Buyers Guide to Property for Sale Southern Cyprus
WHY BUY A LUXURY PROPERTY FOR SALE IN SOUTHERN CYPRUS
Buying a Property for sale in Southern Cyprus has always been a part of the UK’s stable diet and there continues to be an appetite to buy here. The market has evolved into a luxurious location over the years with many high net worth buyers from the UK, Europe, Russia and China acquiring villas for sale with the help of Unique Living. We felt it important to write this Buyers Guide to Property for for sale in Southern Cyprus.
Property purchases range from villas on golf courses for sale, to beach front homes for sale in Paphos and its connecting villages and premier residences in Limassol & Limassol Marina, a man made island off the coast of the town that stretches across 9 miles of the coastline in the heart of Cyprus.
Unique Living started selling properties in Southern Cyprus back in 2002 and has developed its associations with the market over the last 18 years helping clients buy some of the most prestige villas and apartments here with in partnership with our local team.
One of the major incentives to buy in Southern Cyprus, is the Cypriot government’s “Golden Visa” scheme. In short, Cyprus property buyers can obtain residency in return for purchasing a property for sale in Southern Cyprus in excess of €300,000.
For a €2M spend, and an obligation not to sell for three years, non-EU citizens qualify for a EU passport, this has proved very popular in recent times, The programme has attracted around €4 Billion worth of investment since 2013.
Experience, expertise and understanding of the Cypriot residential property market is everything and Unique Living’s team have over 20 years knowledge. To learn more about the Golden Visa schedule a call with us today:
FINANCIAL PLANNING WHEN BUYING PROPERTY FOR SALE IN LIMASSOL AND PAPHOS
The first thing we would recommend you do is sit down and review your numbers, ideally even before you start looking at properties. It may be that you can afford to spend more than you had thought with some thorough financial planning. Lifestyle planning is an important part of the purchase process and at Unique Living we feel that understanding your family dynamic is a key part of this process.
FINDING A LAWYER IN SOUTHERN CYPRUS
Once you have found your perfect property for sale in Southern Cyprus you must carry out your due diligence. We highly recommend that you find a local lawyer to represent you in concluding your purchase. Unique Living will introduce you to English speaking, local lawyers who will answer any questions that you may have. It is important you find a lawyer with knowledge of the local market, local laws can vary from region to region, the same applies to whether you are looking to acquire a residential villas for sale in Limassol or Paphos.
THE PROCESS OF BUYING A PROPERTY FOR SALE IN LIMASSOL AND PAPHOS
Once you have had your offer accepted you may be asked to sign a reservation agreement that will demonstrate your intention to buy a property in Southern Cyprus. A small holding deposit, usually around €2,000, is required and it is not unusual for this to be paid directly to the vendor. This amount could vary according to the size and the value of the property but should be decided between you and the vendor with the assistance of your lawyer if needed. We recommend to put your offer in writing and keep a record of emails and correspondences at the start of the process between yourself and the seller and their representatives.
At this point the Cyprus property for sale should now be removed from the market while your lawyer carries out some basic due diligence and the bank will carry out its own valuation if you require a mortgage. We always recommend you insist on this and ensure the agent gets other affiliates to remove from the portals and other places the property is being marketed.
Your lawyer will verify the property’s status, for example whether it has title deeds, building and planning permits, mortgages etc. This is of key importance, before you take the process further. We would recommend that if the property has no title deeds to walk away from the purchase or insist it is provided before taking any further steps. All the properties advertised on the Unique Living website have title deeds or title deeds pending.
Providing this paperwork has been provided you would then conduct a structural survey to ensure that the property is free from structural defects and complies with planning laws. A survey is not a legal necessity but it is a good insurance against any issues that may materialise later.
Further to satisfactory results from your due diligence, your lawyer will proceed to drafting, negotiating contractual issues and signing the preliminary agreement. If a title deed is not available, an assignment will be drafted. This is a certain procedure that ensures the whole transaction is safe. If a title deed is available, a contract of sale will be drafted.
Once the contract is complete, the buyer will be expected to pay 30% of the value of the property using your own funds. This is non-refundable and should occur between 1 – 4 weeks after singing the Contract. The balance comes from either individual funds or a bank loan and is usually a matter of weeks later, up to three months. If you need a mortgage and have not already applied for one, provide your bank with documentation to support your application.
