Property Acquisition

Buying a property in Cyprus is relatively straight forward compared to many other countries the process of buying property in Cyprus by foreigners is very simple. Once you have chosen your property in Cyprus a reservation fee is paid to hold the property while your solicitor draws up the relevant paperwork and applies for your residency permit if you intend to live on the island. During this time the contract will be drawn up which will be agreed between the buyer and the vendor. The contract will need to be signed as soon as possible and either a further deposit or full amount will be paid depending upon the agreement between buyer and seller. Once the final payment has been made to the seller, the property then becomes yours. Non-Cypriots on having signed a purchase agreement for a property, as a formality and routine procedure, are obliged to make an application to the Council of Ministers. The Council of Ministers is the body that grants its approval for a non-Cypriot to transfer a property to his or her name. The entire process may take 5-10 months, however in the meantime there are no restrictions in signing a contract, taking possession of your purchased property, and living in it, as you are the legal owner of the property according to contract law. The Council of Ministers application procedure is undertaken by your solicitor.

Fees, Taxes & Duties
Transfer Fees

The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in his name at the Lands’ Office. The fees are charged on the property’s market value at the date of purchase.

Value of Property CY£ Transfer Fee Rate % on Property Value
Up to £50,000 = 3%
£50,001 to £100,000= 5%
Over £100,000 = 8%

If the property is placed in joint names, e.g. the name of a couple (husband and wife) or two individuals, then the purchase value is split into two parts which results in reduced transfer fees. For example if £100,000 property is bought:

Property in One Name
Upto £50,000 = 3% = £1,500
£50,000 to £100,000 = 5% = £2,500
Total Fees Payable === £4,000

Property in Two Names

Husband
£50,000 3% £1,500
Wife
£50,000 3% £1,500
Total Fees Payable £3,000

Immovable Property Tax

The registered owner of the property is liable to an annual immovable property tax calculated on, the market value of the property as at 1st January 1980.

Market Value CY£ Annual Tax CY£ per Thousand
Up to £100,000 = 0%
£100,001 to £250,000 = 2%
£250,001 to £500,000 = 3%
Over £500,000 = 3.5%

Stamp Duty and Mortgage Fees

Unless otherwise stipulated in the contract, the purchaser is liable for the payment of stamp duty at the rate of 1.5% per thousand of the value up to CY£100,000.

Thereafter the rate becomes 2% per thousand. Although the non-affixing of stamps does not invalidate the contract, the stamp duty plus a fine will be payable when the document is produced to the court or any Government department. In order to avoid the payment of a fine, which could be substantial, the documents should be stamped within 30 days of their signing.

In case of mortgage, the registration fee is 1% of the amount secured, plus the relevant stamps.


Income Tax and Capital Gains Tax

Dealers in land are treated under the income tax laws whereas non dealers under the Capital Gains Tax ones. Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies the assets of which consist mainly of immovable property. Note that no Capital Gains Tax is paid when selling shares of companies which are listed on the Cyprus Stock Exchange (this applies until 31/12/2001).

As a general rule, the gain is the difference between the sales proceeds and the original cost of the property. In case of property acquired before 1/1/1980, the gain is the difference between the sales proceeds and the market value of the property as at 1/1/1980. The assessed value on this date is fixed by the Inland Revenue and it is known prior to acquisition. However, the Director of the Inland Revenue may, in certain extreme cases, make his own assessment as to the market value of the property on the date of its disposal. The cost of acquisition and sale includes interest payments

paid for the acquisition. Additions to the property etc are also deductible from the gain. On the acquisition cost, the inflation rate (as this is so published by the Government) is added on. Thus the tax is charged on a gain which takes into account the inflation (which for the last years is 2.5% -3.0% per annum). The Gains Tax as a whole, has minimal effects since the appreciation of value coupled with the following allowances and inflation leaves little for taxation. In the case of companies these allowances are not applicable.

Allowances: The following lifetime allowances are available to individuals:

• The first CY£ 10,000 of gains arising from the disposal of any property.
• The first CY£ 15,000 of gains arising from the disposal of agricultural land by a farmer (subject to certain conditions).
• The first CY£ 50,000 of gains arising from the disposal of a house used by the owner for his own habitation (subject to certain conditions).

The above allowances are not available separately. An individual claiming a combination of the above allowances is only allowed a maximum of allowance of CY£ 50,000. Cyprus residents and companies registered in Cyprus are subject to Capital Gains Tax when disposing property, wherever it is, whether in Cyprus or abroad.
These rates have remained unchanged after accession to EU on 1st May 2004.

Non residents are only taxed when selling property situated in Cyprus. They can be totally exempt from this tax if they prove that they acquired the particular property by importing foreign currency between 1/8/1980 and 13/7/1990.

Losses are calculated in the same way as gains and can be set off against capital gains of the same and future years.

Estate Duty

Estate duty was abolished as from 1/1/ 2000.

