The allure of Cyprus’ Mediterranean climate and golden beaches makes it an attractive second home for Brits – whether you’re looking for a place to spend long summer breaks, or retire to Cyprus.
Buying property in Cyprus does require careful planning to make sure it goes smoothly and any potential pitfalls are avoided. Our complete guide to buying property in Cyprus is here to help. It covers everything you need to know about the property market, mortgages and fees, as well as the buying process itself.
We’ll even look at some of the most attractive locations on the island which you could be calling home, but we’ll also touch on the best ways to cover overseas property costs. We hope that this guide will prove a useful starting place when considering Cyprus for your dream property purchase.
What’s the property market like in Cyprus?
Cyprus’ property market is split between two key areas – the urban centres of Nicosia, Limassol and Larnaca, and the coastal resort areas of Paphos and Famagusta, which see particular demand from expats looking to soak up the sun.
Up until 2020, the market was faring much better than it had in a long time, following 3 years of significant improvement. However, the country’s economy has been hit hard by the Covid-19 pandemic, which has had a knock-on effect on the property market.
And, according to Deloitte’s February 2021 – Cyprus Real Estate Market Report, in 2020 total contracts of sales were considerably lower at 7,968 compared to 10,366 in 2019, a reduction of 23%.
This has affected both supply and demand for housing on the island. But, prospective foreign buyers should take heart – the report points out apartment prices are stable, appear to be least affected by the pandemic, and are expected to recover first².
Whilst things are still uncertain, experts consulted in the Cyprus Real Estate Pulse survey (December 2020) say access to financing, market confidence, foreign travel and investment are likely to be big factors in the short term Cyprus property market performance and recuperation.
Can foreigners buy property in Cyprus?
In short – yes, foreigners are able to purchase property in Cyprus. What’s more, it’s easier to do so here when compared with many European countries.
EU citizens are able to purchase property in Cyprus with no restrictions. For UK nationals, it’s still possible, but the rules have changed slightly since the UK left the EU.
Buying property in Cyprus after Brexit.
UK nationals may buy one property in Cyprus and are entitled to hold the freehold. The property can be either an apartment, house, villa on a building site or plot of land limited to no more than 4,014 sq. m.
In some instances, the purchase of a second property (such as a holiday home) may be allowed. UK nationals looking to buy property in Cyprus also need to be aware that following Brexit they can only stay for a total of 90 days in any 180 day period. If you wish to stay for longer then you’ll need to apply for a visa.
Importantly, the process to purchase is now different for post-Brexit buyers. When entering into a sale, you’ll need to apply to the Council of Ministers for permission to purchase a property and title deeds won’t be passed to you until permission is granted. While it’s a formality and highly unlikely your application will be refused, you’ll also need a clause included in the contract to outline what should happen if permission isn’t granted.
It’s not uncommon for the application to take several months to a year to finalise. You also won’t be permitted to rent or lease property, acquire a share in a property and unmarried couples can’t buy a property in joint names.
How to buy property in Cyprus as a foreigner – a step-by-step guide
The steps to purchase property are fairly similar to those in the UK, but with a few differences. We’ve outlined the key steps below:
- Arrange your mortgage – If you’re not a cash buyer, look into mortgages and loans first, to work out how much banks will be willing to lend you before you get started.
- Appoint a local lawyer – check that they’re independent from the developer/vendor and estate agent involved in the sale, to make sure your interests are looked after.
- Start your property search – websites, property portals, real estate agencies
- Once you’ve found a property, it’s important to visit in person to check that the condition matches your expectations.
- Make your offer – once you’re happy with the property you’ve found, make an offer through the estate agent.
- Apply in writing to the Council of Ministers for permission to purchase the property.
- Sign the sale contract, which will also be signed by the vendor.
- Transfer the funds.
- Complete the sale – the property will be registered in your name once permissions have been granted and funds certified.
How to avoid potential pitfalls when buying a property in Cyprus?
There are some things to look out for during the property buying process and actions to take to help you avoid pitfalls.
- Frequently, developers will take out a mortgage on land or property⁰, for which you’d become liable in the event they become bankrupt, and you’ve signed a contract to purchase it. Appoint an independent lawyer to check no mortgages have been placed on the land prior to purchase, which will ensure you don’t encounter difficulties at a later date. Ask your lawyer to obtain a Land Search Certificate from the Land Registry.
- Be aware that buying property in the north of Cyprus comes with some risk. Ownership of property is often disputed in the north due to claims of ownership arising from people displaced in 1974. Purchasing such property could result in legal proceedings. Therefore, if you’re keen to buy in the north of the island, it’s a good idea to rent first and get to know the local market. A good lawyer should also help you obtain a property with the right type of indisputable deeds.
How do I get a bank loan/mortgage in Cyprus?
If you need a mortgage to help you buy a property in Cyprus, the good news is that it’s possible to get a Cypriot bank to lend to you. However, it’s also associated with a level of risk (particularly property in north Cyprus) so you’ll need a good, international mortgage broker, who can find you the best mortgage for your circumstances.
When you’re ready to apply, you should expect to have to prove you’re a low-risk borrower. Be prepared to show your passport as proof of ID. You’ll also need to provide proof of income in the form of recent payslips, personal bank statements or audited accounts if you’re self-employed. You’ll also need proof of any other savings including shares, bonds and pension funds, for instance. The lender will then need to obtain a property valuation report.
Your mortgage application can be approved when the lender finds everything is in order with your finances and the property in question. Once approved, you’ll let your lender know the completion date for the funds to be released.
What kind of taxes and fees will I need to pay?
To budget accurately for your purchase, keep these additional fees in mind:
- Transfer fees – 3-8%
- Stamp duty – Based on property’s price, ranging from 0.15% to 0.20%
- VAT – 19%
- Legal fee – 0.10-1%
The estate agent fees are handled by the vendor, so you shouldn’t normally need to pay these.
Now you’re equipped with the information you need to start looking for that perfect place in sunny Cyprus. Best of luck with your search!
Source: wise.com
