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A Guide to Buying a Property in Cyprus

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A Guide to Buying a Property in Cyprus Powered By Docstoc
					by: Les Calvert

Overview

The Cyprus Property Market

Cyprus is one of the more popular real estate markets in the world. Activity in the real estate
market in Cyprus is brisk, including foreign nationals who buy and sell real estate Non-Cypriots
have been involved in all areas of the real estate market. Foreign nationals have been found to
invest in commercial, investment and residential real estate in all areas of the country.

Most industry experts maintain that the real estate market in Cyprus should continue to do a brisk
business well into the coming decade. With the entry of Cyprus into the European Union, more
and more foreign nationals from EU member states likely will become involved in the Cypriot
real estate market.

There are no prohibitions on foreign nationals purchasing real estate in Cyprus. However, and as
will be discussed in greater detail shortly, a foreign national must obtain prior permission from a
Cypriot governmental agency in advance of making the purchase of real estate in that country.
Generally speaking, this approval is relatively easy to obtain -- although the process of obtaining
the permission can be rather time consuming

Investment Property in Cyprus

One of the primary areas that foreign nationals have become involved when it comes to real
estate investment in Cyprus is in the resort and vacation property arena. Cyprus remains a very
popular destination for people on holiday. As a result, foreign nationals have taken to buying
apartments, single family residences and hotel properties which in turn are utilized by men and
women on holiday.

Over the course of the past decade, a number of foreign nationals have profited dearly through
investments in real estate used for vacation or holiday purposes in Cyprus. Indeed, because this
type of venture has proven so profitable for some foreign nationals, these men and women have
taken to purchasing and investing in multiple property holdings in Cyprus. Again, and has been
noted, this is particular true in the area of investment in properties that are intended to be used
for vacation or holiday purposes.

Residential Real Estate in Cyprus - Single Family Properties

A significant number of foreign nationals have established second homes and vacation
residences in Cyprus over the course of the past thirty years. The trend towards purchasing
second residences and holiday homes in Cyprus continues on to this day.

One of the more recent occurrences in regard to holiday or vacation homes in Cyprus involves
the creation of significant developments that are designed exclusively for people who want
gracious residences on Cyprus. These developments in many instances are taking the form of
gated communities for the security conscious foreign national who wants to idle away part of the
year in Cyprus.

In addition, some foreign nationals have determined the benefit of purchasing older residences in
the country and embarking on improvement and remodeling campaigns to bring them up to date.
In some instances, these men and women are rehabbing properties and putting them back on the
market -- making nice profits in the process.

Residential Real Estate in Cyprus - Apartments

The Cypriot apartment market is bustling in the 21st century. With Cyprus movement into the
EU, a significant number of foreign nationals from other EU nations are finding themselves in
the country with some degree of regularity. In this regard, many of these business men and
women have turned to spending a significant amount of time in Cyprus each and every year.
Rather than hole up in a hotel, these men and women have taken to purchasing apartments in
Cyprus.

Some of these business minded people have gone so far as to rent or lease out their apartment
properties when they are not in the country on business -- making their apartments an income
generating enterprise.

In some resort communities, men and women from foreign countries have purchased apartments
for vacation and holiday purposes. There is a wide range of different types of apartments of
available for sale in resort areas in Cyprus.

Holiday Property in Cyprus

As referenced previously, vacation real estate sales in Cyprus is brisk business in the 21st
century. One area in which foreign nationals have been active in the market is the purchase and
ownership of single family, free standing residences on the island. These types of residences
generally do come with some fairly hefty price tags.

In addition to larger residences that are being purchased with regularity by foreign nationals,
many foreign nationals have taken to purchasing holiday apartments in the country. In some
instances, these foreign nationals have turned these types of property into something of a
lucrative investment. For example, when they are not in residence in Cyprus, these men and
woman are turning around and leasing out these holiday residences to other individuals --
including many foreign nationals -- who then use these residences for their own holiday purposes

Mortgage Options

When considering the options for a mortgage on your overseas property there are a couple of
choices to consider;

Do you consider raising finance on your existing property in the UK to cover the whole cost of
your purchase abroad? A good idea if the interest rate in the country in question is a lot higher
than it is here in the UK as you will pay a lot less in monthly repayments.

