Cyprus: Real Estate Comparative Guide

1 Legal framework

1.1 What legislation governs real estate in your jurisdiction?

The real estate regime in Cyprus is not set out in a single piece of legislation, but is rather spread across numerous laws and regulations.

The main law which governs and regulates real estate in Cyprus is the Immovable Property (Tenure, Registration and Valuation) Law (Cap 224), as amended. However, important aspects of real estate law are also governed and regulated by the following laws:

• the Immovable Property Transfer and Mortgage Law (L 9/1965), as amended;
• the Rent Control Law (23/1983), as amended;
• the Sale of Land (Specific Performance) Law (Cap 232), as amended;
• the Sale of Land (Specific Performance) Law (L 81(I)/2011), as amended;
• the Acquisition of immovable Property (Aliens) Law (Cap 109), as amended;
• the Immovable Property (Towns) Tax Law (L 89/1962);
• the Immovable Property Tax Law (Cap 322);
• the Fraudulent Transfer (Avoidance) Law (Cap 62);
• the Streets and Buildings Regulation Law (Cap 96, as amended);
• the Department of Lands and Surveys (Fees and Charges) (Cap 219);
• the Town and Country Planning Law (L 90/1972), as amended;
• the Immovable Property (Fees and Charges) Law (Cap 219), as amended; and
• the Compulsory Acquisition of Property Law (L 15/1962), as amended.

General provisions in connection with real estate law can also be found in:

• the Constitution of Cyprus;
• the Contract Law (Cap 149), as amended;
• the Trustee Law (Cap 193), as amended;
• the Capital Gains Tax Law (L 52/1980);
• the Stamp Law (Cap 228), as amended;
• the Wills and Succession Law (Cap 195), as amended;
• the Civil Procedure Law (Cap 6), as amended; and
• the Civil Procedure Rules.

1.2 What special regimes apply to different types of real estate?

The Rental Control Law of 1983 (L 23/1983), as amended, established the special regime of ‘statutory tenancy'. A ‘statutory tenant' is a tenant who is protected under this law and who cannot be evicted from the property except in the cases set out in the law. In the case of a statutory tenant, all terms of the lease agreement remain valid except the period of the tenancy and the amount of rent payable, which are regulated by the Rental Control Law.

This special regime applies only to leased property which was constructed prior to 31 December 1999 and which was rented or made available for rent prior to 31 December 1999

2 Ownership

2.1 What types of ownership rights exist in your jurisdiction?

The Immovable Property (Tenure, Registration and Valuation) Law provides for the following forms of ownership:

• full title ownership (ie, the registered owner of immovable property has the whole interest therein);
• beneficial ownership under trust deed (ie, the beneficial owner has all rights provided in the trust deed, which must be registered at the appropriate land registry);
• beneficial ownership due to life interest reservation (ie, the beneficial owner has the right to possess or exploit the immovable property until his or her death, while the title is in the name of registered owner);
• long-term leases (ie, a minimum 15-year lease which is registered at the appropriate land registry; subject to the provisions of the lease, the tenant may have the right to sell, transfer or mortgage the immovable property); and
• ownership in undivided shares (ie, at least two persons are the registered owners in undivided shares of immovable property and each has the right to possession, together with the others, to the whole of the property without a specific part of the property being allocated to him or her).

2.2 What ownership structures are commonly used in your jurisdiction?

In Cyprus, a very common vehicle through which people – mainly investors – structure the acquisition of immovable property is the Cyprus private limited liability company with shares. The advantages of this ownership structure include:

• speedy, flexible and straightforward procedures; and
• potential tax efficiencies for the owner.

Cyprus company law imposes no limitations or restrictions on foreign share ownership, provided that the restrictions imposed by the Acquisition of Immovable Property (Aliens) Law mentioned in question 2.3 are met. This ownership structure enables the potential seller and buyer of the immovable property to avoid the transfer process through the land registries.

Alternatively, investors seeking to minimise their risks by becoming the registered owners of real estate in Cyprus may prefer to become the owners of units in a Cyprus real estate alternative investment fund, which will use the money invested by numerous investors to buy several properties under better conditions.

