accounts in Cyprus
The opening of bank accounts in Cyprus is a very informal affair when compared to the UK. It normally takes no more than 30 minutes and can be done whilst you wait. It is advisable to open the following types of account:
Sterling Account – This one to transfer funds pending payments etc
Cyprus Pounds Account. – This one to make payments to the developer and for standing orders etc.
Your lawyer can open these accounts on your behalf if you give them a general power of attorney.
General Power of Attorney
This allows your lawyer to act on your behalf when you are not present in Cyprus. They are not allowed to do anything without having notified you and having received your consent for them to carry out whatever it is they need to do for you.
There is no fee for arranging this. It is always advisable to have one in place even if you do not want to use it.
Wills
The law in Cyprus with regards to Inheritance tax is different from that of the UK. For this reason it is advisable to discuss with your lawyer the setting up of separate wills for any property purchases in Cyprus.
Driving in Cyprus
We drive on the left hand side of the road. Vehicles are Right Hand drive. Speed limits are expressed in both Mph and Km.
Speed cameras have started to be introduced into accident black spots in various places on the island.
Use of Mobile Telephone whilst driving is a CY£50.00 fine and 2 points Failure to wear seatbelts and speeding are also common offences.
Documents for the vehicle and your driving licence should be carried with you at all times when driving. In the event of being involved in a traffic accident you will be required to produce them.
You should ensure that if you unfortunate enough to be involved in an accident that you do not attempt to move the vehicle. Doing so will render you most likely to blame for the accident when the traffic police arrive. If on the other hand the accident is a minor affair, and both parties agree to agree then merely exchanging details such as names and insurance companies etc along with details of the damage is sufficient.
Most hire car companies will insist that you call them and advise of the accident. They will either arrange to visit the scene or will advise you on what course of action to take.
Cost of Living
The cost of living in Cyprus compares very favourably with other countries within Europe.
Refuse Collection – This will cost on average CY£52.00 per year.
Water – Normal consumption normally around CY£15.00 every 2 months.
Electricity – Normal Average Usage CY£35.00 every 2 months.
Communal Charges – Complexes between CY£200 – 500 per year (depending on facilties offered).
Fuel Prices – approx 50% of those currently in the UK.
Communications
The telephone network in Cyprus is an advanced system. The current fixed line system run by the Cyprus Telephone Authority (Cyta) is both fast, and offers prices that are currently the envy of many other countries in Europe including the UK.
Fixed lines can be installed in 24 hrs provided that the line exists. ADSL Lines are also available at reasonable rates.
There are 2 mobile telephone operators one run by the (Cyta) network and the other by a private organisation which trades under the name Areeba.
Other Points
If you cannot find an answer to what you are looking for here
contact us by and we will respond within 24 hrs.
|
