Areas of Practice

Property Useful Tips

With the increasing complexity of the property market and the constant introduction of new concepts and measures, it is advisable that the potential purchaser seeks professional advice prior to concluding a deal, in order that hardships and disappointments are avoided. This advice is especially useful to the foreign purchaser who has to encounter the problem of different laws and local attitude. For this reason, our firm has prepared the following tips that may be useful to a foreigner purchasing property in Cyprus.

 

For Land Buyers

  • • Be absolutely sure that the land you are buying is in fact the land that you are being shown. Ask for a copy of the title deed and check the sheet/plan/plot references and the site plan position of the site. Look at the site plan and ascertain from its boundaries its shape and position. The location of nearby roads and buildings, major differences in the topography of the ground, river and streams are clearly shown on Lands’ Office plans. If you cannot study the site plan seek the advice of your property surveyor. Items in the description such as "near the road", "near the village" etc, are used off handily by people eager to sell, which, in some instances, are far from being true. Also beware of "terrific opportunities".
  • • Check the planning zone in which the property you intend to buy belongs. If you plan to build a house in a certain area, you may find that the maximum building density allowed is so low that you will not be able to erect a satisfactory unit. In addition, the particular zone may forbid the specific use you have in mind. Furthermore, it is not sufficient to merely check the zone of the property under consideration, but one should also check the zone of the nearby area as well. This is important, since your plot may be within an agricultural area, but a few meters away there may be another zone, say industrial or animal farm- ing, which will create nuisance to your property.
    The things you must observe when studying a Planning Zone are:
    1. 1. Building Density: The maximum amount of square meters, which you can build.
    2. 2. The Use: What nature of use is permitted if any.
    3. 3. Site Coverage: The maximum proportion of the site which can be occupied by a building.
    4. 4. Height and number of stories allowed.
  • • The seashore protection zone is independent of the town planning zones. It is a zone which extends from the sea and it usually (but not always) has a depth of approximately 300ft (91 metres). Within this zone no building can be allowed (the right of ownership is not affected), not even a small hut or ice-cream shed (note that a swimming pool may be built but subject to a relaxation and constraints).
  • • When there are ancient monuments close to your plot, make sure to examine whether the Director of Antiquities has any objections to a building project. If a plot of land is classified as an ancient monument area, Director’s approval must first be sought. Usually, the ancient monument area is marked as A.M. on the Lands’ and Surveys’ plans, but the non inclusion of the letters A.M. does not guarantee that the plot is free from this kind of restrictions. If, therefore, you see on inspection ancient monuments close to the land you intend to buy or if you see on the Lands’ Survey Plans your prospective acquisition or one near it being marked with A.M., then check the whole matter with the Antiquities Department.
  • • Try to check whether there is any road or other scheme which affects your property or the locality in general. It is advisable that you buy a recent Lands’ and Surveys’ plan (the whole sheet) for the property you intend to buy, since on these plans many proposed public projects such as roads etc are shown. It is best, if you suspect of any schemes in the area you wish to invest in, to see the District Inspector (at the District Officer’s Office) and/ or pay a visit to the local Planning Office.
  • • As a general rule, electricity can be brought to any place in Cyprus provided one is prepared to pay for it. Be careful, however, with the general belief that if there is an electricity line close to the property the cost of providing electricity will not be much. This is not true at all and it is best to examine the approximate electricity provision cost with the EAC District Officer.
  • • Telephone lines may be a problem for less developed areas. If one is needed at your "spot", examine this possibility with the CYTA DistrictOfficer. In any case cheap mobile telephony (3.6 cents per minute for calls mobile to mobile phone and 2.4 cents per minute for calls from mobile to fixed phone and a monthly charge of £4.60) is available with a network covering 90% of the island.
  • • The most important factor is access to your property. Do not be fooled by what is on the ground. Check the Lands’ and Surveys’ plan to see whether the property abuts onto a public access, as well as the nature of its boundaries (shown on the title deed). The fact that the property abuts a public access does not necessarily mean that a building permit can be obtained based on this road access. If your property does not possess an access (or a satisfactory access), it can acquire a right of way over adjoining properties in order to reach a point of public access. The procedure is undertaken by the Lands’ Office on application and the right to obtain an access is reserved even if the owners of the properties over which the access will pass object to it. Please note that if the right of access is in excess of 600 feet (distance from a public road to the property) and for a width of less than 12 ft, then a permit to erect a house will, most likely, be refused.
  • • For those who want to buy a plot of land and put up a house there, there are certain major points they have to bear in mind. As a rough and general rule and provided there is a satisfactory access, a single house can be erected on a plot of land. If more than one house is required, then water must be provided. The water supply may be either from a public or a private source. In the event of private water supply (usually a borehole) its quantity and quality must be tested by the Water Development Department. For all the towns and for some villages there are water development zones and it is very difficult to get public water supply to a property situated outside the zone. Do not take, therefore the word of the middleman, the owner or others, that
    water supply can be made available. Remember that the appropriate water authority is the Water Development Department only and that promises and the willingness of locals to help may meet the Authority’s objection.
  • • If there is a building on the plot you are buying, ask to see the building permit in order to make sure that the structure is not illegal, as well as to ascertain the terms and conditions of the permit. Please note that most of the above problems do not exist in the case you buy a building site (as opposed to buying a plot of land/field). Even if the title deed registers the property as a building site, it is recommended that you go through the motions of checking the various prerequisites for development (but electricity telephone and in general all other public services are provided to a building plot).