2.3 Are there any restrictions on real estate ownership in your jurisdiction?

Article 23 of Part II: Fundamental Rights and Liberties of the Constitution expressly provides that "every person, alone or jointly with others, has the right to acquire own, possess, enjoy or dispose of any movable or immovable property and has the right to

respect for such right". The registered owner of immovable property is not restricted from possessing, using or renting the property, or from disposing of its ownership, including through partial or total alienation, charge, change or destruction.

Despite the above general principle, Article 23 of the Constitution further provides that this right is subject to restrictions:

In such case the owner of the property will be entitled to relevant compensation.

The Acquisition of Immovable Property (Aliens) Law (Cap 109), as amended, further imposes specific legal restrictions of ownership of real estate on particular classes of persons. It prohibits the ownership by an alien (ie, "any person not being citizen of the Republic and includes company controlled by alien, foreign company and trust in favour of an alien") of immovable property without the prior permission of the Council of Ministers. An alien can apply to the Council of Ministers for the acquisition of one property only.

2.4 Is ownership of land and buildings constructed thereon legally separable?

No. Once a building has been constructed on land, a new separate title deed must be issued by the appropriate land registry in the name of the (new) registered owner. Therefore, the land and the buildings on it are registered together and are inseparable for title purposes.

2.5 What security interests can attach to real estate? How are they prioritised?

Mortgages, memos and liens are the available security interests over immovable property.

Under Cyprus law, the principle is that the earlier rights are privileged and defeat later rights. Therefore, any mortgages, memos or liens registered in favour of a bank earlier than others will take precedence over later registered rights.

3 Registration

3.1 What body administers the land register in your jurisdiction?

All land in Cyprus must be registered at the appropriate land registry office. There are six district land registry offices for the corresponding six districts of the island.

The appropriate land registry office will provide the registered owner of the immovable property with a title deed with all relevant information of the property stated therein.

3.2 Is registration of real estate rights, transactions and encumbrances mandatory? What are the consequences of failure to register?

No.

However, pursuant to Section 40 of the Immovable Property (Tenure, Registration and Valuation) Law (‘CIP Law'), "no transfer of, or charge on any immovable property shall be valid unless registered or recorded in the District Lands Office". Further, Section 65E of the CIP Law provides that trusts referring to immovable property are not valid unless established by a trust deed or a will and registered at the appropriate land registry office.

Therefore, if the parties wish their rights over the land to be enforceable, any oral or written transfers of property, acknowledgments of encumbrances and/or assignments of such rights, as well trusts referring to immovable property, must be registered with the land registry office.

3.3 What are the formal and documentary requirements for registration?

The parties to the transaction must be personally present at the appropriate land registry office or represented by their lawyer or any other person authorised by a duly signed and certified specific power of attorney. For the avoidance of doubt, transactions relating to registered real estate cannot be completed electronically.

The land registry office will proceed with registration of the immovable property and issuance of the relevant title deed mentioned in question 3.1 (ie, the official document proving that someone is the registered owner of the property) once the following information has been provided by the seller at the land registry office:

• the duly signed sale and purchase agreement;
• evidence of payment of the purchase price to the buyer;
• evidence of payment of any fees, charges and taxes owed to the authorities (ie, immovable property tax; capital gains tax; inheritance tax (if applicable), liabilities to the Sewage Board and municipal fees);
• the title deed of the immovable property;
• the full name of the new owner and the share owned by the owner; and
• the full address of the property.

3.4 What is the process for registration?

The registration process is straightforward where a separate title for the property sold exists in the name of the seller. In such case, the transfer of title from the seller to the buyer will take place immediately once the documents stated in question 3.3 have been provided at the land registry office.

However, in the case of certain properties – such as developments either under construction or recently completed comprising several apartments and stores; building complexes comprising houses, apartments and so on – upon sale, a separate title deed covering the property will not have been issued. In such cases, a separate title deed of each property in a development may take time to be issued; and a certain procedure must be followed by the developer and the seller before, during and after the project is completed.