Do you secure a mortgage against the property from a local bank in the country of purchase?
This can be a wise option especially if the interest rate is lower than our current UK interest rate.
Most overseas mortgage / bank lenders will require upto 30% deposit on mortgages. However,
you will need to give some thought to how you will service your mortgage payments each month
especially if you are not living or earning in that country as you may well lose out on exchanging
money each time to cover monthly expenses. Check out our Foreign Currency page to see how
you can save money in this example

Some Builders and developers may well offer their own mortgage facilities on their properties
for sale. This can be beneficial to both parties depending on the logistics of the mortgage or loan
facility. Always check and compare with the two options above before making your final
descision.

For more details on Mortgages in Cyprus visit our Mortgage page in the Cyprus section.

Specific steps to buying real estate property in Cyprus

The initial step that a foreign national must take before he or she can purchase real estate in
Cyprus is obtaining approval from the government. Specifically, a foreign national must require
permission to purchase real estate in the country from the Council of Ministers. A would-be
purchaser of real estate in Cyprus needs to keep in mind that the process of obtaining approval
from the Council of Ministers can take from between eight to fourteen months. A would-be
purchaser also needs to appreciate that if he or she makes the purchase of real estate without the
prior approval of the Council of Ministers, a title deed will not be able to issue transferring
ownership of the real estate to the foreign national.

While the process of obtaining permission from the Council of Ministers is not a matter of
overnight approval, the process itself is not difficult. The Council has taken steps to make the
process as easy as possible for a foreign national seeking to purchase real estate in Cyprus. Time
consuming in some ways, the application and approval process is not difficult to maneuver
through.

Once approval is obtained from the Council of Ministers, the next step in buying real estate in
the country -- once a piece of real estate has been identified for purchase -- is signing of the
preliminary contract. At the time this agreement is executed, a holding deposit is posted with
either a lawyer or a notary.

When the holding deposit is paid, a companion reservation deposit agreement also is executed. In
point of fact, it is the deposit and this secondary agreement. The property is then taking off the
market and remains in that position for the time spelled out in these agreements. Provided that
the terms of the preliminary agreement are satisfied, the property will not return to the
marketplace.

The deposit that is lodged in Cyprus normally is as low as 1%. The parties can negotiate a
particular deposit amount -- but, in most instances, the standard deposit is in the amount of 1% of
the overall purchase price of the real estate that is being sold. The remaining balance due and
owing on the overall purchase price will then be due and owing at the time of the execution of
the final contract, which will be discussed shortly.

During the period of time that follows the execution of the initial, preliminary agreement, the
lawyer who has been appointed to oversee the transaction will investigate the status of the title
the real estate through the District Land Registry Office.

Following this period of investigation into the status of the title, and provided that the buyer has
obtained appropriate financing, the parties move onward to the execution of a final contract. It is
at this juncture that the closing of the real estate transaction in Cyprus becomes rather complex
when contrasted with what occurs in many other countries around the world.

When the final contract is signed by the parties, the contract itself is filed with the Land Registry
Office to prevent the same piece of real estate from being sold a second time. An application is
then made to the Central Bank of Cyprus to approve the transfer of funds for the purchase of the
real estate. (This approval is not necessary if both the seller and buyer happen to be foreign
nationals. However, it is required if at least one party to the transaction is a Cypriot.)

The title will be transferred to the buyer at this juncture and the buyer will be entitled to
possession the real estate. It is important to note that if the real estate is newly developed, the
title itself will not issue for upwards to three years after the signing of the final contract. With
that said, the buyer is protected because of the filing of the final contract with the District Land
Registry Office.

There will be some different taxes due and owing -- and paid by the purchaser -- after the signing
of the final contract. However, these taxes are not particularly costly or significant.

Property Abroad always recommends using a Solicitor or Lawyer.

This article was posted on October 17, 2006

				
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