Value Added Tax - VAT

Since 1st January 2003 a revised flat rate of 15% was introduced on most goods and services. Exceptions to the 15% VAT are foodstuffs and pharmaceuticals where Cyprus has already secured a derogation of zero percent VAT until December 2007.
Since May 1st 2004 VAT is added on the price of new properties as follows:
First Time Buyers have to pay 5% VAT
All Other Buyers have to pay 15% VAT
However, all properties for which a valid application for Planning Permit was submitted at the Town Planning Department before 1st May 2004 are fully exempted from VAT. This has resulted in increased interest in resale properties and existing new projects.


General Tax Information

From 1st January 2003 there is one important change to Cyprus Tax System for non-domiciled persons. You will be regarded as a “Tax Resident” if you spend more than 182 days in a calendar year in Cyprus. Parts of days count as whole days. Spending less than 183 days in Cyprus means you will not be regarded as a resident for tax purposes. To take advantage of the Double Taxation Treaty Cyprus has with the UK you have to be in Cyprus for more than 182 days. The tax year in Cyprus is the calendar year, and husband and wife are taxed individually.

Cyprus Standard Income Tax Rates for 2004
Up to CY£10,000 0%
CY£ 10,001 to CY£15,000 20%
CY£15,001 to CY£20,000 25%
Over CY£20,000 30%

Buying a property in Cyprus: Purchase procedure Buying a property in Cyprus is easy and the whole procedure can take just a few days.

WHAT CAN YOU BUY
As a non-Cypriot, you are entitled to a FREEHOLD ownership of one property, a villa or an apartment or a piece of land up to 3 donums (43.200sq.ft or 4.012 sq.m.) If you are of Cypriot origin there are no restrictions.

1. MAKING AN OFFER
Buying a property in Cyprus is not very different from the U.K. You make an offer and if it is accepted it is normal to give a nominal deposit (between CYP 1.000,- and CYP 2.000,-) to reserve the property, bind the owner, have the property taken off the market and secure it at that day’s price. This in Cyprus, unlike the U.K., is legally binding, so no “gazumping”. Contracts are consequently drawn up and this process takes only a few days. Upon signing of the contract the buyer must pay at least 20% - 30% of the value of the property. The remaining sum is paid according to the terms agreed with the seller,(if any).

2. SPECIFIC PERFORMANCE
The contract, once duly signed and stamped, must be deposited at the land registry office within two months. This is a safety measure, blocking the property and, consequently, not allowing the seller to re-sell it to anyone and hence safeguarding the buyer until the “Council of Ministers” application has been made and approved.

3. APPROVAL OF THE COPUNCIL OF MINISTERS
On having signed a purchase agreement for your property, as a routine procedure, it is
necessary to make an application to the Council Of Ministers to grant it’s approval for
a non-Cypriot to transfer the property to his/her name. You are however, the legal
owner of the property according to the contract law. This is a single process requiring
a bank reference, a character reference and controls issues such as criminal records,
that the land size is within the required limits, that only one home is owned in Cyprus
and that the buyer has the minimum required funds to live in Cyprus. the whole
procedure can take up to six months but, in the meantime, there is no restriction on
taking up possession of your property.
The following points should be considered:
I. Should approval not be granted, you can re-apply.
II. Should approval not be granted, you have 33 years in which to sell your house.
III. You can live in your house from the moment you purchase it – prior to the “Council Of Ministers” granted approval.
IV. You can re-sell your property during this time.
V. It does not effect inheritance rights.
VI. No U.K. citizen has ever been refused approval, exemptions apart, it is a form of control only.

4. PAYING FOR YOUR PROPERTY
You are required to pay for your property from external funds. Personal cheques, bank drafts and telex transfers are all acceptable.
5. SOLICITORS
It is advisable to have solicitor’s advise for the purchase of your property. Their duty will be to do the necessary searches on the property, check the contracts (draw them up in some cases), and do the “Specific Performance” and “Council Of Ministers” application. By law in Cyprus, all registered estate agents must do searches on their properties and must inform the clients on any legal encumbrances, memos, etc.,mortgages or problems related to the property.

6. PROPERTY PURCHASE & OWNERSHIP COSTS

6.1 PURCHASING COSTS
Solicitor CYP 750,- to CYP 1000,-
Search Fees Included in above
Property Transfer Tax See below
Stamp Duty See below

6.2 PROPERTY TRANSFER TAX
This is necessary in order to transfer FREEHOLD ownership to your name and is
due when the property is registered in your name at the Land Registry Office. This
process is done after the “Council Of Minister’s” approval.
The Property Transfer Tax is a once only payable to the Land Registry Office
according to the following scale:

VALUE OF PROPERTY
CYPRUS POUNDS TRANSFER FEE RATE
%
Up to CYP 50.000,- 3.0
From CYP 50.000,- CYP 100.000,- 5.0
Over CYP 100.000,- 8.0

For example, on a purchase price of CYP 110.000,-
The 1st CYP 50.000,- is taxed @ 3%
The next CYP 50.000,- is taxed @ 5%
The remaining CYP 10.000,- is taxed @ 8%
Should the property be bought by a couple, the rate is broken in half, i.e. on CYP
200.000,-:

