Hadjimatheou Brother Developers - Property Developers in Cyprus
You are here: The Buying Process

The process of buying property or land in Cyprus is very simple and safe. All estate agents are required by law to be licensed and have insurance. A licensed estate agent is required to advise you of the bad points as well as the good ones about any property. You should make sure you do not use one of the many non registered agents ask to see the license which must be displayed in the office. Legal estate agents are members of CREAA, the Cyprus Real Estate Agents Association.

Paying for property

You will need to decide how you will pay for your property. There are three options.
Buy for cash, a straightforward option. Once capital has been invested in a property it can be sold again if required although this needs time and any profit will be taxed.
Re mortgage your main home if you are buying a second home to raise the cash, again, a straightforward option and one that doesnt involve you having to deal with anyone except your present lender or another mortgage lender in your country of primary residence. Your home may be repossessed if you do not keep up repayments on your mortgage, so you may be putting your main home at risk for the sake of a holiday home. Finance your property with a mortgage from a Cyprus bank. This can be in the currency of your choice, but will probably involve higher setting up costs.

Prepare yourself for the initial costs

Whether you are buying for cash or with a mortgage there are some costs you are going to have to fund yourself. The Reservation fee of CYP 1,000-2,000 is paid to the estate agent or developer when you decide on the property you want and have agreed the price and payment terms. Your next step is your lawyer. Legal fees, For any property, be prepared to pay around 0.75% of the purchase price as the cost for the legal fees. For a new build property do not use the developers lawyer even if it is offered free. Get independent advice. There will also be Stamp Duty on the contract price, this is calculated as CYP 1.5 per thousand pounds up to CYP 100,000 and 0.2% over CYP 100,000. The contract can be written in English, and should be if this is your native tongue. Agency fees, The vendor pays the agents fees. You should not be asked to pay anything extra.

The costs of a mortgage arranged in Cyprus

Mortgage deposit, the minimum amount you need to provide as your deposit for a mortgage depends on your residency. For Cyprus residents it is possible to arrange a 90% mortgage For EU residents minimum amount of deposit is 20% of the purchase price, and 25 or 30% is not unusual. For residents of non EU countries the minimum amount of deposit is usually 30% of the purchase price.

Arrangement fee, All of the banks charge arrangement fees. Most charge 0.75% to 1.0% of the amount of the mortgage. It is advisable to check because they do differ from each other.
Repayment term, This is often as little as 10 years, but up to 15 years is often available and very occasionally, longer.

Qualifying for a mortgage

The essential elements in order to qualify are,

1. Sufficient income to service your mortgage
2. Suitability of the property

Working out your price range

If you need a mortgage to buy your property, you should establish just what price range you should be looking at and whether you have enough cash funds for the deposit and legal fees and that your income is sufficient to afford the monthly cost of your mortgage.

Finding the ideal property

Much information is readily available from magazines and Internet websites advertising properties for sale in Cyprus it is very easy to get an idea of what type of property is available and at what cost before you actually start your search. There are many ways to search for properties. Estate agents, property magazines and web sites. You will find that most estate agents speak fluent English. Think carefully about the location and type of the property depending on whether you plan for it to be your main residence, second home, holiday home to be let out on occasion or a property to be let as an investment for the future. Make a list of the important elements, the purchase price, the overall size and number of rooms, would you prefer a garden, terrace or balcony, etc it will keep you and your estate agent or on the right track to find your ideal property. The type of property and its condition is also an important consideration. Buying to renovate or build a new property demands careful pre planning. Planning consent and building approval will be required. You will need the advice of an expert, an architect or surveyor.

Purchasing the property

Once you have found a property that is suitable discuss with the estate agent what offer might be appropriate and ask them to tell the vendor your offer. Once an offer has been accepted by the vendor, you will be required to pay a reservation fee. Once the reservation fee has been paid the property will be immediately withdrawn from sale, thus giving you peace of mind until your lawyer is ready. This reservation fee should be paid to the agent or developer, rather than to a private vendor. You will now have up to 28 days to do all your searches and surveys and appoint a lawyer to do the legal checks and prepare and agree a contract. Your lawyer will check the title to the property to ensure that you will own what you are buying, free from mortgage, and with building license.

