Written by Guest Writer Sarah Hordle - Island Homes
Buying a Property in Cyprus
Many thousands of people have invested in property in Cyprus in the last 20 years and with the excellent climate, favourable exchange rates, and for 2016 only, government incentives on transfer taxes and capital gains and not to mention the terrific prices, 2016 is the year to bag a bargain!
For many years Cyprus has, been a popular destination for property purchase. With over 300 days of sunshine every year, endless stunning blue flag beaches and truly breath-taking scenery it is the perfect location for retirement, investment or just to own a holiday home! Many people purchase property to rent out and there are a wealth of excellent management Companies in the area to help you. With property prices at their lowest for 10 years and a fantastic exchange rate now is definitely the time to buy.
There is plenty to do all year round and the lifestyle is active and fun. If you enjoy the outdoors Cyprus is the perfect choice. We are a small island and everything is only a short drive away – sea, sand, shopping, markets, sports, golf, activities, clubs, mountains, cities and even skiing in the winter, never a dull moment!
Living in Cyprus
Cyprus is famous for its hospitality and welcome. The Cypriot people are naturally friendly and helpful and there is a strong emphasis on family. In addition there is a large ex-pat community of many nationalities and you will be made very welcome by all! In Cyprus we drive on the right, use 3 pin plugs, benefit from a very low crime rate and the majority of local people speak English and love to do so.
Taxation rates are amongst the lowest in Europe and Cyprus is also a fabulous place to do business with a terrific financial and legal infrastructure.
Located at the Eastern tip of Europe Cyprus is also perfectly situated for those that love to travel with fantastic access all year round to a wealth of countries to be discovered.
Whether you are planning to rent or buy there are 3 key points that will help you:
Find a Good Estate Agent
If you work with a good Agent they will not only save you thousands of Euros they will help you through every stage of the process. Your agent should be Licenced and registered with the Cyprus Real Estate Agency Board and be knowledgeable in all aspects of property law.
Your Estate Agent should be local to the area in which you wish to buy and be able to advise you on everything from finance options, to schools, to the best place to purchase your weekly shopping!
Research, Research, Research!
There is a wealth of information available on the internet and the more you read, the more prepared you will be. Write down every question, no matter how minor, and make sure you get the answers. You should start this process and ‘interview’ your agent as soon as possible. This way you get to know the person you are dealing with and make sure you have someone who is listening to you and understands your needs and desires.
Put Together a Checklist
It may sound obvious but list all the things you want from your property in Cyprus. From general items such as when you will be using the property and what local amenities you would like, to specifics such as financing, rental potential and returns, number of bedrooms & bathrooms, plumbing for a dishwasher and annual running costs. The list can be endless but being prepared with those questions will help your agent to guide you to the right decision.
Once you have this in place you can then decide…
Where to Buy a Property in Cyprus
The South East Coast of Cyprus offers a wealth of options for those looking to purchase a home. From a lock up and leave apartment, to traditional bungalows, to fabulous sea front homes there is something to suit everyone and every budget. The first step is to decide which area is right for you:
Buying a Property in Protaras
Protaras is a fabulous family resort with a wealth of bars and top quality restaurants and truly spectacular beaches. Property in Protaras is sought after by buy to let investors, holiday home owners and those who like a busy social life. Fig Tree Bay, arguably our most famous beach, is a wonderful place to spend your time - summer or winter!
Buying a Property in Ayia Napa
Ayia Napa has something for everyone; whether you like to stroll around the fishing harbour, relax with a delicious Meze gazing over the sea or enjoy the thriving nightlife or just want to worship the sun you will find Ayia Napa has it all.
Buying a Property in Ayia Thekla
Ayia Thekla is just a short drive from Ayia Napa and is a beautifully relaxing place to stay. The new Marina is now underway and will offer a truly unique experience in South East Cyprus. Once completed it will attract a high class clientele and offer excellent facilities.
Buying a Property in Larnaca
Larnaca is a thriving, cosmopolitan city and port with excellent shopping, cinemas and nightlife both traditional and contemporary. With many beautiful villages close to the sea and the town there are a wealth of choices for the discerning purchaser. Oroklini, Pervolia, Kiti and Dhekelia are particularly popular and have the added benefit of being only minutes away from Larnaca Airport.
Buying a Property in Kapparis
Kapparis is a true, year-round resort, and only a five minute drive from the centre of both Protaras and Paralimni; the main regional town. There are plenty of stunning coves where you can enjoy the sun and sea and it is very popular with local people and tourists alike.