WIFE HUSBAND
1st CYP 50.000,- @ 3% 1st CYP 50.000,- @ 3%
2nd CYP 50.000,- @ 5% 2nd CYP 50.000,- @ 5%

6.3 IMMOVABLE PROPERTY TAX
The registered owner of the property is liable for this annual tax and it is based upon
the value of his property.
VALUE – CYPRUS POUNDS ANNUAL TAX CYP PER THOUSAND
Up to 100.000 Exempt
100.001 – 250.000 2.5
250.001 – 500.000 3.5
Over 500.000 4.0

6.4 CAPITAL GAINS TAX
Capital Gains Tax is levied at 20% on gains arising from the disposal of the
property, however, for foreign owned property that is sold, generous allowances and
exemptions from Capital Gains Tax exist. As the gain also takes into account
inflation, the actual appreciation coupled with the allowances and exemptions leaves
little for taxation. See brochure for details.

6.5 STAMP DUTY
The purchaser is liable for the payment of Stamp Duty at the rate of CYP 1,50 per
thousand up to the value of CYP 100.000,-, and, thereafter, the rate is CYP 2,- per
thousand. This duty should be paid within 30 days of signing the contract.

6.6. MORTGAGE FEES
There is


a registration fee of 1% of the amount secured, plus any relevant stamps.

7. ON-GOING COSTS

7.1 PROPERTY OWNER COSTS (Approx. average)
a) Electricity, depending upon usage : CYP 30, - every two months.
b) Water, depending upon usage: CYP 10,- to CYP 20,- every two months.
c) Sewerage, depending upon usage : CYP 50,- per annum.
d) Service Charges : for apartments : CYP 100,- to CYP 200,- per annum.

7.2 TAXATION
Double taxation agreements exist between Cyprus and numerous European
countries, which regulate taxation matters regarding residents of the island.
As an example: alien retirees are taxed on a flat 5% per annum on pension and
Investment income brought into Cyprus with exemptions totaling CYP 4.000,-
per person of CYP 8.000,- per married couple. Further details are available on
request.

7.3. ESTATE DUTY
Estate duty was abolished as from 1/1/2000.

7.4. Please note that laws and regulations of various governmental departments
are constantly changing in view of the harmonization of Cypriot laws with
those of the European Union. As accession talks proceed, a lot more laws and
regulations, as we now know them, will be either abolished or amended.

Cyprus
Rating:

Exceptional growth in the real estate sector where foreigners are able to buy on a freehold basis and the process is straightforward compared with other European countries.

Cyprus Pound: Steady Currency. Living costs are 40% to 70% compared to most parts of Europe coupled with a good infrastructure and many amenities.

Economic climate: The Cypriot economy is buoyant. Overseas investment is encouraged and the Cypriot economy has been vibrant in the past decade.

Taxes: Property related VAT 20% is incurred on the profit from the sale of property with the first CYP£ 10,000 being exempt. Profits up to CYP£ 50,000 are exempt if the owner has occupied the property for 5 years. Local Authority taxes CYP£ 50-150 per annum.

Popular areas: Cyprus offers many choices. Paphos is one of the most favoured areas but there are many other popular towns. Polis in the North West is expected to experience major growth.

Price ranges: Prices are expected to rise following entry into the EU in 2004 but at the moment property is comparatively reasonable for the Mediterranean.

Budgetary guide: Villa (2/3 beds): CYP£ 108,000 –300,000. Town House (2/3 beds): CYP£ 76,000 –180,000. Apartments (1 bed): CYP£ 48,000 – 84,000, (2/3 bed): CYP£ 60,000 – 180,000).

Overseas Investors: May purchase a villa, apartment or land (up to 4,013 square metres) freehold. Deposit: CYP£ 1,000–3,000. 25% of purchase price usually payable within 1 month. Title Deeds are not always available if there is ongoing construction, therefore it is important to be satisfied with the Developers credentials.

Service Fees: Transfer charge: 3% (to CYP£ 50K), 5% (CYP£ 50K to 100k), 8% (CYP£ 100k +), Stamp Duty: CYP£ 1.5 per 1,000 to CYP£ 100k, CYP£ 2.0 per 1,000 from 100k +.

Mortgages: All Cypriot commercial banks are able to offer mortgages in foreign currency from between 60% to 80%. Loan periods can range from 10 to 15 years (age related).


Related site: http://www.welcometocyprus.com

http://www.propertyworldme.com/content/html/46.asp
http://www.infinityqatar.com/cyprus.htm

Cyprus for Property Investors

In 2005 Cyprus was named one of the top five property investment hotspots in the world. The attractions of the third largest island in the Mediterranean Sea for both visitors and property investors alike are linked to the fact that Cyprus is blessed with a perfect climate that consists of year round fine weather ranging from temperate or cool but sunny in the winter to hot and sweltering in the summer.