If the buyer has taken out a bank loan, registration of the property in the name of the seller and the mortgage in benefit of the creditor takes place simultaneously.

3.5 Is registered information publicly accessible?

No. Information or documents in the public register of titles connected with the ownership of immovable property, as well as charges or encumbrances over immovable property, are treated as confidential, unless the information is requested by an ‘interested party'. The land registry office will provide information in connection with an immovable property at the request of:

• an interested party or its attorney;
• the administrator of the owner's estate; or
• a plaintiff to a claim or a judgment creditor.

4 Commercial leases

4.1 What types of commercial leases exist in your jurisdiction?

In Cyprus, all leases (short-term and long-term leases, as well as leases with the option to purchase the property) are governed by the Contracts Law (Cap 149), which essentially codified basic principles of contract law established under the common law.

4.2 Are the terms of a commercial lease regulated or freely negotiable? What do they typically cover (eg, duration; security deposit; rent; sub-letting; termination)?

The parties are free to enter into a commercial lease and clearly determine their own terms, without any restrictions. The terms usually cover the following matters:

• Lease period: This may be for a periodic or fixed-term tenancy with the option to renew automatically upon notice.
• Rent increases: An agreed increase in the rent payable on a specific percentage or as per the provisions of the Rent Control Law, as amended.
• Assignment or sub-letting: The tenant may be prohibited from assigning or sub-letting the premises without the prior written approval of the landlord.
• Deposit: A specific amount is usually payable by the tenant as a deposit simultaneously with signing of the lease for any damages caused to the property other than physical damage during the tenancy period.
• Termination: The parties may agree to a specific procedure of termination with service of written notice within a specific period which will be served with a specific method of service and so on.
• Insurance: Regulating whether the premises will be insured and for what purposes.

4.3 What are the formal and documentary requirements for conclusion of a commercial lease?

Once the terms of the commercial lease are agreed, the agreement will be signed by both parties in the presence of two witnesses, who will also sign the agreement.

Cyprus law has no specific documentary requirements and the parties are therefore free to agree to these under the lease agreement. It is common practice to request copies of documents such as:

• the title deeds of the property;
• planning and building permits or final approval;
• architectural plans;
• licences for specific use (if any); and
• insurance.

4.4 What is the process for concluding a commercial lease?

Once the lawyers of both parties have finalised the lease agreement, the parties will proceed with signing of the lease in the presence of at least two witnesses, who will also sign the lease.

4.5 What are the respective obligations and liabilities of landlord and tenant under a commercial lease, and what are the consequences of any breach?

The express and implied terms of the lease agreement are binding on the parties, unless the agreement is void. Therefore, their respective obligations and liabilities are those agreed in writing between the tenant and the landlord. If any of the parties is in breach of any of the agreed terms, such breach will give rise to legal action against that party by the other. In almost all cases, a claim requesting damages as well as an eviction order will be initiated by the landlord. Section 11 of the Rent Control Law provides the landlord with the right to terminate the lease where, among other things:

• the tenant refuses and/or fails to pay the rent within 21 days of receipt of notice in writing by the landlord;
• the tenant is causing annoyance or disturbs the neighbours, or allows the use of the rented property for illegal purposes;
• the rented property is damaged due to the exclusive negligence of the tenant;
• the tenant has no right to sub-lease the property, but sub-lets it nonetheless;
• the premises are required by the landlord either for himself or herself or for his or her family; or
• the premises are required by the landlord for demolition or demolition and reconstruction, such as to render recovery of possession absolutely necessary.

On the other hand, under Section 14 of the Rent Control Law, a tenant may extend or renew the lease through a court order if he or she has been conducting business in the rented property for the past five years.

4.6 How are rent variations typically effected throughout the term of the lease?

The parties are free to agree on any rent variation they wish during the tenancy period, unless the Rental Control Law applies and does not allow for the agreed increase in rent.

4.7 What taxes are levied on rental income?

The tax payable on rental income in Cyprus is income tax. Anyone who is a tax resident of Cyprus in any one calendar year is liable to income tax.

