Property Purchase Procedure and Requirements
Cypriots & E.U. citizens living in Cyprus
Under Cyprus Law, Cypriots or persons of Cypriot origin as well as E.U. citizens who have their permanent residence in Cyprus are allowed to acquire any property without any restrictions.
The residential status is ascertained by the District Offices and is obtained when a person resides in Cyprus for a total period of 185 days per year or more.
Foreigners & other Non-E.U. citizens
Foreigners and E.U. citizens who are not permanent residents of Cyprus, wishing to purchase immovable property in Cyprus are obliged to adhere to special formalities and are restricted by certain regulations.
Firstly a restriction as to the type and size of the property is applied and they are given permission to buy only one apartment or one house or a building plot or land, which in the case of E.U. citizens can be unlimited and in the case of all other foreigners up to 4,014 square metres (the equivalent of three donums).
In the cases of persons who are living or working in Cyprus for a long period of time a permit to buy a second house may be granted.
After the permission has been obtained and the property registered in the name of the purchaser, there are no other restrictions for the foreigner who is the owner of immovable property in Cyprus and he or she may sell or dispose of the property as they wish. The foreigner owner of immovable property can sell it and buy another, as any bona fide repeat purchaser will be granted a subsequent permit.
Furthermore the legal heir/s of the said owner is not required to obtain a permit from the Council of Ministers in order to transfer the property on to their name.
The restriction applied for E.U. citizens not residing in Cyprus will seize after May 2009 and all citizens of the E.U. will be treated equally with Cypriot citizens regardless of their residential status.
APPROVAL BY THE COUNCIL OF MINISTERS
According to Cyprus Law, foreigners must obtain the permission of the Council of Ministers prior to the acquisition of real estate property. Recently these powers have been assigned to the Pertinent Authorities of every district, in order for the procedure to become speedier.
A foreigner – the law uses the term ‘alien’ – is any person who is not a citizen of the Republic, including an alien controlled company. The term does not include foreigners of Cypriot origin, or the non Cypriot spouses of citizens of the republic.
Acquisition of real estate property includes:
Transfer of title deed.
Long lease for periods of more than 33 years.
The acquisition of shares in a company that owns immovable property, if such an acquisition results in the company becoming controlled by foreigners.
The establishment of a trust or any type of set-up, which is connected with the ownership of real estate, for the benefit of a foreigner, including tax benefits.
Although the proceedings for the obtaining of the permission might need a considerable amount of time to be fulfilled, purchasers are entitled to occupy their properties until then.
Also, any contract for the purchase or lease of property is valid even if the Pertinent Authority rejects the foreigner's request for permit. As such, when purchasing a property, it is advisable for the relevant contract to include provisions for such an event so as to secure a refund of any money paid or any other remedy.
The application to the Pertinent Authority requires information about the personal details and financial standing of the applicant and particulars of the property and its present owner. Also it must be accompanied by a number of legal documents.
As general rule permission is granted to bona fide applicants provided they have:
No criminal record in their country or in Cyprus.
The financial means to support themselves in Cyprus. (An income of €20,503 (CY£12.000) per annum between the couple is considered satisfactory).
As of 1st May 2004 citizens of the EU residing in Cyprus or Cyprus based companies, controlled by citizens of a Member State are not considered to be foreigners. As for citizens of the EU not residing in Cyprus, there is a transitional period until May 2009, after which they will be treated equally with Cypriot citizens regardless of their residential status.
One can wonder about the safeguards of a transaction between a seller and a purchaser, especially when the purchaser is not allowed to transfer the acquired property onto his/her name, sometimes for a long period of time after payment of the consideration, as in the case of a foreigner purchaser waiting for several formalities to be completed.
According to the provisions of Specific Performance Law, the purchaser of immovable property may secure the transfer of the acquired property onto his/her name by deposing a duly signed and stamped copy of the contract at the Land Registry within two (2) months from the signing of the contract.
By deposing the contract to the Land Registry, the purchaser prevents the owner from transferring the property elsewhere or charging it for as long as the contract is valid and legally effective. Note that no burdens, charges or encumbrances can affect the right of specific performance after the contract has been deposited with the Land Registry.
Depositing a copy of the contract to the land Registry gives the purchaser the right to seek “specific performance” of the terms and conditions of the contract and thus to register the property onto his/her name, even though the owner may not be willing to accommodate such procedures.