On May the 1st 2004 the Republic of Cyprus became a full member of the European Union and it is poised on the brink of joining the European Exchange Rate Mechanism within the next two years. These facts have resulted in the property sector in Cyprus receiving an intensification of interest, however there’s a great deal more to excite property investors examining this European hotspot - read on to find out more…

Please note: this guide to Cyprus for property investors focuses on the Greek Cypriot controlled Republic of Cyprus. If you would like to learn more about The Turkish Republic of Northern Cyprus please click here.

The economy of Cyprus is robust and prosperous; it is built mainly on tourism and the financial services sector - however construction also plays a strong role in maintaining the health of the economy. Cyprus has many natural and economic attractions that made the island one of the top five real estate investment hotspots for 2005 and also ensured growth in the property sector hit 20% again as it has annually for the past 5 years.

With mild winters that bring welcome rainfall to the island, Cyprus manages to remain green and lush throughout the winter, spring and early summer. This ensures the island remains beautiful, that its many rare species of orchid blossom and that its agricultural sector delivers fine produce in abundance. As the strength of the summer sun intensifies so the numbers of tourists to the island increases and from May to October the many daily cheap flights to and from Cyprus from the UK and mainland Europe bring in thousands of visitors.

These visitors are not just attracted to the long sandy beaches, fantastic tourist facilities and amenities, stunning Trodos Mountain Range, warm waters of the Med and the heat of the sun, they come to view the historical remains and ruins that Cyprus has in abundance.

The ancient island of Cyprus is the birth place of the goddess of love and beauty Aphrodite, and its history dates back to aceramic Neolithic times. Throughout its long history and because of the island’s strategic importance lying between Turkey, Syria, Egypt, Israel and Palestine it has been fought over and invaded and depending on whichever ruler was in power at the time it has either prospered or suffered at their hands. Because of its rich and diverse history, the island is literally covered with sites of intense historical interest and this is yet another natural reason for the island’s attraction.

In terms of the economic attractions of the island for property investors - the tourists demand rental apartment and villa accommodation for a minimum of six months of the year and the tourist market in Cyprus is fast growing meaning that annual demand is increasing. Furthermore, the island attracts many retirees particularly from the UK because pension income in Cyprus is only taxed at 5% - this makes for a strong demand for resale properties and also long term rental properties. Property prices have been increasing annually in Cyprus at a rate of around 20% for the past 5 years and yet base property prices in Cyprus are still far below those asked for similar properties in the other sunshine destination favourites such as Spain and Portugal.

For larger property investors interested in establishing a company through which to operate and trade, corporate tax in Cyprus is only 10% and there are other incentives offered by the Cypriot government to bring in foreign direct investment.

As a country the Republic of Cyprus is politically and economically stable. It is a first world country with fantastic infrastructure, superior education and healthcare facilities, the cost of living is affordable and the country is a free market economy.

Oh, and of course Cyprus is quite possibly one of the most naturally beautiful countries in the world and it has the perfect climate and up to 320 days sunshine a year! All in all it is a real estate investor’s paradise, a second property owner’s heaven and an expatriate’s dream home destination.

http://www.amberlamb.com/index.php/a/m/guide-to-cyprus-for-property-investors/

Cyprus Property Investment Guide

The Republic of Cyprus is an exciting country for property investors and one which already offers fantastic capital growth and rental yields and which is likely to see improvements in these two profit areas over the medium term as Cyprus aligns itself for adoption of the Euro in 2008.

Furthermore an investor has an exceptionally strong year round tourist market to focus on as well as a growing second home market and a well established retirement market offering the right amount and type of investment diversity in one country that an investor requires when building a successful portfolio.

Since Cyprus joined the European Union in 2004 it has enjoyed a period of significant investment which has boosted the country’s economy and improved the infrastructure, education and healthcare services available in Cyprus. The economy in Cyprus grew by 3.8% in 2005 – well above the European Union average. More international businesses particularly in the fields of finance have established regional bases in Cyprus and all this inward flow of financial assistance and investment has helped make Cyprus into an even more attractive country for tourists, expatriates and retirees who are already attracted to the island’s perfect climate and stunning natural beauty.

The next goal for Cyprus is membership of the Euro-zone and the adoption of the Euro as the country’s currency. It is on track to reach the economic milestones it has been set to achieve membership by 2008 – for example the Minister of Finance Michalis Sarris recently announced that the budget deficit should drop to below 2% of GDP by the end of 2006 which is an important milestone and achievement for Cyprus.

As a further part of Cyprus’ progress towards acceptance it is having to reduce its interest rates. This is proving very popular with overseas property buyers who have already seen rates drop from 5% to 4.25% and who are aware that rates could drop as low as 2.5% which is the European Central Bank‘s base rate currently. Generally speaking as interest rates fall people can afford to borrow more money to buy property and more people can afford to enter the property market – in addition to this 100% mortgages are available to finance property purchases in Cyprus from certain lenders making it even easier to afford a property in Cyprus.

In Cyprus demand for property already outstrips supply therefore a growth in the numbers of those able to enter the market is resulting in an increase in the underlying value of properties with capital growth figures in the year to date in the region of an impressive 18% - and for a property investor this represents great immediate potential from an established market which is getting harder to come by as worldwide established property markets are slowing down.

