How to buy real estate in Cyprus
Despite the recent restrictions on buying property, there are still opportunities to buy property under other programs. The opportunity to buy property in the south, by the sea, attracts both investors and individuals wishing to move to Cyprus. Below you can find the information that may be useful to those who wish to buy property in Cyprus.
Foreign buyers: their rights and obligations
Obtaining of real estate rights in Cyprus
Without any restrictions and the need for permits from state authorities to purchase real estate in Cyprus can be EU citizens (both individuals and legal entities).
However, non-EU citizens will need authorization from the Council of Ministers. In fact, the only checks are the following: whether the buyer has no legal problems and whether he/she already owns a home in Cyprus.
Foreigners may buy a maximum of two properties with a total area of 4014 square meters in their own name. This restriction can be circumvented. For this purpose, foreign nationals can open a company and register the properties in their name or register them in the name of family members.
Purchase of real estate by foreign nationals
According to local law, citizens of other countries may purchase any real estate: a house, apartment or plot of land up to 4014 square meters (see above), but no more than two units per family (i.e. spouses; children are not counted). Citizens of other countries (individuals only) can also buy commercial real estate with a total area of no more than 4014 square meters. Here, the entire commercial building or floor in a building with multiple office spaces, for which a common title deed has been issued, is considered one unit.
If you buy more than two units, no title is issued. This does not prevent the owner from using the purchased property in the usual way (living by himself, renting, selling, etc.), but it is not possible to obtain a loan on them.
Rights for foreigners after buying real estate in Cyprus
If you have bought any property in Cyprus, you are entitled to a multiple entry national visa. It allows you to stay in the country for up to 90 days every six months. But there is no possibility to travel without a visa to Schengen countries. Cyprus is part of the EU, but not of the Schengen Agreement.
If you buy a property worth €300 thousand or more, you automatically qualify for a permanent residence permit, which does not require renewal. And, having lived in Cyprus for a cumulative period of 5 years within 8 years, you can obtain citizenship of the country by naturalization.
The investment citizenship program, under which, having invested in the local economy from €2 million, one could quickly obtain a Cypriot passport, was suspended in 2020. However, it remains possible to obtain a Cyprus permanent residence permit for investment.
Complete real estate transaction procedure
Step 1. Opening a bank account and reserving a facility
Opening an account
When you have chosen a property to your liking, you can open a bank account, but it is not necessary. You can transfer money from your account to the seller's account (usually the developer himself). Recently, such a scheme is relevant for citizens of Russia and Belarus, which bank account from 2022 on the island open, but only after the registration of the transaction on the sale of real estate.
Citizens of other countries can still open an account in a Cypriot bank, as all payments for real estate in Cyprus are made in a cashless manner. To do so, an individual must provide the following documents:
- passport,
- internal passport,
- a letter of recommendation from the bank where the individual is already serviced,
- confirmation of the origin of funds (salary, pension, dividends, interest on deposits, rental of real estate or vehicles, etc.). Alternatively, you can provide a tax return for the last 2 years,
- bank account statement on the movement of funds.
The minimum deposit to activate a bank account in Cyprus is €200.
Deposit payment
When the client has chosen what he likes, a preliminary contract is drawn up with him, he himself makes a deposit, and the selected property is reserved. The deposit itself is 1-2% of the value of the object and is not returned to the client. If the buyer for any reason refuses the deal, the deposit is not returned to him. However, if the deal falls through the fault of the seller, the full amount is returned to the client.
If the buyer is not able to be present at all stages of the transaction, the buyer can issue a general power of attorney to his lawyer, which an independent notary will certify in the presence of the buyer. On the basis of such a power of attorney, the lawyer will be able to fully conduct the entire process on behalf of the buyer, including both the signing of the contract and the registration of real estate. It is not necessary for the buyer to be present at all.
Generally, the period for which a facility is reserved is up to 1.5 months. During this period, the lawyer:
- checks the real estate documents;
- verifies that the seller's lawyer has cleared the property of liens and encumbrances, if any. Further, a tax clearance certificate is issued;
- prepares the sale and purchase agreement, negotiates it between the seller and the buyer and leads the parties to the conclusion of the transaction.
Step 2: Concluding the contract
At the signing of the contract may be present both the seller and the owner accompanied by lawyers, and only their authorized representatives with powers of attorney.
The sale and purchase agreement is signed both in Cyprus and in Russia, in the representative office of the Cypriot company. In this case the notary may not be present at the signing. The contract is signed in two copies. Its provisions are binding on both the buyer and the seller and must be complied with in all respects.
Given the fact that the legal system in Cyprus is based on the British legal system, the contract is usually drafted in English. If the buyer wishes, a copy in another language can also be drawn up and notarized. Alternatively, a bilingual contract can be drawn up in the form of a table with the English text on the left and the other language on the right.
The contract of sale should clearly present the description of the property, as well as the payment procedure for the transaction. When signing the contract, 30% of the value of the selected and reserved object is usually paid. In addition to the 30% payment, the state duty - stamp duty for legalization of the transaction - is also paid.
Step 3: Payment of the transaction
In real estate transactions in Cyprus, payments between the seller and the buyer are made by bank transfers. The buyer transfers to the seller a minimum of 30% of the value of the property less the amount of the reservation payment within the terms specified in the contract after signing the contract of sale. The rest of the amount the buyer transfers after the registration of the contract in the Land Department of Cyprus, as well as the submission of a request to the Council of Ministers of Cyprus for the purchase of real estate and approval of VAT exemption (when buying property in the primary market). A payment schedule is then drawn up and agreed upon.
Step 4: Registration of the new owner
Once the contract is concluded, the foreign buyer or his lawyer handling the transaction provides the Council of Ministers with a written statement agreeing to the purchase and a copy of his passport, and pays stamp duty.
A maximum of 60 days after signing the contract of sale, the buyer's lawyer must register the deed with the District Land Registry Office. This ensures the security of the foreign buyer's title.
Registration provides the purchaser with legal rights to the property until the individual real estate certificate of ownership is issued, and also ensures protection against resale, purchase, lease or mortgage of the property without their knowledge.
Once the buyer has paid the seller the full remaining contractual amount, it is necessary to wait for formal Cabinet approval to purchase the property. The foreign buyer must submit the following documents to finalize the transfer of ownership and obtain title:
- an application to be submitted to the District Land Registry Office;
- receipts for payment of the registration fee;
- a receipt for payment of the property registration tax.
The buyer and seller must be present in person to obtain the title. The Cyprus Land Department registers the transaction (usually within two to three hours). But already before the registration the buyer can use the purchased property. It is important to know here that the plot of land on which the property is located is also registered as property.
