BUYER'S TIPS
Buying in the North of Cyprus
Buying Off-Plan
Payment Terms
Building Guarantee
Legal Issues
Cyprus Taxes
Cyprus Mortgages & Finance
Buying in the North of Cyprus. We do not sell or advertise property in the Turkish occupied North of Cyprus. As a result of the illegal Turkish Invasion and occupation of the northern part of Cyprus, approximately 200,000 Greek Cypriots who lived in the area currently occupied by Turkey, were made by force to leave their properties and move to the government controlled areas. Their properties were then illegally expropriated by Turkey and its subordinate local administration and passed to mainly Turkish mainland settlers.
The European Court of Human Rights (ECHR) has made rulings that clearly set out the following points that need to be bourn in mind:
1. The administrative practice applied by the subordinate to Turkey local administration in the occupied area of Cyprus of issuing ‘title deeds’ to the new occupants of properties belonging to Greek Cypriots situated in the occupied area of Cyprus is based on the so-called ‘legislative’ and ‘constitutional’ provisions of the said occupation, which in no case whatsoever can be attributed any legal validity.
2. Greek Cypriot owners cannot be deemed to have lost their properties and have always remained and will continue to remain the ONLY true and lawful owners of their properties in the occupied area of Cyprus.
On the British High Commissions website the question below has been posted:
I have been told that it is now safe to buy property in the north of Cyprus. Is this true?
This is the High Commission’s reply:
There are a number of practical, financial and legal issues associated with buying property in the north, most of which relate to the complex political situation. These include the non-recognition of the "Turkish Republic of Northern Cyprus", the suspension of EU law in northern Cyprus, the possible consequences for property of a future settlement, and the many thousands of claims to ownership from people displaced in 1974. There is also a risk that, as a result of the disputed ownership of many of the properties, purchasers could face legal proceedings in the courts of the Republic of Cyprus, as well as attempts to enforce judgements from these courts elsewhere in the EU, including the UK.
In addition, purchasers should ensure that they are fully aware of the specific Turkish Cypriot rules on foreigners purchasing property in the north including the requirement to obtain consent to the transfer of property.
On 20 October 2006, an amendment to the Republic of Cyprus criminal code relating to property came into effect. Under the amendment, buying, selling, renting, promoting or mortgaging a property without the permission of the owner (the person whose ownership is registered with the Republic of Cyprus Land Registry, including Greek Cypriots displaced from northern Cyprus in 1974) is a criminal offence. The maximum prison sentence is 7 years. The amendment to the law also states that any attempt to undertake such a transaction is a criminal offence and could result in a prison sentence of up to 5 years. This law is not retrospective, so will not criminalise transactions that took place before 20 October 2006.
Furthermore, documents relating to the purchase of property in northern Cyprus will be presumed by the Cypriot authorities to relate to the illegal transfer of Greek Cypriot property and may be subject to confiscation when crossing the Green Line. Anyone in possession of these documents may be asked to make a statement to the Cypriot authorities and could face criminal proceedings under the 20 October 2006 amendment. The full implications of this legislation are not yet clear. Any enquiries about its scope should be made to the Republic of Cyprus High Commission in London (Tel: +44 20 7499 8272), or to the Ministry of Foreign Affairs for the Republic of Cyprus (Tel. +357 22 401000)
For further details see their Frequently Asked Questions
Buying Off-Plan means that you purchase a Cyprus property on a development some time during the planning and construction phase. Buyers are guaranteed a lower initial purchase price compared to the finished value, with the greatest returns being gained from buying in the early stages. Indeed buying in the early phases of the development will also widen the choice of plot within the project. Buying off-plan also allows you a choice of tiling, fixtures and fittings and colour scheme, allowing clients to customise their property to suit their lifestyle and design preferences.
Payment Terms payment terms are typically a 3,500 Euro reservation fee to take the property off the market with a 20% to 40% deposit being payable within 30 to 60 days of signing the sales contract. Flexible staged payments are then made until completion, with the final payment paid on delivery.
Building Guarantee. Developers offer a building guarantee of between one and three years.
The legal system in Cyprus is based largely on the British equivalent and safeguards the buyers’ rights in many ways. For the purchasers protection once the sales contract has been signed and a deposit paid, the Land Registry in Cyprus provides a simple and effective legal instrument called the ’Specific Performance’. This procedure protects the purchasers’ ownership rights until the title deeds are issued in their name. The contract cannot be withdrawn by anyone and therefore the property cannot be mortgaged, leased, sold or transferred. This status can only be changed by the purchaser themselves.
Lawyers. We strongly suggest that you appoint a lawyer that is independent of the developer so there is no conflict of interest and the contract of sale is drawn up with your best interests at heart. We can highly recommend a family practice of Cypriot, English speaking lawyers that have been operating in Cyprus for over 30 years.
Lawyers Fees. These can vary but a general rule is 1% of the property price.
Wills & Inheritance Law. If you already have a Will drawn up outside Cyprus you should not rely on it to deal with your Cyprus property without having sought expert legal advice. It is advisable to have a separate Will to deal your assets here. Many people assume that a property held in joint names passes automatically to the joint owner on death. This is not correct, the estate has to be administered and property passes in accordance with their Will or Cyprus intestacy provisions.
Stamp Duty. A one off stamp duty is levied on the purchase of property in Cyprus. The rates depend on the contractual purchase price and payment is due within 30 days of signing the Sale Agreement. The amount is payable by the buyer to the tax authorities.
Immovable Property Tax. The annual immovable property tax is imposed on the market value of the property as at 1st January 1980 and applies to the immovable property owned by the taxpayer on 1st January each year.
Council Tax is paid annually and is considerably cheaper than in the UK.
Transfer Tax. The purchaser will be liable to pay transfer tax for the property when this is registered in their name at the Land Registry Office. The fees are charged on the property’s market value at the date of purchase.
An important note is that if the property is purchased in joint names (husband and wife) the purchase value is split into two and each is assessed separately.
Capital Gains Tax is levied at 20% on gains arising from the disposal of the property. The first 17,086 Euro to 85,430 Euro on a private residence sale is exempt and there is also an indexation allowance.
Inheritance Tax has been abolished in Cyprus with effect from 1st January 2000 and is no longer levied.
Mortgages are readily available from the local banks in Cyprus. When buying an off-plan property it is usually best to apply for a home loan from the bank that is backing the developers’ project as they have already deemed that the developer is worthy. If you use another bank independent of the developer you will have to get a bank guarantee which will cost 1.5% to 1.8% of the value of the property annually until you get the title deeds.
If you are paying stage payments for a new build property you can save many thousands of pounds by using a finance specialist instead of your local bank when arranging the transfers. After many years of dealing with these types of transactions we recommend HiFx who are perhaps the largest foreign currency exchange company in the UK.
