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Introduction
As the legal system in Cyprus is largely based on the British one, it safeguards the buyers’ right in a number of ways. The buyer must bear in mind that as soon as the contract of Sale is signed and a prepayment is paid, the contract should be registered at the Land of Registry office; this procedure simply protects the buyer’s ownership rights until the Title Deed is issued and transferred to Buyers’ name. Adding, it ensures that the property will not be registered twice by another person, it cannot be leased, sold, transferred or mortgaged. In the case of non-Cypriots a prerequisite of registration is evidence that the property has been paid for with foreign currency and also that the buyer obtained permission from the Council of Ministers (usually a formality).
Purchase & Ownership Requirements
Cyprus has proved to be increasingly popular place for retirement and/or for the acquisition of homes by Foreigners as it provides a calmly sunny place to live. Overseas individuals are given the permission to obtain property in Cyprus by submitting to the Council of Ministers their Contract of Sale as evidence. However, this process is just an obligatory formality that can be easily administered by a lawyer of your choice. Although this is the case for the time being, therefore, once Cyprus entered into the EU this process will be simplified further (Amendments introduced to the Acquisition of Land by Aliens Law Cap 109 – To take effect on the date of accession, currently scheduled on the 1st of May 2004).
Land Registry Expenses
The procedure of transferring a certain property on the name of the Buyer can only be followed considering the Buyer has paid the total amount that the contract of sale entails plus any extras. Property transfer expenses are payable to the Land Registry Office by the Buyer and the fee amount is based on a sliding scale as shown below:
| Transfer fee | Property value Euro |
| 3% | up to € 85,430.07 |
| 5% | € 85,430.07 – € 170,860.14 |
| 8% | Over € 170,860.14 |
| i. | The fees are charged on the property’s market value on the date of purchase. |
| ii. | If the purchase price doesn’t represent the value of the property on the day of the Sale agreement, the Managing Director of the Land of Registry office can impose and consequently receive rights on the sale value of that property as he/she specifies. |
Property Tax and Duties
There are substantial tax advantages for U.K. citizens retiring to Cyprus. The U.K./Cyprus double taxation treaty, which is unique in this respect, enables United Kingdom pensioners to remit both government as well as private sector occupational pensions to Cyprus free of withholding taxes in the United Kingdom. In addition, every year the owner of the property should pay the various Property and Municipality taxes.
There is Immovable Property Tax, which is imposed on the market value as at 1st January 1980 and applies to the Immovable Property owed by the taxpayer on the 1st January of each year. Physical and legal persons are both liable to Immovable Property Tax as follows:
Tax Rates
| Property Value Euro | Rate %0 |
| Up to € 170,860.14 | Nil |
| € 170,860.14 – € 427,150.36 | 0.25 |
| € 427,152.07 – € 854,300.72 | 0.35 |
| € 854,300.72 plus | 0.40 |
Below is an example of costs involved in the purchase of a property by a Non-Cypriot.
| Fees for application to Council of Ministers |
| Transfer fees (to Land Registry Office). |
| Stamp Duty |
| Government Immovable Property Tax (per annum) |
| Municipal Property Tax (per annum) |
| Sewage Tax (per annum) |
| Mortgage arrangement fee |
| Other legal fees. |
| Insurance on replacement value of property |
| Surveyors fees |
Stamp Duty
Due at the time of signing the contract, stamp duty is levied at the rate of € 2,56 per € 1,708.60 with a value up to € 170,860.14. For any amounts in excess, the rate is 2%. This single payment is payable by the purchaser.
Acquiring Bank Loans
Property Lending to Non- Residents
Cyprus Banks is in the position to examine requests for Loan facilities by Non- Residents for the purchase of immovable property in Cyprus. Therefore, we believe that it want be long before these parameters are simplified further and that banks promote better financial packages to European citizens as Cyprus is now full member of EU.
Most of the cases, Bank’s main parameters for offering lending to non - residents are the following:
| a) | Loan amounts of up to 70% of the purchases price of property can be offered provided the purchase price of the property does not exceed CYP 100K. In case the purchase price of the property exceeds the amount of CYP 100 K, then an additional loan of 50% of the amount exceeding CYP100K can also be examined. |
| b) | The maximum amount of loan per applicant is CYP200K. However, banks can also examine applications for greater amounts, on a case –by-case basis. |
| c) | The facility is repayable over a period of 10 years with monthly, quarterly, semi-annual instalments subject to the Bank’s approval. |
| d) | The interest to apply on these loans will be Libor + up to 2.75% and the customer can borrow in number of currencies, (i.e. GBP, EURO, CHF, USD, CYP), subject to the Bank’s final approval. |
| e) | The valuation cost of the property is payable by the applicant irrespective of the outcome of their application. |
| f) | Upon the establishment of the loan facility and in addition to the valuation cost the applicants will have to pay an “arrangement fee “of up to 1% of the loan amount and documentation fee” up to CYP 100. |
| g) | As security, the Bank will require the following: |
| • | First legal charge over the immovable property to be purchased, or assignment of the sale contact supported by a bank guarantee from the seller. |
| • | Assignment of a term life policy, depending on the credit assessment. |
| • | Assignment of a Fire Insurance Policy. |
| • | The borrower will have to pay his contribution towards the purchase to the release of the loan funds. |
Requests for financing which do not fall within the above parameters can also be examined on a case – by – case basis.
Additionally, and in order to enable the proper credit assessment of each application, the following must be provided by each applicant:
| 1) |
Bank reference from their existing Bankers. |
| 2) |
Details of the property to be purchased supported by a copy of the sale contact. |
| 3) |
Full residential address and date of birth. |
| 4) |
Proof of income. |
| 5) | Statement of assets and liabilities duly signed by the applicant. |
Payment Terms
The company adapts its Payment terms based on each customer’s case. However, when a house or an apartment is still under construction, as prerequisite for the sale of a property the following payment terms must at least be met:
| a. |
30 % of the total amount as a Prepayment |
| b. |
50 % monthly installments up to the delivery of residence |
| c. | 20% will be paid off at the same time with the delivery of residence |
Bank Guarantee
The company offers Bank Guarantee to customers that request it and it covers up to 80% of the property price. The Bank Guarantee simply secures issuance of the Title Deeds.
A .P. MILIOTIS CONSTRUCTIONS LTD | tel: +357 22511133 | e-mail: info@miliotis.com.cy |
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Notes: 1) Any misprint on information given do not bind the company. 2) Photos are indicant and do not represent the actual projects.
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