There are fewer people buying off plan and flipping properties for resale as they come to completion in Cyprus as rental yields are impressive at an average 8% and many investors are aware that they can potentially reap greater profits if they hold onto their properties for longer as stated. Those who buy to let in Cyprus are enjoying gradually increasing rental yields and in some cases investors are buying off plan and buying into guaranteed periods and levels of rent being offered by large developers and tour operators who are able to give these guarantees because the appeal of Cyprus from a tourist perspective which is also increasing.

Cyprus is an increasingly attractive destination as it begins to get a better handle on pricing accommodation and flight packages. In the recent past Cyprus was gaining an unfavourable reputation for being an expensive medium haul destination but the tourism industry has fought back with price reductions and an aggressive campaign to attract more visitors. The appeal from a tourist’s perspective is now increasing in part because of a rise in the numbers of direct flights to and from Cyprus that is making the island more accessible. An example of just one major flight operator to expand operations is British Airways which now flies direct to Cyprus 19 times a week.

Since Cyprus joined the EU in 2004 it has raised its profile worldwide as an exciting and beautiful destination in which to holiday. Furthermore Cyprus is a unique destination as it has year round appeal. While one cannot sunbathe in the winter one can enjoy a beautiful and mild climate and escape the harsh northern European winter, therefore the long let retirement market rent out properties throughout the winter months in Cyprus for attractive sums of money and offer an investor another market to target.

The other market sector that an investor could target is the growing full time retirement market attracted to the island because Cyprus is relatively tax friendly- pension income is only taxed at 5% for example and there is no inheritance tax on all estate property all over the world for permanent residents of Cyprus apparently (although I would suggest those domiciled in the UK should check their status), has a fairly low cost of living, a perfect climate, excellent and affordable healthcare facilities and is almost as popular with retiree escapees as Spain and yet property for sale in Cyprus is at least 30% cheaper than the majority of properties in Spain’s most popular regions. Therefore the retirement and second or holiday home markets offer an investor a way to resell to release capital growth.

It seems that the future for property investment profit in Cyprus appears to be very positive indeed and sustainable at least for the medium term. Other data applicable to this discussion includes the fact that Cyprus and Egypt have returned positive initial findings from their joint exploration efforts in Cypriot waters for oil and gas deposits and Cyprus is seeking to diversify and develop into fields of education and healthcare in a bid to lessen the nation’s reliance on tourism and real estate and guard against any shake up in one given industry sector seriously undermining the economy.

http://www.amberlamb.com/index.php/a/m/cyprus-property-investment-guide/

Cyprus Property Buying Process

Since the Republic of Cyprus joined the EU back in 2004 the property buying process has become even simpler for EU based real estate investors.

This is a guide to the property buying process in Cyprus for non-Cypriot purchasers and it features details of the fees, taxes and costs associated with making an investment into property in Cyprus.

Unless investment property in Cyprus is being bought via a company structure, a foreign investor is currently only permitted to purchase a single property in Cyprus with surrounding land not exceeding 4,014 square meters. These rules should change for EU residents as Cyprus is now a full member of the EU but currently these rules still stand.

As stated, the property buying process in Cyprus is simple and straightforward. Once an investor has located the ideal property to meet his investment requirements he should make an offer to the vendor via his estate agent. This offer should detail the price he’s willing to purchase the land or real estate for as well as any stipulations for the sale - such as the inclusion of carpets and curtains, the completion of repairs or maintenance work or even the completion date if the property is being bought pre-construction.

Once the terms of the sale have basically been agreed upon the property investor is required to pay around a 1% holding deposit which will allow the vendor and estate agent to remove the property from the open market. This deposit is often paid via the property investor’s solicitor and held while the contracts are drawn up and title searches are conducted.

As is critical in any property transaction, an international property investor purchasing real estate in Cyprus requires the assistance of an independent lawyer. The lawyer will conduct all the necessary checks on the property or land and represent the purchaser’s interests throughout the sale process.

In Cyprus it is common only to sign one contract rather than a preliminary and final contract. The solicitor usually draws up the contract whilst conducting title searches etc., and therefore an investor should only sign the contract when he is sure all checks on the property have been concluded satisfactorily.

The contract is signed by both the vendor and the property investor and depending on the nature of the real estate being purchased either a stage payment is then due or final monies are due. Off plan properties are commonly bought in Cyprus by investors and these types of property require stage payments to be made by the purchaser throughout the build period. Otherwise if the property being purchased is complete already, the final balance is due upon contract closure.

It is possible to arrange a mortgage locally in Cyprus for the purchase of investment real estate with amounts available to borrow ranging from 60 - 80% of the final purchase price. Non-status mortgages are typically the easiest to arrange but the majority of good estate agents in Cyprus can advise further on this matter. Expect to pay a mortgage arrangement fee in the region of 1% of the amount being borrowed.

