How to Buy Your Dream Property in Cyprus

The dream of owning a home on Aphrodite’s beautiful island of Cyprus is a dream shared by many - Cyprus is after all an island with a near perfect climate, it is an affluent island where the standard of living is high, where the cost of living is still affordable, where taxation on pension income is very low and where you can even get a mortgage to buy that ideal villa and pool in the sun!

If you want to know how to buy your dream property in Cyprus this guide will show you all the steps involved in the purchase process so that you know what to expect and you find the process as stress and hassle free as possible.

The very first thing you need to know is that since Cyprus joined the European Union in 2004 there have been many changes that have affected the housing market - and until 2009 these changes are still filtering through into the purchase process system. 

For example, it is now possible for EU citizens to buy a home – i.e., a principal residence in Cyprus unrestricted.  If you wish to buy more than one property you will still require permission to do so from the government’s council of ministers but even this restriction is being lifted in 2009 at which point you’ll be able to buy whatever you want and as much as you want just like local citizens can.

Another rule that came into force as a result of Cyprus’s EU accession is the fact that nowadays anyone who wants to be an estate agent has to be registered and they have to abide by certain principles of practice which make them on the whole more reliable! 

A negative change that EU entry wrought was the addition of VAT at 15% on new build property, but even this amount can be reduced as low as 5% if you’re a first time buyer.

So, how to buy property in Cyprus?  First things first you’ll need to engage an estate agent to assist in the search for that ideal home!  You can search on the internet or travel to Cyprus and find registered agents to help you…alternatively you might like to contact a developer directly about a site that they have under construction.

When you are viewing homes with an agent or developer outline your maximum budget and advise whether this should also cover all legal fees, expenses and service related costs as well.  Then you need to keep an open mind but you also need to proceed with commonsense when viewing real estate.  This is because you will no doubt be shown some truly dream properties but always look beyond the view and the stunning swimming pool!  See the build quality, the quality of fixtures, fittings and ‘finishings’ – asking about whether white goods, air conditioning, curtains and even central heating are included.  If not, you will need to budget to buy these things yourself.  What’s more, you shouldn’t take any open promises made by an agent or a developer as being real promises until they are written in to your sales contract!

To that end you need to engage the services of a solicitor.  It is unwise to use the same solicitor as the property’s vendor – you need someone who will be acting only in your best interests!  Agree their fees up front and also the scope of the service they will provide and then get them to write out for you a watertight sales contract that lists every single promise made by the developer, every single obligation agreed to by the vendor and also the full specification of what it is you are actually buying for your money!  That contract has to be well written – don’t be shy about questioning any aspects of it if you are not happy and do not sign until you are 100% satisfied by the contract.

And finally – you have to pay for your property!  If you need a mortgage to buy in Cyprus there are many banks available on the island willing to offer a variety of finance packages.  You have the Bank of Cyprus and Laiki Bank which are the most popular, they often offer repayment periods of up to 40 years, relatively low processing fees and interest rates and some mortgage lenders in Cyprus even offer you a payment holiday for the first few months of your mortgage which makes sense as these are the months when you always have extra money to find for getting services and utilities connected or for furnishing your new home.

The best way to find out how much you can borrow is to visit the branches of a handful of banks and go through your financial status with the bank and get an offer in principal from them so that will guide how much you can spend on your property.

In terms of all the fees and transfer charges, taxes and expenses you will have to pay on top of the purchase price for your property in Cyprus you should budget 10%.

Your legal fees will be between CYP 500 – 1000
If you use a surveyor they will charge around about CYP 300 depending on the property to be surveyed of course!  You can find surveyors in Cyprus through the Cyprus Scientific and Technical Chamber.
Stamp duty is 0.15% up to CYP 100,000 and 0.2% thereafter.
If you have to apply to the Council of Ministers for permission to purchase (to be scrapped in 2009) you’re looking at a one off processing fee of CYP 150 and your lawyer should not only advise you whether you have to apply but they should action the request on your behalf.
Those who take out a mortgage have to pay around a 1% registration fee.
VAT is 15% on all new builds unless you’re a first time buyer and then it comes down to 5%.
Transfer fees depend on whether you register the home in single or joint names – it can actually work out cheaper if you do it in joint names but then you can get away with reduced VAT of 5% on two homes if you are planning on moving in the future by buying in one name for the first purchase and the other name for the second purchase - so ask your solicitor for advice.  Transfer fees are usually between 3 and 5 or sometimes even 8% of the property’s purchase price.

And finally – the estate agent’s fees – these are between 3 and 5% but don’t panic, you don’t pay them, the person selling the property does.

The actual process to buy a dream home in Cyprus is very straight forward as you can see, you pick a property, sign a contract, hand over the money and the solicitor does the rest!  Now all you have to do is decide which property you want to buy because there are so many to choose from in a variety of fantastic settings.  Good luck!