Conveyancing in Cyprus: Cyprus Property Purchase Laws

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Conveyancing in Cyprus: Cyprus Property Purchase Laws

Southern Cyprus is a safe place to buy property provided that the correct legal steps are followed. The legal system is based on the British system and English contract law and there is a reliable system for the registration of land.

Restrictions on Buyers

The first matter a buyer should determine is whether they may in fact purchase a property in Cyprus. There are certain restrictions on what can be bought as follows:

1. Citizens of EU member states who are not permanent residents of Cyprus may purchase:

• The Title Deed to any number of fields and plots
• The Title Deed to only one property on the island - a house or an apartment

2. Citizens of EU member states who are permanent residents of Cyprus can purchase any amount of land and property in Cyprus.

3. Non-EU citizens can purchase an apartment, or a house or villa which is under construction or built on an area not exceeding 4.014 square meters (2 donums)

4.  A Company registered in the EU can purchase only one house or apartment for its directors and/or business premises but may acquire unlimited plots and fields.

Restrictions on what can be purchased for EU citizens should be relaxed by 2009.

Reservation Fees

Once a buyer has found the property that they wish to buy in Cyprus they may be asked to pay a reservation fee. It is important to have a signed reservation fee agreement drawn up which will outline the circumstances in which the reservation fee will be returned to the buyer. 

For example it should say that if the sale does not go through because of a defect in the title that the reservation fee will be returned and that the reservation fee is to be deducted from the actual purchase price on completion. 

It is safer to agree that the agent or lawyer will hold the fee.

Due Diligence

Your lawyer should carry out certain due diligence before advising you to proceed. 

They should:

• Perform an encumbrances search at the Land Registry - to reveal any mortgages, charges or other adverse matters such as memos, a caution or court judgment against the title
• Perform a company search - to find out the financial status of a selling company or use a credit reference company to check out the financial status of an individual seller
• Obtain the planning and building permits if any

Negotiation and Signing of the Contract

Property is purchased in the first instance by a Contract of Sale, the terms of which should be negotiated by a lawyer who is experienced in such transactions. Almost always developers have their own sale agreement and this can be modified. Often it is better to start over in order to achieve a contract that will protect the buyer's interests. Probably the biggest mistake made by buyers in Cyprus, is to sign the developers standard contract without taking legal advice.

The contract will be signed by the buyer first. Then the developer will sign when the first payment due under the terms of the contact is made. This is equivalent to the "exchange of contracts" stage that UK buyers will be familiar with.

Stamp Duty

Once the agreement has been signed, it will be stamped at the tax office to show that the stamp duty applicable to the Contract is paid; a copy of the sale agreement will then be deposited with the Land Registry.

The Stamp Duty is:

• CYP 1.50/€2.56 per thousand for purchase prices up to CYP 100,000/€170,860.14
• CYP 3.42/€ per thousand for the part of the purchase price exceeding CYP 100,000/€170,860.14

Depositing the Contract

The contract can then be taken to the Land Registry and deposited. This prevents the seller, mortgaging, charging, reselling or otherwise interfering with the buyers rights to the property, until the title deed is ready.

Permission to Purchase

A prerequisite to registration, in the case of non-permanent residents, is approval by the Council of Ministers of the buyer's application to buy property in Cyprus. The main purpose is to safeguard Cyprus from allowing foreigners to enter the country to reside who cannot financially support themselves. A licence must be obtained from the Council of Ministers allowing the buyer to acquire such property, in accordance with the Immovable Property Acquisition (Aliens) Law. Such licence is granted to bona fide (genuine) purchasers.

Permanent residents also need a form of permission, but the process is simplified as permission will already have been granted for residence by the issue of a "pink slip".

Transfer Fees

Real estate transfer tax-fees must be paid in order to transfer freehold ownership into the name of the purchaser. The transferee is responsible for the tax payment and it is payable to the Government at the time of the transfer of the property and the issue of a title deed in the name of the purchaser.

On obtaining the necessary permit to purchase and on full settlement of the purchase price, the property can be transferred into the name of the purchaser at the Land Registry. However, this can not be done until the relevant Government authority has issued the title deed. This will not happen until the District Land Registry Office has processed any necessary plot divisions on a development. The key is the administration time taken by the District Land Registry Office and this can be many years. In Paphos in particular, delays of over five years are common.

The rates are on a graduated scale. 

The transfer fees are:

• 3% on purchase prices up to CYP 50,000/€85,430.07
• 5% on purchase prices from CYP 50,000/€85,430.07 to CYP 100,000/€170,860.14
• 8% on purchase prices over CYP 100,000/€170,860.14

Note: Some properties are sold without title deeds as the developers can be very slow releasing them. There have been a few occasions in Cyprus where people have bought property where the developer still has the title deeds and has mortgaged the property.

Further Information

• See AngloINFO INFOrmation Page: Buying to build in Cyprus
• See AngloINFO INFOrmation Page: How to Buy Property in Cyprus

Prepared by: Louise Zambartas UK Solicitor/Cyprus Lawyer of the Law Office of Louise Zambartas
Gregoriou Building, Office 61, 6th Floor, 95 Griva Dighenis Street, Limassol 3101, Cyprus
Tel: +357 25373734 / Fax: 357 25 725502 / Website / e-mail