4.8 Can a commercial lease be triple net?

There are no ‘triple net' commercial leases in Cyprus. Since the parties are free to agree on the terms of the lease, some leases include terms pursuant to which the tenant agrees to pay specific property expenses such as building insurance, maintenance and garbage collection fees, in addition to rent and utilities.

4.9 How are landlord and tenant disputes typically resolved?

In order to resolve their disputes, the parties (unless they have agreed otherwise) may initiate legal proceedings before the Civil Court or the Rental Control Court and seek damages and usually eviction orders. The provisions of the Rent Control Law on rent control and statutory tenancies:

• regulate the adjustment of rents and relations between landlords and tenants; and
• protect tenants from eviction, except in specific circumstances (eg, non-payment of rent due).

Provided that the Rental Control Court has jurisdiction to resolve the dispute, either of the parties (usually the landlord) may file any claim and/or applications with the court.

4.10 What types of guarantees are market practice and required by landlords to secure the tenant's obligations

The most common types of guarantees used in Cyprus are:

• a deposit payable upon signing of the lease; and
• a personal guarantee provided by the tenant (and, if the tenant is a company, by its shareholders personally).

5 Real estate transactions

5.1 What form do real estate transactions typically take in your jurisdiction?

Under Cyprus law, there are two forms of acquisition:

• the acquisition of property through the purchase of a freehold property; or
• the acquisition of a lease exceeding 33 years.

5.2 Which players are typically involved in a real estate transaction in your jurisdiction?

The following players are typically involved in a real estate transaction in Cyprus:

• the buyer and the seller;
• the buyer's bank and/or finance institution, if a loan is approved for the purchase;
• the seller's bank and/or finance institution (or judgment creditor), if the property is mortgaged;
• lawyers;
• a real estate agent; and
• a certifying officer.

5.3 Is the seller bound by a duty to disclose? What representations and warranties will it typically make?

No. However, he or she might be asked to do so.

Further, the seller usually – if not always – provides the buyer with a full search of the property as well as representations and warranties on the following matters:

• legal ownership of the property (ie, no previous sale agreement or option to purchase to a third party has been filed at the land registry office);
• building and planning permissions and architectural plans (including a warranty that he or she has no knowledge of public rights of way over the land);
• the absence of any potential or ongoing legal proceedings, mortgages, charges or other encumbrances;
• timely completion of the property, if under construction; and
• the ability to deliver clear title deeds.

In high-value real estate transactions, warranties can sometimes be supported by personal guarantees from directors of the company.

Under certain circumstances, an agreement caused by misrepresentation will give rise to a possible claim against the seller.

5.4 What due diligence is typically conducted in a real estate transaction?

The due diligence typically carried out in a real estate transaction includes a full search effected at the appropriate land registry office, to confirm the validity of the title deed and the absence of any mortgages, charges, memos and other encumbrances.

If the buyer will acquire the real estate by becoming the shareholder of a Cyprus company limited by shares, a search at the Registrar of Companies will be effected requesting information on the seller. It is also advisable for the buyer to request from the seller a report by a qualified surveyor on the condition of the property, specifically if the property is second hand.

5.5 What are the formal and documentary requirements for conclusion of a real estate transaction?

• Signing of the sale and purchase agreement by the parties and by two witnesses.
• Stamping of the sale and purchase agreement by the buyer immediately (or within reasonable time) after signing of the sale and purchase agreement.
• Arrangement of a meeting with the land registry office where the immovable property is located in order to file the sale and purchase agreement. Since filing of the sale and purchase agreement is for specific performance purposes, the meeting must take place within six months of signing of the sale and purchase agreement. If, for any reason, a delay occurs and the sale and purchase agreement is not filed within this period, the buyer may proceed with the filing of an application before the relevant district court requesting leave from the court to file the sale and purchase agreement at the land registry office.