 

For Own Home Developer

Actions to be taken and points to bear in mind when buying your own plot to build your own house.

  • • Seek a suitable plot. Visit the area that you are interested in and ask the local residents directly, or in case of a village, the village muchtar, if there is
    land for sale. Seek the assistance of a registered estate agent who may be in a position to offer to you alternatives, but bear in mind always that most local sellers do not use the services of estate agents. The direct approach (find out who is the owner of the plot you are interested in and ask him if he wants to sell) may prove to be the best one. Bear in mind that it is the seller who pays for the commission of the agents and not the purchaser and for this reason agents may have the owner’s interest at heart and not yours. See "useful tips for land buyers".
  • • The next step is to appoint an architect to carry out the design. There is an abundance of well qualified architects on the island and many capable technicians as well. A building design may be carried out only by a registered architect/ engineer. As such, we suggest that you appoint an architect for the purpose (not an engineer or technician). Architect fees range from 4%-6% (on the building cost) but you can also agree on a fixed fee. The prevailing
    fees are 3,8% on the building cost for a complete set of architectural plans and 1,6% for supervision (including the issuing of certificates). In addition a 1% - 11/2% is payable for the structural design and 0,3% for structural supervision. If you are at loss as to the choice of a suitable consultant, seek the advice of the Registrar of the Association of Architects & Engineers (all licensed architects must be registered). Please bear in mind that in case of large buildings you may be able to negotiate a lower fee (as also in the case of repetitive work).
  • • In case you require air condition ing /central heating, we suggest that the advice of a qualified electrical and mechanical engineer be sought. Fees for this consultant are around 4% for the design and 2% for supervision (on the cost of the E & M works). Insist on all drawings being ready before inviting
    tenders.
  • • It is recommended that a building permit be secured first before works commence, although works such as excavations etc may begin prior to the issue of the building permit. In this case, your architect must consult with the Appropriate Authority to see whether there are any major objections to the drawings.
  • • Invite a number of tenders from contractors who are reputable. Remember that the lowest tender price is not always the best. Your architect must be in a position to advise you on the selection, and bear in mind that contractors are registered depending on their size, organisational ability and past performance. Ask for the contractor’s registration and recommendations from past owners/ developers/ architects.
  • • If you are contemplating the development of a complex/costly building, you are strongly advised to appoint a project manager (3% fees on the total
    cost) who will manage the design team and the whole development. Also the appointment of a quantity surveyor (1% fees) on such scale projects is strongly advisable.
  • • Central heating is not generally required in the seaside towns (although this is a matter of own judgment) but air conditioning (at least in the bedrooms) is recommended. The cheapest form of cooling is the split unit type with heat pumps. This is increasing in popularity and it is an alternative to be considered. The cost per unit starts from C£350 for a 9 BTU and the price increase for larger capacity units. The cost of central oil fired heating is approximately C£30/sq.m.
  • • Solar heating is an economic alternative and its adoption is relatively inexpensive, having a payback period of approximately 4 years and a cost of around C£300-400.
  • • If you will have a garden, it is advisable to drill a borehole for watering, as the water charges rise more than proportionately with consumption. This will cost around C£1,200 for the borehole and a pump, although it will depend on the depth of the borehole. The drilling of a borehole requires a Government permit first (permit is given easily).
    ● When the building permit is issued, works may begin. Try to avoid variations/changes, as these will give rise to claims on the part of the contractor,
    which will mean a financial loss to you.
    ● Upon completion of the work, your architect must submit drawings (as built) to the appropriate Authority for the issue of a certificate of final approval. When this is issued, it will have to be deposited at the District Lands’ Office so that the registration of the building on the title deed of the land is effected.
    Caution: Fees given above are only indicative. Published scale fees exist for all consultants.