The Sale Contract

The buyers lawyer will normally prepare the contract of sale in English, before signing it do check that all the details and conditions are correct, such as Details and identities of the vendor and yourself the purchaser A full description of the property The surface area of the property and land The purchase price and how and when it will be paid Details of any fixtures and fittings included in the sale There are no let out clauses. This is a binding contract On the day of signing the Sale contract you will be required to pay your deposit to the vendor. This could be just the reservation fee already paid by you, the buyer. Once you have signed the Contract of Sale, the clock starts ticking. You have got a set date by when you should complete on the purchase. This is normally 28 days but can be longer or shorter by agreement. In the case of property under construction there will be a schedule of payment dates following the usual 30% deposit on signing.

Completion day

You will have arranged a date for completion to take place. It is your responsibility to ensure you have the mortgage funds from the lender. Once you know the date you will be completing on your property purchase you will need to make sure that you have a bank account open and funds are being transferred into it in time for the completion date and arrange for buildings insurance to be on risk from the date of completion. You may also wish to insure the contents of the property and if you have a mortgage to consider Life Insurance. Property in Cyprus is Freehold. You own the property and the land it stands on absolutely. This applies to houses and flats (in the case of flats you own a share of the land.) Title deeds will be issued in your name after you have obtained the Council of Ministers consent. For Europeans this is only a formality now (EU law prohibits discrimination). For citizens of other countries this can take 6 months to obtain, but is usually granted. Your lawyer will apply on your behalf. When the title deed is issued to you, you will pay Transfer Tax calculated as 3% on first CYP 50,000, 5% on next CYP 50,000 and 8% on the remainder. If buying in joint names each person has the tax on their half share.

The professionals involved with property purchase

As soon as you start thinking about buying a property in Cyprus you are going to need professionals who will help and advise you.

The estate agent

Estate agents are usually local to an area and therefore will only have properties for sale within that area. The agent earns commission from the sale of the property and will try to obtain the best possible price for the property, but will know what price the vendor will accept. They should also be able to give you an estimation of all the other fees and the property charges you will be responsible for when you are the owner. Legal estate agents are members of CREAA, the Cyprus Real Estate Agents Association

The lawyer

The lawyer is a private individual suitably qualified to advise on legal matters in Cyprus. The purchaser is free to choose their own lawyer, and will be responsible for their fees which are negotiable.

Architects and surveyors

An architect or surveyor should be considered if you are thinking of purchasing an older property or one that you want to renovate. They will have experience with planning and obtaining necessary permissions and certificates, and be able to give an estimation of the cost. They should also know of reputable builders who are registered as such and who have their own insurances to cover their work.

Property taxes and related topics

There are only small taxes on residential property. The local authorities, the Municipality, collects Municipal Tax which covers the costs of refuse collection and street lighting and is normally about CYP 60.00 per year. There is also an annual Property tax collected by the District authority. These taxes are assessed according to the assessed value of the property in 1980 and only apply to property valued in excess of CYP 100,000 at that date. Most property is therefore exempt. Communal Charges, maintenance charges For those owning property such as an apartment within a complex where there are common facilities there are maintenance and service charges to pay. You should consider these charges before signing any contract. The charges will vary according to the size and quality of the complex, whether there are lifts, swimming pool, gardens, tennis courts and other facilities.

The Law of Inheritance

Cyprus succession law applies to properties in Cyprus, even if the owners are not Cypriot nationals. Under Cyprus succession law you are not able to leave your assets to anyone you please. Property on death must pass to your spouse and any children equally. You should take advice from your lawyer.An exception exists for British citizens who can leave their property as they wish if they have made a will. This stems from the time when Cyprus was a British colony before 1960 and an allowance was made from the local system of leaving property to the children.

Capital gains tax

Capital gains tax is imposed on gains from the disposal of immovable property at a rate of 20%. There are certain exemptions and indexation relief allowed. There is no capital gains tax liability on the gains of investments.


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