Buying Off Plan Property in Cyprus

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CYPRUS PROPERTY: Guide to Buying Off Plan Property in Cyprus

Once you have decided on the property in Cyprus that you wish to purchase you will be required to do the following:

Reservation Deposit Agreement

When reserving a property in Cyprus, you will need to sign an agreement that will remove the property from the market for approximately one month. This time is garnered so that your lawyer can begin his due diligence into the property, its ownership and make investigations at the District Land Registry to ensure that there are no liens, debts, charges on the paperwork. You will be obliged to pay a reservation fee which is non returnable unless your lawyer finds discrepancies at the Land Registry. Many owners make a Power of Attorney that allows their lawyer in Cyprus to act on their behalf in case they are unable to attend the contractual signings

If you are purchasing an off plan development, your lawyer will make checks at the Planning Department to ensure that all of the necessary building permits are in place and legally recognised, as well as making sure that the developer can legally build and sell to you. A company search can also be recommended on the developer to check that they are a financially stable company, with a good track record and that they are legally enter into contracts with you.

Sales Contract: Once all of the necessary searches by your lawyer have returned positively you will need to be signed. This is the equivalent of Exchange of Contract in the UK. Once the Contract of Sale has been signed you have six weeks to pay the first installment to the vendor. Failure to do this can negate the contract

Possession: Your possession of off plan properties should only be completed once the development has been completed and all occupancy licenses have been issued. At this point you will pay for the utilities to be connected. You will then establish all rights in Cyprus including taxation, duty-free, driving, domicile and residency

Transfer of the Title Deeds: If a property title is already in existence, both parties will immediately proceed to transfer the title deeds and the seller pays the remaining amount owed for the purchase. If the property is anew property which has been bought off plan in a development in Cyprus the title will need to be issued officially and this can take up to three years although things are improving. During this time, you will obtain legal security when a valid contract is signed, stamped and registered with the land registry.

Property Taxes, Fees and Rates: The taxes due for the real estate transfer are paid to the Land Registry and are necessary to transfer the freehold ownership to the new owner. You will then be responsible for the tax payments.

Banks and financial institutions have made vast improvements in recent years, which have allowed for more accessible mortgages for foreign investors. Banks can now offer international investors the same terms as to Cypriots with typical LTV 'Loan to value' of between 60 and 80% with repayments scheduled over 20 years

Buying properties in Cyprus has come along way in recent years especially when compared to a decade or so again when there were currency restrictions in place, there were several political issues with Turkey and the viability for investors was not even on the map. Now thankfully, the restrictions have been lifted, tourism is up and Cyprus is enjoying a new lease of life as a desired destination for second homes buyers, the buy to let market and the more serious international investors.

The Cypriot legal system mirrors many of the same processes that are found in British Law and all properties are sold on a Freehold basis I both North Cyprus (Turkish) and the EI Republic of Cyprus (Greek)

There are many bargains that promoted in Northern Cyprus in the border areas - there are also numerous claims in European courts regarding Greek Properties that have been illegally sequestered and sold to foreigners. All of the reputable Turkish developers in the north of Cyprus will offer an guarantee of their title deeds, but have your lawyer take a very close look prior to transferring any funds

The Cyprus real estate market has gathered quite a lot of momentum since the entry of the Republic of Cyprus into the European Union with the adoption of the euro as their currency, negated the need of work permits for EU citizens and have introduced a 15% VAT charge on property purchases. There is no Inheritance Tax in Southern Cyprus. Guaranteed rental schemes are becoming more popular in Cyprus and are well worth watching out for.

Cyprus is the third largest island in the Mediterranean and one that is blessed with stunning scenery, a pleasant climate and friendly locals. Divided as it is, Cyprus gives property investors two distinct markets in which to indulge.

South Cyprus represents an established tourist destination with large foreign communities, regular flights and good infrastructure.

North Cyprus offers cheaper prices, an evolving infrastructure, currently fewer flights but the potential for a higher return on investment

Regardless of whether you choose to invest in South Cyprus or North Cyprus, you are buying in a foreign country and dealing with a language that you probably will not understand. It is essential that you employ a professional lawyer to perform the due diligence for you and hold your hand all of the way through the purchase procedure.

Cyprus is a beautiful island and one that will appeal to many retirees and families looking to start afresh in a new and exciting country. The economy and business sectors are growing annually and tourism will no doubt continue to be one of the major industries in both the north and south of Cyprus

Overseas buyers must obtain permission from the Council of Ministers - this is very much a foregone conclusion and should not be cause for you to delay your property purchase in Cyprus, even though it can take between 8 and 14 months for the application to be processed. A certificate from any person in authority in your country of origin, certifying your good character and clean criminal record AND a certificate from your financial institution reflecting your financial standing - Certificated preferably will show healthy deposits.

When you are ready to transfer your funds you will require a permit from the Central Bank of Cyprus. This permit is NOT required if both vendor and purchaser are foreigners.

All funds must either be transferred through official banking institutions OR declared upon arrival in Cyprus if the monies are cash

Typical purchase costs including contracts, powers of attorney, purchase permits, solicitors fees etc will typically be around £1,000.