Cyprus Property Regulation

Cyprus Property Regulation

The Republic of Cyprus (“Cyprus”) has a strategic position geographically, acting as a meeting point for Europe, Asia, Africa and the Middle East. This has contributed to the importance of the country for international business, leisurely travel and investment in general; Real Estate investment being one of the most interesting investments in recent years, especially since Cyprus’ full membership into the European Union in 2004. Cyprus property regulation consists of a number of strict laws.

The general legal framework related to immovable property in Cyprus is composed by:

• The Constitution of Cyprus; the Contract Law (Cap. 149).
• The Civil Procedure Law (Cap. 6); the Stamp Duty Law (No. 19/1963).
• The Wills and Succession Law (Cap. 195); the Administration of Estates Law (Cap. 189).
• The Probates (Re-Sealing) Law (Cap. 192).
• The Trustee Law (Cap. 193); the International Trusts Law (No. 69(Ι)/1992).
• The Central Bank of Cyprus Law (No. 138(I)/2002).
• The Movement of Capital Law (No. 115(I)/2003).

The specific regulation through which Cyprus regulates immovable property is: 

• The Immovable Property (Tenure, Registration and Valuation) Law (Cap. 224).
• The Sale of Immovable Property (Specific Performance) Law (No. 81(I)/2011).
• The Compulsory Acquisition of Property Law (No. 15/1962).
• The Acquisition of Immovable Property Law (Aliens) (Cap. 109).
• The Immovable Property (Transfer and Mortgage) Law (No. 9/1965).
• The Immovable Property Tax Law (Cap. 322).
• The Immovable Property (Towns) Tax Law (No. 89/1962).
• The Capital Gains Tax Law (No. 52/1980).
• The Rent Control Law (No. 23/1983).

Purchase and sale of properties in Cyprus:

Cypriot nationals and EU residents have no restriction for acquiring immovable property in Cyprus; third country nationals, however, must obtain permission from the Council of Ministers. Since 2013, third country nationals are allowed to own two properties; either two residential properties or one residential and one small shop with a floor area of up to 100 sq.m., or a residential property and an office of a surface up to 250 sq.m.[1] exceptions are allowed under permission of the Council of Ministers.

The process for purchasing a property in Cyprus is relatively easy and straight forward. In practice, the purchase of a property is divided into three stages; the first stage is the reservation of the property with a reservation fee, that could vary depending on the type of property, from 2 to 5 thousand Euros, it is highly advisable to have appropriate legal documents upon paying this reservation fee and the guidance of a local attorney. The second stage is verifying the ownership of the property and that the property is free from third party rights or any type of encumbrances, once these aspects have been verified, the seller and buyer will sign and stamp a Sales and Purchase Agreement paying 20% to 30% of the selling price and register the contract thereafter at the District Land Registry Office (“deposited”). The third and final stage is the payment of the remaining amount and concluding the transfer of ownership by paying the transfer fees and registration of the new ownership at the Land Registry. The Land Registry will then issue a Title Deed within one to two weeks.

The expenses incurred in the purchasing process are transfer fees and stamp duty. The transfer fees in Cyprus are payable by the purchaser of the property and apply on different rates, for the first €85,000.00 a 3% rate is charged; on the next €85,000.00 is charged at a rate of 5% and any excess above €170,000.00 is charged at 8%.However, no transfer fees are payable when the Value Added Tax (VAT) was paid and currently a deduction of 50% on the transfer fees is applicable in all other cases. [2]

The legislation regarding Stamp Duty regulates the rates of stamp duty payable on the basis of the amount of the consideration[3] at the following rates:

• €5,000.00 or less – no stamp duty payable.
• Over €5,001.00 up to €170,000.00 – €1.50 for every €1,000.00.
• Over €170,000.00 – €2.00 for every €1,000.00.
• With a maximum stamp duty of €20,000.00.

The stamp duty must be paid within 30 days from the date of execution of the documents and if they are executed abroad, within 30 days after the documents are received in Cyprus. Without the stamp duty stamp, the contract will not be allowed for registration in the Land Registry and therefore the transaction will be regarded as non-existent for the regulators and authorities in Cyprus.

Expenses for having a property in Cyprus:

As of 2017, the Immovable Property Tax is abolished; however, the local Property Tax continues in full force and effect. Depending on the size of the property, local authorities charge for regular refuse collection, street lighting, sewerage and similar community services. There is also a Municipality Tax calculated on the market value of the property with variable rate depending on the Municipality. Last but not least, there is an annual Sewerage Tax calculated on the market value of the property with variable rates paid to the local sewerage board.

Inheritance:

Regarding wills’ provisions referring to immovable property, the applicable law is where such immovable property is situated (lex rei sitae); and in the case of property located in the Republic of Cyprus, the Wills and Succession Law will be applicable and requires that wills should be in writing and attested by at least

[1] Official information from the Civil Registry and Migration Department of Cyprus, available here

[2] The detailed list of fees can be obtained here

[3] Consideration: A valuable consideration in the sense of the law may consist either in some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility given, suffered or undertaken by the other. Currie v Misa (1875) LR 10 Ex 153; (1875-76) LR 1 App Cas 554