Buying A Property In The ‘Red Soil Villages’
The ‘red soil’ villages are so named for the rich soil that produces the best potatoes and strawberries in the world! Made up of Deryneia, Frenaros, Sotira, Liopetri, Vrysoules, Xylofagou and Avgorou these villages offer a true slice of traditional life. These villages offer exceptional value for money and an authentic Cypriot experience.
After doing your research you have found your dream home and you are ready to proceed! There are many types of property in Cyprus and the procedure will differ slightly depending on the type you have bought. Typically you will buy a completed property (with or without title deeds) or an off plan property that will be built in stages.
When buying an off plan or partially built property payments will be made to the developer as the building reaches each stage of completion. All new properties attract VAT currently at 19%, however if it is your first property in Cyprus you will pay just 5% VAT and NO title deed transfer tax when the deeds are ready. As a general rule the following steps should be taken:
Take Independent Legal Advice
The legal system as regards property in Cyprus is vastly different to that in most other countries. Your agent should have explained this to you in depth through your meetings but always seek the advice of a lawyer. Once they have done the necessary searches and checks it is time to pay the deposit on the property so that it cannot be sold to anyone else.
Depending on the price of the property you buy a small holding deposit of between 2-10,000 Euro is usually paid. An agreement is typically signed by both the purchaser and the vendor to stipulate the price and what is included within the sale. This deposit should be fully refundable in the event that there are any legal problems preventing the sale of the property.
Contracts will be drawn up between the lawyers for both parties to detail the rights and obligations on both sides. Once approved these will be signed and sent for the stamp duty to be paid. (see costs overleaf).
A tax clearance certificate will be obtained to confirm that the vendor has paid any capital gains taxes and property taxes that are outstanding on the property.
On the day of completion you or your representative will visit the Land registry, pay the consideration for the house and either your contract will be deposited or the Title deed will be transferred (if there is a title deed see costs below).
Cost of Buying a Property in Cyprus
In addition to the actual cost of the property there are a few other costs that need to be taken into account:
Legal and Conveyancing Fees
These are usually a maximum of 1% of the purchase price + VAT.
0.15% of the purchase price on the first 100,000 Euro’s and 0.2% of the balance.
ONLY on resale properties at 0.5% of the purchase price
Deposition Of The Contract
Mainly on new properties at €50
Title Deed Transfer Tax
Many properties are still in the process of waiting for their full title deed to be issued but as soon as the title deed is ready you will be asked to pay the transfer taxes. Any property that has the title deed transferred in 2016 will pay only 50% transfer tax! If the property you purchase has a ready title deed you will pay this at the land registry on completion and the costs are based on a sliding scale on the value of the property.
It is very important to consider the annual running costs when you are making your decision to buy and you will be pleasantly surprised by the low level of costs compared to most countries. As a guide see table below.
As a rough guide total taxes for a couple owning a 3 bedroom house each year will be approximately 400 to 600 Euro’s per year depending on the size and location.
Property Management in Cyprus
Many property owners in Cyprus use their property as an investment and choose to rent out their Cyprus property to holiday makers or locals. With the current excellent prices on property and the increase in tourism, investment properties can offer gross returns of up to 10% per annum! This can, however, be difficult to manage if the Cyprus property owner does not live in Cyprus themselves. This is where a good property management company can really make the difference.
Property management companies can take care of everything relating to your Cyprus property including marketing your property, managing bookings or long term rental agreements, welcoming guests, key holding, cleaning, pool maintenance and gardening, managing your bills and communal fees if relevant and even doing laundry and providing welcome packs for your guests.
With any property, things can go wrong and having a reliable and reputable property management company in Cyprus means whether it is a maintenance issue or just checking the electric meter, your property management company will take care of it. This gives you peace of mind knowing your Cyprus property is being well taken care of and that your holiday makers or long term tenants have excellent customer service and a reliable point of contact.
Now is the Time
We hope that this has given you a great ‘taster’ about the possibilities of owning your own slice of paradise and the processes and procedures that are involved. Just think, in a few months you could be sitting on your own patio, gazing at your pool with an ice cold Keo in hand…Life doesn't get better than that!
2016 is the year to buy, with favourable exchange rates and great prices, the market is at rock bottom and prices are beginning to climb. You could own a villa with private pool for less than it costs for a one bedroom apartment in many cities!