Within 30 days of signing the contract all taxes and fees apart from the transfer fee are due, these costs are detailed below. Once the contract has been signed it is stamped and registered with the Land Registry office in Cyprus, this enables the purchaser to have secure possession of the property while their solicitor applies to the Council of Ministers for the investor’s permit to own property in Cyprus. This particular process of application is deemed a mere formality nowadays as it is incredibly rare that permission fails to be granted. However, as the process can take a lengthy period of time it is necessary to secure the property with the Land Registry so that the vendor cannot attempt to resell it. Once permission to own property is granted the title deeds are finally transferred to the property investor’s name and the transfer fee becomes due for payment.

The costs associated with buying investment property in Cyprus include but are not necessarily limited to the following:-

Lawyer’s fees - from CYP 1,500

Property Transfer Tax - 3% on the first CYP 50,000, 5% from CYP 50,000 to 100,000 and 8% over CYP 100,001

Stamp Duty - CYP 1.50 per CYP 1,000 for the first CYP 100,000 then CYP 2.00 per CYP 1,000 thereafter

Immovable Property Tax

Local Authority Taxes - these are calculated per home and are used to pay for street lighting, refuse collection etc.

VAT - 15% (on new build properties)

An investor should speak to a lawyer or estate agent in Cyprus about the fees, charges and taxes he will be liable for before he commits to purchasing property in Cyprus.

Cyprus Property Investment

Cyprus is due to adopt the Euro as its official currency by 2008 at which point it has been estimated that the cost of borrowing will be reduced substantially as interest rates in Cyprus will have to be slashed to meet the European Union’s standard. A brand new Cyprus property investment fund has been launched in a bid to position itself in the Cypriot real estate market ahead of the expected boom that this reduction in interest rates is expected to cause in the property market.

The launch of the new Cyprus property investment fund is being overseen and advised upon by the real estate investment specialists at Assetz and it offers investors seeking alternatives to direct investment in a single property a broad range of diversification opportunities from a very low initial investment commitment.

Investment into property in Cyprus remains an incredibly attractive choice for many – firstly property prices in Cyprus remain far lower than in Spain for example, furthermore many astute developers construct apartment and villa communities after agreeing a rental contract with a specific tour operator thus offering a potential buyer a guaranteed level and duration of income from their property investment. According to Assetz‘s analysis of the property market in Cyprus, 2005 brought average capital appreciation of around 15% with average rental yields achievable in Cyprus a comfortable 8%. All of these factors mean that Cyprus remains one of the most attractive European marketplaces for property investors looking for sunshine rental units.

However, as any property investor will tell you, committing to purchase a specific property restricts the investor in many ways. Firstly they have to tie up large sums of capital, they may then have to afford property finance, they will have to manage the ongoing rental and maintenance of their property asset and they will not be able to withdraw their money at a fixed point in time nor will it necessarily be easy to actually sell their property asset when they want or need to. For those who are looking for alternatives to straight buy-to-let property investment for example, the new Cyprus investment property fund offers an exciting and excellent alternative.

The fund, and others like it that have already been launched, generally buy a combination of residential and commercial properties, they buy into existing developments with guaranteed rental traffic and they look at real estate that can be let to both the domestic market, the tourism market and the growing student market in Cyprus meaning that the fund buys a diverse range of properties across a diverse range of property market sectors and lets, rents or leases real estate to as broad a range of individuals and companies as possible.

Diversification is the key to reducing overall risk which is why a property investment fund is also a great vehicle for those who love the idea of capital appreciation and rental yields but who shy away from direct property management.

And finally, according to Assetz this latest Cyprus property investment fund has a great added bonus for British investors – it is suitable for all those who wish to purchase property through their Self Invested Personal Pensions with the lowest financial commitment possible currently in the region of GBP 5,000.

http://www.amberlamb.com/index.php/a/n/00063-cyprus-property-investment/

House prices look set to continue their rise

Friday, March 10th, 2006 in News by dolmadis

THERE is not likely to be any let up in the rise in house prices in Cyprus for the foreseeable future, but experts yesterday ruled out any notion of a bubble.

In June 2005, house prices rose 1.1 per cent over May, according to the BuySell index, the only one published on the island.

The June increase brought house prices to an accumulated 3.6 per cent rise for the first half of 2005, with the BuySell Index rising to 110.7 and the average home price to £86.218.

“In some countries prices go in cycles and in some others they go up or not,” said Stelios Platis Director of S.Platis Economic Research, which has just published 60-page analysis on the Cyprus property market, which was commissioned by BuySell.

Platis said before the BuySell monthly index was formulated, there was no clue as to the property market in Cyprus. He said it was also widely used abroad as in indicator as to the state of the market in Cyprus.

“Whether there is a bubble or not depends on the country and how the financial system of that country works. My opinion is that the chances of a bubble in the Cyprus property market is very small,” Platis said at a news conference yesterday to present the findings of the research.
The study analysed the key factors that that have led to a rise in prices, and also the factors that negatively affect the market. It concluded that liberalisation of the financial sector and a decrease in interest rates led to easier borrowing, an increased demand for higher quality housing and also for second homes.