5.6 What is the process for concluding a real estate transaction? How long does this take? What costs are incurred?

The parties may agree to enter into an exclusivity agreement for a specific period in order to start negotiations on the transaction. Thereafter, the buyer's lawyer will proceed with due diligence and request a full official search of the immovable property to be sold. The search will provide the buyer with all information found on the title deed, memos, charges and mortgages, other contracts of sale and encumbrances in general.

If the buyer is willing to proceed with the transaction, the parties will then proceed with the draft and/or review of the sale and purchase agreement. Once the contract has been duly signed by the parties and two witnesses, the parties – either by themselves or through their lawyers – will stamp the contract.

The stamp duty payable by the buyer is as follows:

• Property up to €5,000: 0%
• Property with a value of between €5,001 and €170,000: 0.15%
• Property with a value of above €170,000: 0.2%

Stamp duty is capped at a maximum of €20,000.

After the official stamping, the contract will be filed at the appropriate land registry office (ie, in the district where the property is located) for specific performance purposes. The parties can each grant specific power of attorney to their lawyers to do all or any of the above acts on their behalf. Due to the COVID-19 pandemic, the parties may request an appointment from the land registry office for the purposes of filing the contract, which is usually scheduled within one month.

5.7 What are the respective obligations and liabilities of buyer and seller, and what are the consequences of any breach?

The express and implied terms of the sale and purchase agreement are binding for the parties, unless the agreement is void. Therefore, their respective obligations and liabilities are those agreed in writing between the seller and buyer. If any of the parties is in breach of any of the agreed terms, the breach will give rise to legal action against that party by the other. Provided that the sale and purchase agreement has been filed at the land registry office, the claimant may seek damages as well as specific performance of the agreement.

5.8 What taxes are payable on a real estate transaction?

Buyer: Upon a real estate transaction, transfer fees are payable by the buyer at the Land Registry Office immediately upon transfer of the title. The transfer fees are payable at the following rates:

• 3% of the purchase price up to €85,000;
• 5% of the purchase price from €85,001 to €170,000; and
• 8% of the purchase price over €170,001.

Seller: Upon filing the sale and purchase agreement at the land registry office or upon signing of the share purchase agreement, the seller must pay capital gains tax. In particular, a 20% tax is imposed on capital gains from:

• the disposal of immovable property;
• the shares of a company that owns the immovable property; and/or
• the shares of companies which indirectly own immovable property and derive at least 50% of their market value from such immovable property.

A capital gains exemption applies, among other things, to:

• transfers made as a result of reorganisations; and
• an exchange of properties where the values of the property being exchanged are equal.

Further, the seller will usually pay council tax and municipality tax.

6 Real estate finance

6.1 Who are the most common providers of real estate finance in your jurisdiction? Do any restrictions apply in this regard?

Acquisitions of real estate in Cyprus are customarily financed by local and overseas banks and financial institutions. Any buyer as a potential borrower must meet the requirements laid down by the bank and/or other financial institution.

6.2 What forms of real estate finance are available in your jurisdiction?

The financing methods used are usually traditional in nature. Under Cyprus law, the traditional method for owners to raise finance is through a mortgage on the real estate.

To secure its position, the lender must register the mortgage with the land registry office and, if the borrower is a company, with the Registrar of Companies. Sale and leasebacks are rare in Cyprus.

6.3 What formal, documentary and other requirements do lenders typically require of borrowers?

Each bank and/or financial institutions has its own specific requirements and criteria in order to approve a loan application.

The standard requirements of almost all institutions for real estate lending consist of:

• proof of funds evidencing the borrower's ability to repay the loan;
• an expert valuation/estimation of the real estate; and
• a determination of the ownership and any encumbrances on the property through searches at the Lands Registry.

6.4 What type of security interests are typically required by lenders?

Lenders usually request from the borrower:

• registration of the mortgage at the appropriate land registry office;
• provision of a letter of guarantee granted by the registered owner where no separate title deed is issued; and
• an indication of the guarantors that will guarantee the (full or partial) repayment of the loan.

