The legal framework for purchasing property in Cyprus is based on English law. When you find your dream home, you’ll likely be required to pay a reservation deposit, normally no more than €3,000 or 1% of the sale price, to take it off the market at that price.
Before you begin your property search, have an independent lawyer on standby to ensure that you understand exactly where your money is going and for what reason. This way, you can get solid legal counsel at the end of the phone – or email, at the very least – when househunting. When purchasing off-the-plan or unfinished properties, it’s critical to check the developer’s financial condition to verify that the company is stable and won’t run into financial troubles during the property’s construction.
Before you sign a contract, your lawyer should examine this with the Companies Registry. If you are purchasing a new or recently constructed property, you must ensure that all planning permissions and building authority licenses have been completely met. If you have any issues with non-compliance, you may be unable to transfer the title into your name in the future. Debts on the land are one of the most important legal inspections in Cyprus. In the past, developers have taken out land mortgages and failed to repay them, leaving the unfortunate homebuyer without ownership of the property on which their home was built.
If all goes well, the lawyers will draft the documents specifying the terms of the sale, and a second deposit will be required – 10% for a resale property and commonly 20% to 30% for new construction. Within 60 days of signing the contract of sale, your lawyer files it with the land registration. With the application, buyers must provide bank and character references. The remaining funds are typically paid upon completion for resales and in stages agreed upon by the developer for new construction.
Deeds of Title
Following purchases or new construction, the authorities take years to release Title Deeds, and most buyers are understandably hesitant to buy without them. In an effort to address these concerns, the government established a new Specific Performance Law in 2011 that aims to improve the protections offered to anyone looking to buy property on the island. In addition, the government has implemented new systems to make it easier and faster for buyers to get their title deeds.
For homes under €170,860, stamp duty is 0.15 percent; for properties exceeding that, it is 0.20 percent. The Lands Registry charges Real Estate Transfer fees in order to transfer freehold ownership to the buyer’s name. When the purchaser’s title deed is transferred into his or her name, the transfer fees must be paid. The buyer is completely responsible for the payment, which is three percent for homes worth under €85,430, five percent for those valued between €85,430 and €170,860, and eight percent for those valued above that.
If the property is owned jointly by two people, such as a husband and wife or two persons, the purchase price is split in half, resulting in lower transfer fees. For example, costs on a house purchased for €200,000 in one person’s name would be €9,165, whereas fees on the same property in two people’s names would be €6,582. Disbursements, or out-of-pocket payments incurred on your behalf, normally equal to one or two percent of the total legal fees. Agent commissions are a minimum of 3%, but are typically closer to 5%. The seller is the one who pays them.