Platis said that between 1992 and 2001 the population increased by some 90,000, while at the same time the number of people per household declined from 3.23 in 1992 to 3.06 in 2001 and the percentage of owner-occupation increased from 63.8 per cent to 68.2 per cent.

“The inability of the existing housing stock and the construction industry to meet the increased demand led in the short run to house-price increases,” said Platis. “The construction frenzy recorded in the period following interest-rate liberalisation could therefore be explained by the existence of demand that had not been satisfied earlier by the previously existing supply. The inability of the supply side to meet demand for specific locational characteristics may also have led to an increase of the prices of such locational characteristics.”

He also said the increase of land value and construction costs had contributed to the increase of house prices in the long run. “The size of the profit margin for developers (the difference between house prices and construction cost) is decisive in whether new houses are constructed and therefore determines the level of supply of housing in the medium term,” he added.

Platis said the stock market bubble also turned the attention of Cypriots back to property as an investment, something that contributed to increased demand and increased house prices, as did EU accession.
Negative effects on the market included the stabilisation or marginal decrease of per-head disposable income of Cypriots during 2001-2002 and the interest-rate increase of 100 basis points by the Central Bank of Cyprus in April 2004.

“This development contributed to an increase in the cost of financing, restricting demand for housing loans and consequently for housing, thus affecting prices negatively,” Platis said. “Additionally, the directive issued by the Central Bank of Cyprus to the commercial banks, instructing them to grant housing loans of up to a maximum of 70 per cent of the value of a house, may have contributed to the decrease of demand in 2003, since it limited the number of eligible persons.”

Referring to the second home market, Platis said that special circumstances such as oversupply of second homes, relatively high prices and an increase of interest rates in the UK, may have caused a demand decrease – with negative or stabilizing effect on prices – especially after the developments in the Cyprus problem from April 2004 and the opening of the Green Line a year earlier.

“Today, and most particularly from February onwards, the Cyprus housing market is believed to be in a phase of price recovery – a tendency which is expected to continue,” Platis said. “The examination of the current conditions on the Cyprus housing market, based on the study’s conclusions, leads us authors to assume that house prices will probably continue to rise.”

By Jean Christou
Copyright © Cyprus Mail 2005

Buyers Guide to Property In Cyprus

Buyers Guide to Property In Cyprus

Property in Cyprus is registered on a land registry, similar to that of the United Kingdom.

The first step is the signing of a preliminary contract. This is binding to both the purchaser and the vendor on executing their agreement as it was originally agreed. At this stage a holding deposit is lodged with a Lawyer or a Notary. The purchasing lawyer will carry out all the inquiries that are needed at the District Land Registry to ensure that the vendor of the property is indeed the owner and ensures that the purchaser obtains good title to the property.

Non-Cypriot citizens require permission from the Council of Ministers to purchase property in Cyprus. This normally takes about 8 to 14 months and without this permission Title Deeds cannot be transferred to the purchaser. Although time consuming, this is a quite easy and hassle free process and with the accession in the EU this is not expected to take place for EU citizens.

The final contract is entered only if all the inquiries are proven to be satisfactory. The contract is then lodged with the Land Registry within two months if signed, to prevent the same property being sold for a second time. Application is made at the Central Bank at this time for the necessary permit for the transfer of purchase funds. This application is not necessary if both the purchaser and the vendor are foreigners. The transfer of the title deed is then completed, the full price is then paid and vacant possession is given by the vendor. If the property purchased is new, then the title deed will take up to three years to be issued by the authority in charge. The purchaser is however secured by having the contract of sale with the vendor and that contract is registered in the Land Registry. All the above procedures are usually handled by a solicitor for a very small fee.

1) Reservation Deposit Agreement

The first step is the signing of the Reservation Deposit Agreement. This takes the property off the market for a specified period of usually one month.

Within this reservation period, the appointed lawyer will carry out required investigations at the District Land Registry to ensure that the vendor of the property is indeed the owner and ensures that the purchaser obtains good title to the property.

In Cyprus the reservation amount is usually at 1% of the property price. The reservation deposit will be “subject to contract” i.e. it is non-refundable, but it is returnable, for instance, if the searches are not successful.

Searches before Exchange of Contracts

* Planning Department Search - This ensures a building permit exists and that the developer can legally build and sell to other entities.

* A company search - A detailed company search demonstrates that the developer has the legal capacity to enter into contracts of sale, and that it is not been served a liquidation order.

2) Signing of the Contract of Sale

Once all searches have been successful the next step is the signing of the Contract of Sale by both the vendor and the buyer. This is similar to the English Term, "exchange of Contracts". Upon signing the contract of sale, the purchaser has a 6 weeks grace period to pay the first installment to the vendor. If the purchaser fails to do that, then the contact can turn void.

3) Possession of the property

Possession of the property will only be completed when the property is actually delivered to the purchaser. At this stage the purchaser pays for all the utilities to be connected and he establishes all rights in this country such as: residence, tax, driving, duty free and domicile.

