Buying Property in South Cyprus | Essential Guide | South Cyprus
At least 47,000 British citizens consider Cyprus to be a sound investment
and have purchased property in the South of the Island.
At least 47,000 British citizens consider Cyprus to
be a sound investment and have purchased property in the South of the
Island or indeed are now living there. The English-speaking Cypriots'
lifestyle, great weather, efficient, English-based legal system, near-zero
crime rates and genuine friendliness towards the British makes it the
easiest country in the EU to purchase property and live in.
Protected now by the European Court, having joined
the EU in 2004, Cyprus looks like joining the Euro zone in 2007, by
which stage property prices could increase over mainland growth in Europe
by a significant margin: Cyprus tends to be around 30% cheaper than
Spain and Portugal - despite having a longer summer and therefore rental
season.
If you are thinking of investing in property anywhere in Southern Cyprus
- whether for a quiet retirement home at the foot of the Troodos Mountains,
a high-yield rental golf property for sale in Cyprus or a town apartment for getaways -
you still need to think carefully before you invest.
Many people use an agent - usually British - to help them with the process.
This is usually the best idea: Often agents can actually get you a better
deal than if you approach developers direct. However, only a few agents
are totally independent of developers, so you need to make sure they
understand what your objectives and budgets are:
You may want to use your villa or apartment as a holiday
home, but also ensure that the property you purchase will produce a
good rental yield. Ask your agent or developer for rental expectations.
(If you are relying on rental income to defray the cost of finance and
running costs - take off 20% of the answer to be conservative!)
Although not important to everyone, you will usually
want to ensure your property is in an area that has high capital growth.
Ask your agent or developer how much capital growth has taken place
over the past couple of years and why this should continue.
Agents should be able to recommend a CHOICE of lawyers,
accountants and banks as well as furnishing suppliers and landscapers.
Don't just use the developer's lawyers; there may be a 'conflict of
interest' and it is vital that your property is registered at the Land
Registry within 60 days on signing the sale contract - otherwise you
may find you do not own the land!
You should ask for competitive local finance quotes
to compare against borrowing from home. The 'home' option is easier,
but beware that extending the mortgage on your own home will not qualify
you for tax relief - a separate, specific loan is needed to achieve
this. Some Cypriot banks can process mortgages faster than others! Usually
proof of income is a prerequisite. You should always ask for independent
recommendations - as you should for advisors such as lawyers.
If using an agent you should ask their help in assisting
with negotiations and, once you have purchased, project management to
save you time and money. All too often some agents, like salesmen, will
disappear once you have paid your deposit.
If you are budgeting on letting your property, you
should develop a comprehensive and effective rental promotion plan yourself
to ensure the maximum yield. If you think one particular company will
be able to rent out your property all year round, think again! Unless
they put their money where their mouth is by are offering you a cheque
for the whole season up front, don't sign exclusive deals - you might
find your property empty a lot longer than you bargained or that you
end up paying a company commission whether or not they let it.
Don't confuse services like landscaping, property and
pool maintenance with rental marketing. They are two different things.
Maintenance is best done by local Brits or Cypriots, but marketing your
property usually needs a strong Internet presence - 90% of people book
their villa or apartment holidays on the Internet. However, if you are
reading this now you are starting in the right place!
Buy-to-Let investment tips
Maximising rental income is not just about finding
the right property in the right location: With a little bit of effort
when furnishing and marketing your overseas property you can increase
rental yields. The key is to ensure that your property has the wow!
factor and make it really stand out from the rest.
Here are a few tips:-
Thumbnail shots are vitally important and can really
make a difference. Photos should generally be taken on a bright sunny
day. Take as many exterior photos as possible - from different angles,
at different times of the day, with different weather conditions and
highlighting those features that will appeal to potential guests. Generally,
if you have a pool it should be in the photo. Take your time when choosing
the final shot and consult others on your choice.
Take equal care with interior shots and include as
many as possible in the ad. It really does make a big difference to
the number of enquiries you will get. As a minimum you need to include
the main living room, kitchen and one bedroom. If you go for the minimum
be prepared with other photos to e-mail to potential guests on request.