6.5 What is the process for obtaining real estate finance? What costs are payable?

As explained in question 6.3, the potential borrower must file an application at any bank and/or financial institution requesting financing for the purchase of the real estate. While each bank and/or financial institution has its own requirements and policies, almost all of them will request that the applicant provide all of the documents mentioned in question 6.3 for review. Upon approval of the application, the bank will request the applicant to:

• sign a loan agreement;
• sign the mortgage for the real estate;
• provide guarantees; and
• register the mortgage with first priority at the appropriate land registry office.

All costs for expert valuation of the property and for registration of the mortgage at the land registry office must be paid by the borrower.

6.6 How is security enforced in case of any breach?

In most cases, the bank and/or financial institution acting as lender in a real estate transaction will ensure that it has the first priority charge over the property. Having such priority as a charge, it may proceed with a legal action before court requesting full repayment of the loan, as well as a court order to sell the mortgaged property. Alternatively, the bank and/or financial institution may wish to proceed with a fast-track procedure, and may thus terminate the loan and request full repayment of the amount due within a specific timeframe. If full repayment is not made by the borrower, the bank may, pursuant to the revised Part VIA of the Transfers and Mortgaging Property Law, 1965, serve notice and commence private auction and foreclosure procedures. In practice, this is the preferred route for most banking and asset administration institutions, due to the expedited procedures.

7 Real estate investment

7.1 Who are the most common investors in real estate in your jurisdiction? Do any restrictions apply in this regard?

Since the discontinuation of the Cyprus Investment Programme at the end of 2020, the most common investors in real estate in Cyprus are individuals and businesses that wish to relocate to Cyprus, due to various government initiatives (eg, the fast-track permanent residence permits granted to individuals and schemes for relocating third-country staff for companies with substantial operations in Cyprus).

EU and European Economic Area nationals are not subject to restrictions, as they enjoy freedom of establishment and movement under EU law. However, specific restrictions are imposed on third-country nationals (see question 2.3).

7.2 What investment vehicles are typically used in your jurisdiction? What are the benefits and drawbacks of each?

The investment vehicles which are typically used in Cyprus are private companies limited by shares and real estate alternative investment funds (see question 2.2).

7.3 How are these vehicles established and administered in your jurisdiction?

Cyprus company limited by shares: Establishing a company in Cyprus is relatively easy and faster than in many European countries. Cyprus company registration itself begins with application for registering a company, to be submitted to the Registrar of Companies. Generally, the company will be registered within one week, subject to the satisfaction of certain conditions.

Alternative investment fund (AIF): The establishment of an AIF involves a two-steps procedure, which is fairly simple and quick, subject to the satisfaction of the conditions provided under the Companies Law and the Alternative Investments Funds Law of 2018 (124(I)/2018).

First, an application for the incorporation of a Cyprus company limited by shares must be filed at the Registrar of Companies.

The establishment of an AIF in Cyprus is regulated by the Alternative Investments Funds Law, which also provides that the Cyprus Securities and Exchange Commission (CySEC) is the competent authority for the licensing of an AIF. Therefore, once the company has been incorporated at the registrar, it can an application for registration of the AIF to CySEC.

8 Planning and zoning

8.1 How is land use regulated in your jurisdiction?

Cyprus uses the most common form of land use regulation: zoning.

8.2 What is the process for obtaining planning permission? How long does this take? What costs are incurred?

A planning permit must be obtained from the local town council where the land is located. To obtain a planning permit, certain documentation must be provided by the applicant and multiple authorities will be involved in assessing all factors relating to the proposed property. Upon review of the application, certain restrictions may be imposed by the authorities (eg, industrial and retail units may only be established in certain areas). Even though multiple authorities are involved, the new fast-track procedure allows a permit to be issued within 10 to 20 days for single residential units within residential plots. Fast-track applications can be submitted online and are expected to account for more than half of all permit applications that are currently submitted; they should reduce the overall workload and processing times for all applications. The fees payable for the application will depend on the type and scale of the development.

Large-scale real estate constructions – such as high-rise buildings, hotels and malls – must meet additional requirements, depending on the use and expected impact of the development on the local community and the environment.

8.3 Can a planning decision be appealed?

Yes – an appeal can be filed within a specified timeframe, which will be stated in the planning permit decision.