4) Transfer of title deeds

If the property title already exists, then both parties immediately proceed to the transfer of title deeds procedure for the new owners, and pay the remaining amount owed. If the property purchased is new, then the title will take up to three years to be issued by the official authority. In this case the remaining amount owed is repaid to the vendor with the delivery of the property. During that time, legal security to the purchaser is provided when a valid contract is signed, stamped and registered with the land registry.

Important Information:

* Non Cypriot citizens require permission from the council of ministers to purchase property in Cyprus. This normally takes about 8 to 14 months. In the meantime the purchaser can buy the property and live in it while waiting for the application to get approved.

* The below two certificates should be acquired by the applicant in his country and sent as soon as possible. These two certificates will be attached to the application form:

a) A certificate from any person in authority in the country of the applicant certifying his good character or clean criminal record.

b) A certificate from any financial institution as to the applicant's good financial standing. Certificates referring to minimum deposits of 35.000 Cyp to 40.000 Cyp are preferable.

* Upon the repayment by the purchaser, a permit from the Central bank of Cyprus is required for the transfer of the purchase money. This permit is not necessary if both the purchaser and the vendor are foreigners.

* All payments should be effected through official channels (Banks) and money brought in cash should be declared at the airport or sea port on arrival.

*All properties in Cyprus are sold freehold.

* The Cyprus legal system is largely based on Britain's and provides many safeguards to protect the rights of the purchaser.

5) Property Taxes, Fees and Rates

Real Estate Transfer tax-fees are paid once to the land registry and are necessary in order to transfer freehold ownership to the name of the purchaser. The Transferee is responsible for the tax payment. The rates are on a graduated scale.

This can be done as soon as the relevant Government Authority has issued the title deed and the purchase has been completed.

Value Of Property In CY Pounds (CYP)	Transfer Fee Rate (Per 100%)
Up to 50,000	3
From 50,000-100,000	5
From over 100,000	8

Should the purchase be made in joint names (provided the price is more than CYP 50,000) the effective value for calculation is halved.

Transfer of ownership takes place by a simple process of registration at the Land Registry Office and the issuing of a title deed after completion and delivery. This can be done either by the buyer personally or by assigning Power of Attorney to a Solicitor. A pre-requisite for registration, in the case of foreigners, is evidence that the property has been paid for with foreign exchange and approval by the "Council of Ministers of Purchaser's application" to buy property in Cyprus. These formalities can be taken up by the buyer's lawyer on the buyer's behalf. However, before the registration of the completed property the purchaser should pay the transfer fees to the Land Registry office.

Stamp Duty

A one-off stamp duty is levied on the purchase of property in Cyprus. The rates are dependent on the contractual purchase amounts and payment is due within 30 days of signing the Sale Agreement. The amount is payable by the purchaser to the tax authorities.

Purchase Price in CY£	Stamp Duty in %
Up to 100,000	0.15
Over 100,000	0.20

Immovable property tax

The annual immovable property ownership tax is based upon the value of the property. Certain immovable properties are exempt:

Value of property CY Pounds (CYP)	Annual Property tax (rate per thousand ‰)
Up to 100,000	exempt
100 ,001 250,000	2.0
250,000 500,000	3.0
Over 500,000	3.5

Important Note:

Immovable property tax is based upon the value of the property in 1980 which is much lower than the current market value. So there is no immovable property tax for the majority of properties in Cyprus.

Local authority taxes and rates

A rough guide could be approximately CYP 50 -150 per year depending on the size of your property. This tax is for rubbish collection, street lighting, sewerage, etc. The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on a meter reading.

Business Environment

Cyprus provides the ideal investment opportunity and the perfect place to reside. The island's geographical location, high quality of life, British based legal system and persuasive tax incentives are but a few examples of why Cyprus is the choice destination for people purchasing property abroad. Some of the tax incentives and exemptions offered by the Government of Cyprus are:

· Foreign residents may apply for Cypriot tax residency if staying in Cyprus for more than 183 days p.a.

· For residents, pensions from abroad are subject to a flat tax rate of 5%. The initial amount of CY£ 2,000 per person is tax exempt.

· Double taxation treaties with 40 countries eliminate double taxation of foreigners residing in Cyprus. Where relief is not given under a double taxation treaty, relief from Cypriot tax is granted unilaterally.

· Tax advice is available to individuals purchasing property in Cyprus.

Work Permits

According to the aliens and Immigration Laws and relevant regulations, the authority for the issue of Temporary Employment Permits to aliens is the Migration Officer. The foreign national seeking employment must secure a local employer through personal efforts while being abroad. This employer should submit an application to the Migration Officer on his behalf.

The application should be accompanied by a short curriculum vitae of the alien, a contract of employment and copies of certificates of the alien's qualifications and work experience in the field of the proposed employment. A work permit is granted only on a temporary basis and for a specified position, provided that no suitable qualified Cypriot citizens are available and that the Public Interest of Cyprus is not negatively affected. These regulations concerning European Citizens will be lifted in time after Cyprus has joined the European Community.

http://www.infinityqatar.com/cyprus.htm