OBTAINING A MORTGAGE IN SOUTHERN CYPRUS
Even if you have sufficient capital to buy property in Cyprus outright, you may wish to consider using a mortgage to fund the purchase for various reasons. From a Fiscal point of view you may be eligible for tax allowances or you may earn a higher rate of return on capital invested than you would pay to service a loan. From a security point of view, a bank will carry out its own due diligence and only lend against a property that meets its criteria.
Mortgages in Cyprus are widely available and the terms are similar to those in the UK. A deposit needs to be at least 30% and the loan is usually repayable over 15 years depending on your age. All mortgage applications will require a property valuation before the loan is approved. Interest only loans are also available but local banks are very selective and the length of the loan may be up to 40 years but this depends large on the buyer’s age. Your earnings are of key importance in obtaining a loan, for example, the banks will not consider rental income as a form of income for certain clients.
RESIDENTIAL PROPERTY PURCHASE TAXES IN CYPRUS
As a general rule, residential buyers in Cyprus should set aside an extra 10% on top of the agreed sale price to pay for taxes arising from the sale. Tax VAT (IVA) for new-build property is payable at the standard rate of 19%, this should be included in the sale price. Stamp Duty is between 0.15% and 0.20%.
Other costs include bank charges, including mortgage valuation fees which you will pay for even if the loan is not approved, Surveyor fees, Land Registry fees, a transfer fee is payable at the point at which the deeds are transferred. It’s charged on a sliding scale of 3% to 8% of the purchase price depending on the value of the property. (Note that fees will be lower if buying in joint names as the purchase value is divided between the two parties0. Legal Fees: These will vary according to the value of the property, fees usually start at 0.7%, but it is worth paying a little extra for a good local lawyer.
TRANSFER FEES WHEN BUYING A RESIDENTIAL PROPERTY FOR SALE IN CYPRUS
The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in your name at the District Lands Office.
The fees are charged on the property’s market value at the date of purchase (i.e. the date given on the last valid contract submitted to the Land Registry Office). Value of Property Transfer Fee Rate percentage on property value. Up to to €85,430 at 3.0%. €85,431 – €170,860 at 5.0%. Over €170,861 at 8.0%
For example: Transfer fee of a property valued at €175,000 [in one name] will be: 3% for the first €85,430 equals 2,562.90 €, 5% for €85,431-€170,860 equals 4,271.45 €, 8% for €4,140 equals 331.20 € – Total Transfer Fee equals11,434 €
Should the property be in joint names the transfer fee will be: 3% for 1st €85,430 x 2 equals €170,860 equals 5,125.80 €, 5% for €4.140 equals 207 € – Total Transfer Fee equals 5,332.80 € Please note that if the property is purchased by more than two people the tax drops considerably.
STRUCTURAL SURVEYS ON RESIDENTIAL PROPERTY FOR SALE IN CYPRUS
We recommend you have a survey carried out on any property you are thinking of buying to ensure there are no hidden defects. We offer a choice of surveys, carried out by a qualified British Chartered Surveyors and based on the internationally recognised Royal Institute of Chartered Surveyors (RICS) Home Survey standard.
CURRENCY TRANSFERS TO BUY A PROPERTY FOR SALE IN SOUTHERN CYPRUS
Currency prices fluctuate all the time so it is a good idea to fix your rate via a specialist foreign exchange company. You can lose or save thousands of Euros depending on the currency provider you use. In most situations, a specialist FSA regulated currency broker can offer you a much better exchange rate than your high street bank.
COST OF OWNING A PROPERTY FOR SALE IN LIMASSOL AND PAPHOS
Once you own a property in Cyprus, it is important to understand the associated expenses. These include electricity, water, municipality taxes, sewerage, board fees, refuse collection, immovable property tax (IPT) and common expenses (not always applicable). Under the Cyprus ‘Immovable Property Tax’ laws 1980 – 2004, all property owners, whether they are residents of Cyprus or not, are liable to pay an annual tax based on the total value of all the immovable property registered in their name. This property tax is calculated on the market value of their property as at 1st January 1980 and is paid to the Inland Revenue Department.
LOCAL RESIDENTIAL PROPERTY TAXES AND RATES IN SOUTHERN CYPRUS
A rough guide could be approximately € 85 – € 260 per year depending on the size of your property. This tax is for refuse collection, street lighting, sewerage, etc. The basic utilities, electricity, water and telephone are payable individually in accordance with the consumption and based on meter readings. If you want to buy a residential property in Southern Cyprus we would delighted to help you fulfil your families lifestyle objectives. We’d love to hear from you and meet to advice you on how to buy a property for sale in Limassol or Paphos:
Managing Director and Founder