Kitchens are always an important feature. Guests like
stainless steel or built in appliances and standard developers' kitchen
units can look custom built with a careful choice of appliances and
door handles. Guests love American style fridge freezers if your budget
will stretch to it. Matching kettles, toasters and a few carefully chosen
accessories can help to create the look.
Create a wow! factor. Modern four poster beds, outdoor
barbecue stations with sink and fridge, jacuzzi baths, contemporary
artwork all make your property stand out from the crowd.
Generally speaking guests prefer neutral colour schemes.
Creams, browns and beiges (with small touches of a strong accent colour)
always look good. Use different textures rather than different patterns.
Only use strong colours if you are very confident in putting them together:
Avoid clutter at all costs. A few carefully chosen
accessories (lamps, vases etc) work well. Your property needs to look
light and spacious but also comfortable. Cushions and throws can work
well and are easy and cheap to replace.
Artwork. Your walls will probably have acres of plain
magnolia walls. Large contemporary artwork always works best and can
certainly help create that wow factor. You can also use artwork to inject
some colour into an otherwise neutral scheme so long as you ensure that
the colours don't clash.
Towels and bed linen. Don't be tempted to buy cheap.
It's a false economy as they will have to be replaced very quickly.
Guests can tell the difference and will be far more likely to return
again or recommend to others if you use high quality towels (500-650
gsm) and bed linen with a high thread count (percale). There is a good
reason why top hotels have big fluffy towels and soft white sheets.
White or cream are definitely the best colours to use and can be dressed
with contrasting cushions and throws to give some colour.
Wording your ad. Always remember you are in competition
with hundreds of other property owners and, alongside the photos, your
description of your property is the only way to maximise its potential.
Highlight all the positive features - stunning sea or mountain views,
large private pool, spacious and luxurious rooms, state of the art kitchen,
double height vaulted ceilings, barbecue station with sink and fridge.
Write clear complete sentences and avoid abbreviations. Don't be too
wordy (internet users don't have the patience to read long reams of
copy).
Quote realistic rental rates. Look at other properties
of a similar size in similar locations. Don't have too many different
rate bands during the season. If your property is of a higher than average
rate for the area make sure that the photos and description justify
the extra cost in terms of quality, location or extra facilities.
Respond as quickly as possible to enquiries. The Internet
is an immediate medium and faster you reply the more likely you will
be to convert enquiries to firm bookings.
Rules & Regulations
Purchasing property in Southern Cyprus is very straight
forward compared to many other European countries. Cypriot law permitted
a non-Cypriot to own one villa or apartment freehold, but since joining
the EU this restriction has been relaxed in accordance with EU stipulations.
The legal process is similar to that of England, with
the security of having a central land registry. When you have signed
the contract of sale and paid a deposit, your solicitor should register
the contract with the land registry office straight away.
Summary of Costs
This is irrevocable and prevents the vendor from re-selling,
transferring or mortgaging the property to anyone else. It is wise to
use a completely independent solicitor from the vendors to ensure there
is no delay in registering your contract.
At this stage you will have to pay stamp duty (1.5%
up to CYP£100,000 and 2% thereafter) within 30 days of together with
your solicitor's fees. People are often confused with when title deeds
are issued and transferred to your name. This may take some time (years
in many cases) if you are purchasing on a large development as the transfer
is unlikely to take place until the whole development is complete -
not just your property.
When the title deeds are issued and transferred to your name, you will
have to pay Property Transfer Tax. This is currently 3% up to CYP£50,000,
5% from CYP£51,000 to CYP£100,000 and 8% thereafter. For joint purchasers
this is divided equally, so the allowances will save you money. There
is currently much lobbying since VAT was introduced on new build homes
to reduce this tax.
As for running costs, there is an Annual Property Tax on properties
valued at over CYP£100,000. You will pay 2.5% on CYP£100,001 to CYP£250,000,
3.5% on CYP£250,001 to CYP£500,000 and 4% thereafter. This again may
be reviewed since Cyprus has joined the EU and VAT introduced on new
build properties.
On any disposal, Capital Gains Tax will be payable at the rate of 20%
on the gain with allowances of CYP£10,000 per person - unless the owner
resides in it continuously for at least 5 years prior to its disposal.
You can also deduct Property Transfer Tax and an inflation allowance
to reduce the taxable gain.
You should check the current position on all of the above information
as, since joining the EU, Cypriot laws are changing all the time.
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