Preparing to purchase property anywhere in the world requires a lot of organisation and time, Cyprus however is a unique market, with many first time property buyers on the island falling prey to hidden pitfalls and mistakes. The Cyprus property market is continually developing and can be a great investment if the correct precautions are acknowledged.
This article demonstrates common mistakes when preparing to invest in property on the island, with tips on how to ensure that all arrangements and provisions are effective and run smoothly.
Have you already made the necessary preparations? Click here to see common mistakes associated with finalising the sales agreements and title deed establishment for your new property.
1. Failure to budget for all relevant costs
It is important to consider additional costs that come with purchasing a property, such as:
- VAT & immovable property taxes (0%, 5% or 19%).
- Applicable transfer fees.
- Cyprus stamp duty.
- Additional legal charges.
- Disbursements that will be applicable for real estate purchases.
Buyers who have made uninformed VAT determinations can find themselves either facing significant VAT liabilities or unable to manage their properties as they’d intended to. VAT charges can be misrepresented by developers in Cyprus so it’s important to stay up to date and informed before signing anything or transferring a significant amount of money.
2. Attempting to keep costs down by not enlisting the help of a service provider or estate agent
Enlisting a service provider who specialises in property is of vital importance. One of the biggest misconceptions is that it will be cheaper and easier for you to go it alone or seek free advice from family or friends. In actual fact, estate agents can often give you advice on how to speed up the process, allowing you to avoid getting into any legal issues that in the long run will cost more to resolve than the nominal fee itself.
Avoid signing anything without having an independent expert approve it. Sometimes Developers create their own purchase contract that in reality protect only the Developer themselves, leaving the buyer without any form of legal defense.
3. Enlisting the Developer or Sellers own Lawyer or Service Provider
Be careful of service providers or Lawyers acting on behalf of builders or sellers, who are therefore not independent or unbiased to your cause of ensuring you don’t run into legal trouble later down the line.
4. Not making enquiries about the property’s legal standing
Any potential properties on the market shouldn’t be the subject of an ownership dispute, for example properties that are part of unresolved divorce settlements commonly won’t easily become available for new ownership. Such a scenario can generally be avoided by purchasing property from a reputable developer on the island.
5. Being oblivious to hidden commission charges
Hidden commission is a tactic used whereby a fee is negotiated between an intermediary or agent and the seller (often a developer) can be a costly mistake when purchasing property in Cyprus. Such fees range from 5% – 50% of the purchase price, or sometimes more. These additional costs can be avoided by enlisting a reputable service provider who can provide potential clients with the applicable references.
Most importantly, it is essential to obtain independent advice from an experienced service provider that will ensure all purchasers prepare to ensure they are protected from all mistakes mentioned on this list. Eltoma Property can assist with any of the above issues get in touch, our property experts would be happy to advise.
Click here to read part 2: Common contractual errors that can occur when buying a Cyprus property.