Cyprus Property Law
1. The Sale of Land (Specific Performance) Law.
Under this law a purchaser of immovable property may secure the remedy of specific performance, by depositing a duly stamped copy of the contract with the Land Registry within 2 months from the date of the execution thereof, thus preventing the vendor from transferring property elsewhere or charging it for as long as the contract is valid and legally effective.
2. The Acquisition of Immovable Property (Aliens) Law.
According to this law, no foreigner can acquire immovable property without the prior permission of the Council of Ministers. Normally permission is granted to bona fide foreigners to acquire a flat or a house or a piece of land not exceeding 4014 sq. meters for the erection of only one house for use as a residence only by the purchaser and his family. (To date no UK citizen has ever been refused.)
Members of the family of an original purchaser may also acquire their own property, provided that they are completely independent of the purchaser, both financially and residentially, such as married children having their own family and business. Permission is granted for personal use, not for letting or commercial use.
After the permit has been granted and the property is registered in the name of the foreigner, no further restriction is imposed on him and he may sell or dispose of it by will or other instrument. Moreover, the legal heir is not required to obtain a permit in order to have the property registered in his name.
The transfer of immovable property can be affected once permission to acquire has been granted and the Central Bank has certified the import of foreign funds. Transfer fees are payable by the purchaser on the sale price or under certain circumstances, on the current market value as follows:-
Current Market Value in CYP Transfer fees
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Value From
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Value to
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0
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50,000
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3%
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50,001
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100,000
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5%
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100,001
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And above
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8%
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Foreigners are now also entitled to borrow money for the purchase of immovable property upon mortgaging such property to the Bank from which they borrow the money.
3. Acquiring the Title Deed
Transfer of ownership from vendor to purchaser is accomplished by a simple procedure through the Cyprus Land Registry Office, either by appointed third party with Power of Attorney, or the buyer in person.
In the case of a non-Cypriot, evidence of payment for the property with foreign exchange must be provided as a pre-requisite for registration.
The contract of sale must be in writing, and it is advisable that such contracts be registered at the District Land Registry Office within sixty days from the contract date. This protects the buyer's rights to the property and provides additional safeguards. When issued, the title deed will be registered in the name of the buyer and will be recorded in the Government archives. The Government archives are confidential and will not be published or made accessible under any circumstances. At any time after the purchase, the buyer may sell or dispose of the property at will, provided that he/she has a valid contract.
4. Taxes & Fees
The transfer of title can be affected once the Council of Ministers' permission is obtained and the Central Bank of Cyprus confirms receipt of foreign funds. Upon transfer of the property and registration in the purchaser's name, the District Land Registry Office will charge Transfer Fees which are based on the market value of the property at the time of purchase. However if the property is purchased jointly by a couple the property purchase price is split equally into two parts and then taxed which is beneficial to the purchasers.
5. Stamp Duty
Stamp duty is due at the time of signing the contract. Stamp duty is levied at the rate of CYP 1.50 per CYP 1,000 up to CYP 100,000 (0.15%) and thereafter at the rate of CYP 2.0 per CYP 1,000 (0.2%). The purchase contract must be stamped within 30 days of its dated signature otherwise a fine will be imposed.
6. Immovable Property Tax, Services Tax
The annual immovable property ownership tax imposed by the government is approximately CYP 60-120 per year, depending on the value of the property. The Municipal authorities also levy an annual property tax at the rate of about CYP 20-30 per year. Other authorities may also impose a sewage tax of CYP 20-40, depending on the value of the property.
7. Basic Terms of the Sales Agreement
It is recommended that the following must be included in the sales agreement:-
a) Owner of the land
The registered owner of the land in which the house or the flat will be erected must be party to the contract (Vendor), this is so the contract can be filed to the Land Registry for the purpose of specific performance.
b) Description of the land
Full description of the land details in which the house or the flat will be erected i.e. registration number, plot number, sheet plan etc. must be described on the contract of sale. Furthermore, architectural plans, building permission, and the building specifications must be part of the sales agreement.
c) Building specifications
Building specifications and their value must form an integral part of the sales agreement.
d) Sales Price and method of payment
The sales price should clearly mention whether the VAT is included or not.
e) Possession and transfer of separate title deed
The contract must include the time that the vendor will give possession of the house to the purchaser. There must be an undertaking by the vendor to issue and transfer in due time separate title deeds of the house/flat, free of any mortgages and/or encumbrances and/or any other easements.
f) Defects
It is recommended that the contract would impose liability on the vendor for any defects, at least 6 months after the delivery of the house/flat.
g) Solicitors
You must have a solicitor in Cyprus in order to complete a purchase and you will probably want to consult with one before going ahead. We have negotiated the services of Louise Zambartas, her details are on our reservation forms. We have negotiated that she will charge 1% of the purchase price of the property. This represents a saving of between two to four hundred pounds. You are of course welcome to appoint your own solicitor to act on your behalf, however this would only lead to the slowing down of the whole buying process as Louise knows the processes of each of the developers in turn. Once you have signed a reservation form then Louise will contact you to guide you through the rest of the process.
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