Cyprus: Real Estate And Property In Cyprus - Oct 17, 2016

Introduction

The demand for land continues to increase. Land is a finite resource and therefore its value is constantly increasing.

In recent years the increase has been rapid, fed by inflation and the instability of the monetary systems and fiscal policies of advanced economies, making investment in immovable property extremely attractive. The great technological advances in communication, transportation and international trade have made investment in this field easier and more accessible than in the past. Even if there is a moderation in property values in the short term, prices have historically shown steady growth in the longer term. Man's affinity with the land stems from time immemorial and it is easy to understand why land has always been considered as one of the most precious commodities, closely connected with social and economic stability and progress, and why legal systems throughout history have sought to put in place robust means to regulate the rights of occupation and ownership of immovable property.

Cyprus

Cyprus is no exception to the global picture. The economic and social evolution that has taken place since independence, combined with industrialisation, the development of sophisticated methods of cultivation and the lack (at least until recent years) of alternative forms of investment, have diverted capital from both home and abroad to land ownership. This trend became even more pronounced after Cyprus became a full member of the European Union in 2004. Since Cyprus adopted the euro as its currency in 2008, property is easier to buy and sell than ever, and demand has continued to increase.

This trend has necessitated the establishment of a suitable legal framework which, while allowing the involvement of Cyprus in the international land market, protects the social, economic, agricultural and industrial interests of the island and its people.

Cyprus has generally succeeded in achieving a reasonable balance between these sometimes conflicting objectives. Despite its troubled history, it has managed to develop a robust legal system for immovable property which is as efficient as similar systems in other advanced countries. It is operated through a series of laws which are regularly amended to meet everyday demands and balance competing interests in this vital sector of the economy.

Foreign investment in immovable property

Cyprus's strategic location in the eastern Mediterranean at the crossroads of Europe, Asia, the Middle East and Africa, its reliable and transparent legal system, combined with its membership of the EU, its excellent infrastructure coupled with reliable communication with all parts of the world, its relatively low cost of living, excellent climate and the friendliness and hospitality of its people, are just some of the factors that make the island attractive to foreign investors. Non-Cypriots investing in immovable property in Cyprus may generally be classified in the following four main categories:

  • Retired residents. Attr active incentives are available to r etir ed people, including very low taxation of pension income received from abroad, with the first €3,420 per year being tax-free and the remainder subject to tax at only 5%. Retirees may also enjoy the benefits of any double taxation treaty between their country of origin and Cyprus. Double tax treaties are in place covering more than 40 countries, and many others are under negotiation. Last, but not least, there are no succession taxes.
  • Economically active residents. This growing categor y includes non-Cypriots who live indefinitely or for a fixed period in Cyprus as employees, either of their own international business company or of a local or international business, and who choose to buy their own home in Cyprus rather than live in rented property. It also includes international business companies purchasing houses for their directors.
  • Holiday makers and speculators. Many people purchase proper ties as holiday homes, often with a view to permanent residence in Cyprus once they retire, or to sell at a profit at a later stage. Profits from the sale of immovable property may be repatriated, subject to capital gains tax.
  • Business investors. Many foreign individuals and companies acquire property in Cyprus for tourism, business premises or industrial purposes, making use of the location and climate of Cyprus, its excellent infrastructure and the various incentives offered for these purposes, especially in the area of taxation. To this end, the Free Trade Zone structure offers attractive incentives, including reduced taxes.

Permanent residence and economic citizenship schemes

The government has put in place a number of programmes entitling owners of property in Cyprus and their families to obtain permanent residence permits or Cyprus citizenship on an accelerated basis provided they are of good character and satisfy the relevant criteria. We should be delighted to advise on the details of these programmes.

Price of land

The relatively small area of Cyprus and high demand for immovable property have brought about an increase in the cost of real estate in recent years but nevertheless both property prices and the general cost of living are still lower than in most European countries.

