Cyprus has gained the reputation of one of the most popular locations for buying real property for investment purposes. Beyond that, purchasing an apartment or villa on the island is a means to qualify for the EU passport which grands a number of advantages that are pleasant and indispensable to businessmen (visa-free travel around the world, reduced taxes, etc.).
What are the general principles of choosing and buying real property in Cyprus and how to avoid mistakes? Which steps need to be taken to make a successful purchase? The answers to these questions are provided in our today’s article.
According to statistical data, 90% of foreign buyers who haphazardly purchased real property in Cyprus remain unhappy with their purchase. Why is it so?
First, because housing may be overvalued. The island’s territory is limited, and there are not many new construction projects in recent years. Before the advent of the financial and economic crisis, the authorities were issuing about 10,000 building permits per year. From 2008 to 2015, the number of such permits decreased by 2 times. However, since the middle of 2016, due to the increased demand for real property, the number of permits issued has increased. So in 2017, there was a 7% increase in the number of permits issued if compared to 2016.
Secondly, unscrupulous developers try to sell an item in which they have a bargain in any possible way. However, in these cases, investors’ preferences and needs are not taken into account. As a rule, such companies start working with clients even before they arrive in Cyprus. Their tactics are quite simple: to develop a minimal proposal and impose not the most attractive option, while eliminating any contacts with other sellers.
To have the best value for the money, one needs to choose a property object with a responsible care. Below are the criteria that will help you to make a rational choice:
The price dispersion in Cyprus is rather big, so depending on the area for the same amount you can buy an apartment or a villa by the sea. For example, buying a house with 3 bedrooms in Larnaca will cost €360,000, and a villa with a pool in Limassol with an area of 880 m2 is offered for €4 million. The price of apartments in the secondary market starts from €100,000.
|Location||Type||Price (€)||Monthly rent (€)||Profitability||Monthly rent |
per sq.m. (€)
|Famagusta / Paralimni||Apartment||83,626||306||4.4%||3.62|
|Cyprus (on average)||Apartment||106,044||356||4.0%||4.21|
|Source: Cyprus Real Estate Prices Index of the Royal Institution of Chartered Surveyors (RICS) for 2017|
Before you come to the island, you should select several items remotely. You may find suitable options on one of the websites dedicated to overseas real estate. The buyer may specify the parameters of the project, namely the type of housing, price range, region, number of bedrooms.
Another way is to contact specialists who will help choose the most attractive items based on the specified requirements to real property.
Check if you need a visa to enter Cyprus. For Russians, for example, Cyprus offers a simplified document submission procedure. It is a provisional visa. An investor will have to apply for a pro-visa on the website of the Embassy of the Republic of Cyprus in Moscow. For this purpose, it is required to fill out a questionnaire and send it via e-mail (the address is mentioned on the application form). The pro-visa is issued within 24 hours. The document must be printed and presented at the airport upon registration. Pro-visa gives the right to stay in Cyprus for up to 3 months. The application procedure is free of charge.
Also, you may enter Cyprus with a Schengen visa, provided that you have already visited one of the Schengen states earlier.
As a rule, hotel booking and transfer are arranged by the company that is coordinating the process of buying real estate. Most agencies have connections with local hotels, therefore booking is made at internal corporate rates.
Upon arrival, the investor may view the real property items that have been chosen by him remotely. As soon as a final choice is made, it is possible to proceed with the transaction.
Step 1. The buyer makes a deposit in the amount of up to 10% of the total value of the property to reserve an object.
Step 2. The investor concludes a contract with a Cypriot lawyer who will provide legal support for the transaction and issues the necessary power of attorney. After that, the buyer may return home.
Step 3. The property is reserved for 1-1.5 months. During this time, the lawyer is checking the documentation, releases the object from pledges and encumbrances (if any), and also prepares a contract of purchase.
Step 4. After the contract is ready, the buyer comes to Cyprus to sign the contract of purchase, and also pays half of the housing cost. In addition, the Stamp Duty is paid and the agreement is deposited with the Land Committee.
Step 5. The lawyer is preparing an application for obtaining permission to buy property from the Council of Ministers of Cyprus and application for a VAT exemption.
Step 6. Within 14 days, the authorities give permission for a VAT exemption. After that, the buyer pays the remaining part of the value of real estate, becoming its rightful owner.
Step 7. After the receipt of the Certificate of Ownership and payment of the property transfer fee, the investor becomes the registered owner of the property.
As soon as the legal nuances are settled, an application for citizenship may be filed.
Under the terms of the immigration program of Cyprus, the minimum value of the property should be €2 million. At the same time, the investor must own residential property worth €500,000 for life.
Important note! Any wealthy foreigner without criminal record and problems with the law has the chance to obtain the EU passport. Providing false information is a strong reason for refusal.
Visa-free travel to 158 countries, favorable tax environment, access to progressive health care system and new opportunities for business development – these are the main “trump cards” of the Cyprus passport.
If you have purchased a villa, but do not intend to live there permanently, it is necessary to pay someone to take care of the garden and the pool. Taking care of a small garden and a swimming pool will cost additional €120-170 per month.
Also, the buyer must pay utility bills. Tariffs vary depending on the area. Rates are the highest in popular resort cities such as Limassol, Larnaca and Paphos. On average, a family of four pays about €30 a month for water and about €100 a month for electricity.
An apartment is very easy to be “deactivated” if the owner has to leave for a long time. Electricity and water can be cut off. Before arrival, one just has to make a phone call to the company engaged in maintenance of the house, and the staff will prepare an apartment.
In recent years, Cyprus has become a very attractive place for work, life, business. It is a magnet for foreign investors because it offers obtaining the second citizenship in exchange for investment in the local real estate market in the shortest possible time. On top of that, buying property in Cyprus is not only a step to become a EU citizen, but also an opportunity to develop a Plan B in case of force majeure in the home country.