8.4 What are the consequences of failure to obtain planning permission or to comply with a planning condition?

If planning permission is granted, a second application requesting a building permit may be filed in order for the building works to commence. Thereafter, and once the construction of the real estate is complete, a committee representative will inspect the completed property and a certificate of final approval will be issued.

In the event of failure to obtain a planning permit, no building permit and final approval will be granted to the property owner.

8.5 Is expropriation of land possible in your jurisdiction?

Yes.

8.6 Is confiscation of land possible in your jurisdiction?

Yes.

9 Environmental

9.1 What main environmental legal provisions apply to the development, use and occupation of real estate?

Certain industries and buildings, as part of their planning permit procedures, may be required to include procedures or specialised facilities to avoid pollution in their application for planning permission (eg, wastewater treatment where connection to the sewerage system is not possible).

9.2 Who can be held liable for environmental contamination and how are clean-ups effected?

Environmental contamination is classified as a criminal offence under the Control of Water Pollution Law (L 106 (I)/2002), as amended. Section 6 of the law identifies a range of practices and events that can be committed by anyone that accidentally or purposefully contaminates water reserves, water beds, rivers or coastal areas. The penalties include monetary fines and even imprisonment in severe cases.

The clean-up of any environmental impact is not mandatory or prescribed by law, although it may generally act as a mitigating factor.

9.3 What environmental provisions and considerations should be factored into real estate transactions?

The parties to a real estate transaction do not usually include environmental clauses in their agreements. However, in the case of large developments, the environmental study provided to the authorities at the planning and building permission stage may and/or should be required by a potential buyer or tenant.

9.4 What initiatives are in place to promote green buildings and energy efficiency in your jurisdiction?

Cyprus is promoting green buildings and energy efficiency through numerous initiatives. For example, the Ministry of Education, Culture, Sports and Youth recently concluded an agreement with the Electricity Authority of Cyprus for the installation of photovoltaic systems for measurement offsetting with a total capacity of 4 megawatts and the thermal insulation of roofs of public school buildings.

9.5 What types of environmental certifications apply in your jurisdiction?

Since 2010, energy performance certificates (EPC) have been mandatory for each building. An EPC sets out the ‘energy identity' of each structure and categorises the building according to its estimated energy consumption. This is calculated based on all characteristics of the building, including layout, orientation, building materials and electromechanical services. Further, there are different qualifications depending on the year in which the property was built.

The owners of property in Cyprus are responsible for obtaining an EPC for the building and may be subject to a penalty if they fail to do so.

10 Trends and predictions

10.1 How would you describe the current real estate market and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The Cyprus real estate market has unquestionably been affected by the COVID-19 pandemic – both negatively, as a number of investments were frustrated due to the ongoing uncertainty; and positively, as many investors and others decided to relocate or purchase second homes.

Cyprus also offers significant incentives to investors that wish to renovate or commercially use listed buildings, which can sometimes amount to one-third of the investments. Building density can also be sold and used by other buildings that are entitled to acquire it; while rents from listed buildings benefit from tax exemptions (subject to certain conditions).

The discontinuation of the Cyprus Investment Programme at the end of 2020 has also negatively affected activity in the high-end residential real estate market, in which investors wishing to apply for Cyprus citizenship were primarily active. However, the ongoing political and financial instability in the Middle East is creating a new trend, as individuals and companies increasingly seek to acquire real estate in Cyprus.

11 Tips and traps

11.1 What are your top tips for the smooth conclusion of a real estate transaction and what potential sticking points would you highlight?

All parties in a real estate transaction – sellers, buyers and their lawyers – should be vigilant in identifying:

• appropriate terms in a contract of sale so that the deal will serve both parties' interests better than the best alternative would;
• potential disputes and deadlocks which may arise during the negotiations;
• potential fees and costs up until closing of the transaction and transfer of ownership;
• potential delays by the buyer's bank in financing the real estate transaction; and
• the prospects of any delays to the transfer of ownership, to ensure that the transfer will be effected within the timeframes required by both parties.

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.