Legal assistance

Most property developers in Cyprus are long-established and reliable, and Cyprus has a transparent and well-regulated legal system, with world-class professional and financial services available in the major cities. Nevertheless, as in every country, the complexity of the legislation on immovable property and the formalities which need to be considered make it imperative to obtain reliable and efficient legal advice from the outset in order to avoid unforeseen pitfalls and undesirable consequences in the future. This should always include a comprehensive search at the Land Registry to make sure that the property is free from any encumbrances, charges or burdens, and enquiries with other relevant government bodies. Cutting corners by neglecting to take independent, reliable legal advice is a false economy which may lead to serious difficulties.

Finally, it should be noted that this brochure refers only to real estate in the area controlled by the legitimate government of the Republic of Cyprus. The so-called Turkish Republic of North Cyprus is recognized only by Turkey, and the ownership of many properties in the north of Cyprus is disputed, with many thousands of claims to ownership from people displaced during the events of 1974. The European Court of Human Rights has ruled in a number of cases that owners of property in northern Cyprus before 1974 continue to be regarded as the legal owners of that property. Purchase of such properties could have serious adverse financial and legal consequences.

Our real estate and property department

Realising the importance of immovable property matters for Cypriot and foreign clients, Andreas Neocleous & Co has for many years had a specialist real estate and property department to provide tailored services and achieve rapid, cost-effective results.

The department deals with all matters relating to freehold and leasehold property, including transactions and disputes involving commercial and residential property, and provides a comprehensive service to resident and non-resident purchasers of property in Cyprus. The department also deals with wills, probate and other private client matters. The services we provide include:

  • Drafting contracts on behalf of buyers and sellers;
  • All aspects of the acquisition of immovable property by non-Cypriots including applications for residence permits, expatriation of funds and similar matters;
  • Property management for non-residents;
  • Estate planning and wills;
  • Administration of estates, probate and re-sealings.

The lawyers in our real estate and property department are experienced in dealing with all property-related issues for individuals and corporate clients and providing comprehensive advice and assistance with all aspects of commercial and domestic property matters. The head of the department is:

Christos Vezouvios. Chr istos heads our specialist immigr ation law team. He was born in Limassol, graduated in law from the University of Wales and subsequently obtained an LLM in International Maritime Law. Christos joined us as a trainee and joined our real estate department following successful completion of his training contract and admission to the Cyprus Bar. Christos is a co-author of "Handbook of the Laws of Cyprus", published by Nomiki Bibliothiki (2008) and of the third edition of "Introduction to Cyprus Law" published by Andreas Neocleous & Co. (2011).

E-mail: christos.vezouvios@neocleous.com

He is supported by:

Mariorita Neocleous, also a native of Limassol. Mar ior ita gr aduated in law from Leicester University in 2006 and was admitted to the Cyprus Bar in 2007. She specialises in real estate and all aspects of private client work. Mariorita is a co-author of "Handbook of the Laws of Cyprus", published by Nomiki Bibliothiki (2008) and of the third edition of "Introduction to Cyprus Law" published by Andreas Neocleous & Co. (2011).

E-mail: mariorita.ioannidou@neocleous.com

Pieris Ashiotis. Pier is gr aduated in law from Sheffield Hallam Univer sity in 2010. He speaks Greek, English and French.

His main areas of practice are real estate law, immigration law and litigation.

E-mail: pieris.ashiotis@neocleous.com

Lefkios Tsikkinis, a vastly-experienced former head of the department who now acts as a consultant to the firm. Born in 1942 in Limassol, Cyprus. Mr Tsikkinis graduated from Athens University in 1967 and was admitted to the Cyprus Bar in 1968. He has extensive experience in the fields of conveyancing and immovable property, wills, probate and succession, foreign investment in Cyprus, international tax aspects of establishing residence in Cyprus, contract law and general commercial and civil practice. He is a co-author of "Introduction to Cyprus Law" published by Andreas Neocleous & Co. (2000, 2009 and 2011).

E-mail: lefkiost@neocleous.com

They are backed by experienced support staff familiar with land registration procedures and with all other aspects of buying and selling property in Cyprus.

Where appropriate, our real estate specialists work closely with their colleagues in other areas of the firm, such as our international tax group, to ensure clients receive the best, most comprehensive integrated advice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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