Areas of Practice

Acquisition of Land and Property by Foreign Investors

Cyprus has proved to be an increasingly popular place for retirement and/or for the acquisition of holiday homes by foreigners. Demand, which is continually increasing, is forthcoming mainly from the European Countries. The upsurge of demand for property by foreigners is attributed to many factors including the relatively low cost of living and its high standard. In addition, the unique hospitality of the local population, the attractive climate, the increasingly important role of safety and security, have played an important role.

Demand and market activity has caused local property values to show a steady and at times sharp appreciation, especially over the last years. Good properties especially resales are still abundant and local property prices are still much lower than those of other European countries.

Restrictions
Cypriots or persons of Cypriot origin and extraction and E.U members are allowed to purchase real estate property without any restrictions. Aliens,
however, are only given permission to acquire one of the following:

  • • One apartment or
  • • One house or
  • • A building plot or land up to three donums (4.000 sq.m.)

 

Offshore entities may also acquire premises for their business (no limit on the extend) or for the residence of their foreign employees provided the residence is registered on the employees’ names. For the transfer of real estate on an alien’s name, the permission of the Council of Ministers is required. This permission is obtainable by all bona fide cases, provided that the property is not intended for commercial exploitation. In certain cases, however, the Council of Ministers will grant the approval for acquisition for commercial purposes if the particular project will enrich tourism. E.U. members are exempted from such restrictions and are treated as locals as from the 1st May 2004.

 

Approval by the Council of Ministers
The definition of alien by law is any person who is not a citizen of the Republic (whether resident or not) including an alien controlled company, but it does not include aliens of Cypriot origin or an alien wife of a person who is a citizen of the republic. For the purpose of the legislation, acquisition of real estate property
includes:

  • • Freehold ownership
  • • Long leases of more than 33 years.
  • • The acquisition of shares in a company, which owns real estate, if such an acquisition results in the company becoming controlled by aliens.
  • • The establishment of a trust or any type of set-up, which is connected with the ownership of real estate, for the benefit of an alien. Any registration of property not complying with the law is invalid. The following general points of real estate acquisition are hereby provided as a very rough and general guidance:
  • • A foreigner can buy a house for his own use only. In case of a long established person who has business (e.g. offshore company) or is residing in
    Cyprus, a permit to buy another house may be forthcoming. E.g. a foreigner has a house in Nicosia and wishes a beach-flat in Larnaka or a villa in Platres for holidays.
  • • A foreigner can buy land, for building, up to the extent of three donums (4.000 sq.m.). A permit to buy a plot of land outside the development area will most likely be refused (this is not so in the case of a house purchase so situated). No transfer of a share in property can be effected, i.e. a permit will be
    refused in case of a foreigner acquiring a share in property.
  • • One couple (husband and wife) can only buy one house (not one house each).
  • • In the case of foreign companies they can buy/build their offices only. No permit will be given for the purchase of a residence unless the house can be registered in the name of the company’s director and he makes the application.
  • • A house cannot be bought in joint ownership save husband and wife. In case a foreigner will construct a building, the cost must be paid in foreign currency.
  • • In granting a permit to build, the Government may impose a time limit to effect the transfer/construction of the property. Such limit may be extended, however, on application depending on the circumstances. A period of three years is considered asa maximum but this can also be extended.
  • • A foreigner wishing to rent property for periods of thirty-three years or more requires the Council of Ministers’ approval.
  • • A foreigner can sell his house and buy another. Any bona fide repeat purchaser will be granted a permit.
  • • A foreign purchaser may let his property for periods in excess of 30 days to a resident of Cyprus (not short lettings). This does not apply to offices.
  • • Any contract in purchase/lease etc. of real estate is valid even if the Council of Ministers rejects the foreigner’s request. As such when purchasing property it is recommended that the contract includes a provision for such an event so as to secure a refund or other remedy to cover such an unlikely occurrence. The time period required for obtaining an answer from the Council of Ministers, provided all documentation is in order is approximately twothree months. As a general rule, all foreigners are permitted to acquire house/ business premises in Cyprus, provided they have:
  • • No criminal record in their own country or in Cyprus.
  • • The financial means to support themselves in Cyprus (An income per couple in the region of C£12.000 p.a. is considered satisfactory). Companies with dubious past, unclear ownership, unclear business etc. are not looked upon favourably. Note: EU members and companies can acquire and invest in any type of property and are treated as ordinary Cypriots since 1st of May 2004.