If you're thinking of buying property, Cyprus has a lot to offer. Of course the wonderful climate is one of the first aspects that people think about, but there is also the mellow way of life, the warm sea to swim in, the healthy foods, the rustic landscape and the welcoming people. There are direct flights from the UK to Cyprus and many 'mod cons' that people have grown used to in the UK are also available in Cyprus, such as air con and satellite TV so ex-pats can still get their weekly fix of Coronation Street!
Buying property in Cyprus could be a great investment, especially for those who want a holiday home or an investment property. However, you have to keep in mind if you're buying an investment property in Cyprus for a rental income; the holiday season is fairly short which is from May to September. From the end of October to April the whole area is virtually closed. However, general apartments and houses for sale still offer overseas investors attractive opportunities because the market is booming and the price of land is still increasing.
While buying property in Cyprus is an attractive option, there are certain legal and other procedural aspects, which need to be kept in mind;
Loans and Mortgages
You can easily obtain a mortgage from local banks when you are buying property. Cyprus has a few banks to choose from however, it is advisable that you choose the bank that is already financing or backing a developers' project, since the bank has already concluded the project is worthy. On the other hand, if you try another bank, independent of the developer, you will have to pay a bank guarantee which will be 1.5% to 1.8% of the value of the property annually until you get the title deeds.
If you opt for paying the money in stages, especially for a new property, you should use a finance specialist in place of a local bank as it could save you thousands of pounds when you arrange the transfer.
Legal Procedures When Buying Property
The legal system in Cyprus is based primarily on the British system and safeguards the buyers' rights in many ways. For the buyers' protection, once the sales contract has been signed and a deposit paid, the Land Registry in Cyprus provides a simple and effective legal instrument called the 'Specific Performance'. This procedure protects the purchaser's ownership rights until the title deeds are issued in their name. The contract cannot be withdrawn by anyone and therefore the property cannot be mortgaged, leased, sold or transferred. This status can only be changed by the purchaser.
To handle the legal issues an English speaking lawyer should be appointed and if you're buying a new build in Cyprus, ensure the lawyer is not concerned with any aspect of the property development so that conflict of interest does not arise. The fees of the lawyer are generally 1% of the property price.
Stamp Duty: a one-off stamp duty is levied on the purchase of property in Cyprus. The rates depend on the contractual purchase price and payment is due within thirty days of signing the Sale Agreement. The amount is payable by the buyer to the tax authorities.
Council Tax: is paid annually and is considerably cheaper than in the UK.
Transfer Tax: the purchaser will be liable to pay transfer tax for the property when the property is registered in their name at the Land Registry Office. The fees are charged on the property's market value at the date of purchase.