House Purchasing Process
Buying a property abroad is always a big decision but once you have decided to buy, the process in Cyprus is very simple indeed.
The Big Decision
Believe it or not, buying a property in Cyprus is a very simple and straightforward procedure, helped by the fact that Cyprus Law is based largely on English Law. Once you find the house of your dreams you can then turn your dream into a reality. If your dream house is a new home, the developer would normally request a deposit in the region of €3.000 - €5.000, which reserves the property and fixes its price. In contrast to the UK, in Cyprus this process is binding and benefits the purchaser by preventing the vendor from changing anything during the building process. A written agreement is then drafted between the vendor and the purchaser, normally based on a standard contract, which will then be scrutinised by a solicitor for the purchaser prior to signing. Following a period of thirty days, the developer will normally seek a sum of money equivalent to 30% of the property value. The remaining balance of the payments is made in stages relevant to the progress of the building work. The key stages are the framework of the building, the plastering work and the completion of the property and at each stage, a certificate will be issued to validate the work and request the next payment.
A typical house or apartment will take between 12 and 18 months to complete before the property can be delivered and you can then start living the dream.
The Written Agreement
The written agreement made between the vendor and the purchaser creates a sales contract, which binds both parties to perform according to their respective obligations. The contract commits the parties to a legal relationship of rights and duties. This contract is then deposited in the Land Registry office within 2 months to log the purchase of the property and safeguard the rights of the purchaser during the building stages and until approval is granted by the Council of Ministers. This contract is very straightforward and written in English, or the language of the purchaser if Cypriot or Greek.
Appointing a solicitor
Before signing any contract of this nature, it is wise to seek advice from a solicitor in order to protect your rights. This solicitor will perform a number of duties on your behalf, including application to the Council of ministers for you, as an Alien in Cyprus, to purchase a property. This is normally granted automatically and no British citizen has ever been refused permission. Other duties will include the land searches and payment of the stamp duty for the property purchase.
Below there is a detailed example to follow
Here is An example on Buying a House From Us
Stamp Duty is due to be paid within 30 days of signing the contract. The purchaser is liable for the payment of stamp duty upon the presentation of the purchase contract to the tax authorities – your solicitor normally deals with this formality. Stamp Duty is payable at the rate of 0.15% up to the value of €170,860.14. Thereafter the rate is 0.20% for over €170,860.14 Example 1: purchase price = € 200,000:
|The First||€ 170,860.14||0.15%||€ 256.29|
|The Next||€ 29,139.86||0.20%||€ 58.27|
|TOTAL PRICE:||€ 314.56|
Real Estate transfer tax
Cyprus Real Estate Transfer tax-fees are necessary in order to transfer FREEHOLD ownership to the name of the purchaser. This is payable when the relevant Government Authority has issued the title deed and the purchase has been completed. The amount of Real Estate Transfer Tax is reduced if two people register as co-owners of the property. The Transferee is responsible for the tax payment and the rates are on a graduated scale. (See examples below):
|Status||Property Value (€)||Transfer Fee Rate(%)|
|Up to||-||€ 85,430.10||3 %|
|From||€ 85,430.10||to||€ 170,860.14||5 %|
|Over||€ 170,860.14||8 %|
Example 1: purchase price = € 150,000:
|The First||€ 85,430.10||3%||€ 2,562.03|
|The Next||€ 64,569.90||5%||€ 3,228.50|
|TOTAL PRICE:||€ 6,790.53|
If the propery purchase is made in joint names the effective value for calculation is halved, providing a substantial tax saving. Example 2: purchase price = €150,000:
|1st Buyer||€ 75,000||3%||€ 2,250|
|2nd Buyer||€ 75,000||3%||€ 2,250|
|TOTAL PRICE:||€ 4,500|
Transfer of ownership takes place by a simple process of registration at the Cyprus Land Registry Office which leads to the issuing of a title deed anything from 2 – 5 years after completion and delivery. This process can be completed either by you personally or by your Solicitor.