Buying a Property in Cyprus

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Published: 24th April 2012
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With abundant sunshine all year round, immense natural beauty, rich cultural and historical heritage, and modern amenities, Cyprus is one of the best places to visit and live in Europe. If you are planning to relocate to or make an investment in Cyprus, it is a good idea to buy a property there. Property prices on the Mediterranean island have become lower in recent years, and they are considerably more affordable compared to the more affluent countries in Europe. However, the country continues to experience significant growth in its tourism industry, and this ensures that there will be a constant need for rental properties. According to experts, this is the perfect time to invest in Cyprus real estate.

Choosing a Property
To purchase a good property in Cyprus, you need to spend enough time doing research. First of all, you have to decide which area in the country you wish to buy a property in. This can be done by reading articles about different cities and towns on the Internet or getting recommendations from people who lived there. It is possible to search for a suitable property online or by browsing through local classified ads, but make sure you view the property in person. After you have confirmed your desire to purchase a certain property, you have to pay a reservation fee to ensure that the owner will not sell the property to another buyer.

Real Estate Agent
If you are not familiar with the local language, real estate scene, and laws regarding property purchase, you may want to consider hiring a real estate agent. A real estate agent will show you all the available properties in your desired area that suit your budget and preferences, and he or she will negotiate on your behalf and handle all the paperwork if you decide to buy a particular property. To ensure that the purchase will be processed in the most efficient manner possible, you have to hire a registered real estate agent. Registered real estate agents in Cyprus are members of the Cyprus Real Estate Agents Association, or CREAA.

If you need a loan, you have to find out the maximum amount you can borrow to finance a property purchase in Cyprus. Loans for purchasing properties in a foreign country are not easy to obtain. In most cases, lenders will only grant you a loan if you have a title deed or bank guarantee. Typically, the maximum loan amounts that are offered for property purchase in Cyprus are 80% of property value for permanent residents, 60% for non-permanent residents, and 50% for investors. Repayment terms vary from one lender to another, but they usually range from 10 to 30 years.

You also have to hire a lawyer to handle all the legal matters that are related to the purchase of your desired property. It is best that you hire an independent lawyer, even if the seller or developer offers the service of his or her lawyer for free.

Your lawyer will work with your real estate agent to prepare the sales contract. If you do not have a good understanding of the Cypriot language, the contract can be prepared in English. You and the seller can sign the contract after you have paid the deposit, which is usually between 20% and 30% of the price of the property. The date by which the purchase must be completed will be stated in the contract. If it is not completed on time, you may lose the deposit, and the purchase may be cancelled. Also, you will have to pay stamp duty for the contract, which costs at least 0.15% of the price of the purchase. After the stamp duty is paid, the contract will be sent to the Land Registry Department.

Title Deed
Some people say that it is perfectly fine to purchase a property in Cyprus without obtaining a title deed, but others do not agree. In Cyprus, a title deed is known as the “certificate of registration of immovable property”, and it is the main evidence of property ownership. It contains important information such as the name of the property’s registered owner, the size and location of the property, and Land Office reference. The only advantage of not having a title deed is that you do not have to pay property transfer fees, but the disadvantages are many.

It is essential to have a title deed because it gives you legal ownership of the property. Without a title deed, you will not be able to take advantage of certain benefits of property ownership, such as the right to transfer or sell the property without reference to the registered owner. When you decide to sell the property, the registered owner has to enter into a sale agreement with the buyer, and he or she may charge you a certain amount of money for doing this, which can be as much as thousands of Euros. Also, he or she can obtain a mortgage on the land without your consent, or reschedule, extend, or increase his or her loan if the property was already mortgaged when you purchased it.

Having a title deed also gives you the assurance that you have not purchased an illegally-built property. It means that the property has undergone formal inspection, and it was built according to the construction requirements that were set by the issuer of planning and building permits. Another disadvantage of having a title deed is that you will not be able to raise funds against your property, or access the capital that you have tied up in the property through equity release loans or other schemes. Additionally, you are not allowed to make changes to your property without permission from the holder of the title deed.

If you choose to obtain a title deed, you need to pay a transfer fee. This fee varies according to the price of the property. It is 3% of the purchase price if the property costs 85,000 Euro or less, 5% if it costs 85,000 to 171,000 Euro, and 8% if it costs more than 171,000 Euro.

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