For Apartment Buyers
There is no difficulty in finding apartments to buy in any of the towns in Cyprus. Land development into apartments is very common and there is an abundance available for sale at any time all over Cyprus, the vast majority being very new. There is also a tendency to sell apartments "on paper", (i.e. when construction plans are still on the drawing board), or during construction, as a means of raising part of the finance for the project. Apartment prices are not uniform. They vary to a great extent with the location, the quality of the project and the town where they are situated. Resales have a sales price of approximately 20%- 25% less than new units, depending on the individual property's specific caracteristics (age, state of repair etc). Price per square meter refers to gross area plus covered verandas plus portion of the floor’s common area (usually 10% of the apartment’s gross area where applicable). It is usual for developers to give credit terms of payment when selling these flats. Terms vary from developer to developer, but commonly these are as follows:

  • • On signing the sales agreement - 1/3 of the total value.
  • During construction - 1/3 of the
    total.
  • The balance upon delivery. If the unit is ready the seller will require at least 75% payable within a short period and the remaining in 12 months maximum. In most cases, however, the owner requires a cash payment and the purchaser secures a local loan with repayment facilities.
  • Location: In any particular area there are many blocks of apartments under construction. Try to shop around and choose a block in a good area. Of course what a "good" area is, is relative and depends on various factors including personal judgment and taste. It is widely accepted, however, that a "good" area is one which is relatively central, not densely developed with apartments, more of a residential area, relatively quite (not on main road) and one which is close to schools and shops. Although the better the area the higher the price, an extra sacrifice, at this initial stage may prove worthwhile in the future. If you have children, pay particular attention to the proximity of public open spaces, such as parks, since you will find that children will need some space to play.
  • The Block: Try to choose a small block of apartments. A five storey building accommodating a maximum of 15 -20 units is ideal. Larger blocks have problems primarily related to their management and lack of privacy. Bear in mind, however, that smaller blocks have a higher common service bill. Try to avoid buying an apartment on a block with shops on their ground floor, since these are usually the cause of nuisance.
  • Ask, before buying, who has purchased the shops (if any) and ascertain whether any restrictions have been imposed on their use. You may find out, for example, that the shops below will be used as a Kebab House or as a Bar (causing you a lot of hardship). If you have to buy an apartment in a block with shops on the ground floor, avoid buying the flat just above the shops. The further away (the higher up), the better.
  • Accommodation: Avoid purchasing a studio type of accommodation (unless you are in a resort area) since you will have problems on resale. Prefer to get rented accommodation rather than buy, if you are thinking to sell your one bedroom/studio unit and buy a larger one in the future. You may well find that selling the studio is difficult. Apartments with the higher demand are the average size three bedroom units (around 120-130 sq.m.) and the two bedroom (70-100 sq.m) ones. However, this state of affairs is fluid and changes from time to time and from location to location.In resort areas the most arketable
    accommodation are the compact two and one bedroom apartments.
  • Services: Experience has proved that it is difficult for co-owners to agree on the common servicing of the blocks. It is therefore advisable, especially
    if you are buying in a large block, to prefer to buy where the block has the lowest common service bill. Common central heating has proved to be a major problem and the cause of many disputes amongst co-owners. Avoid also apartments which have common hot water facilities.
  • Prices are usually quoted as pounds per square meter (it includes the analogy of common areas and covered verandahs. The extends given are based on external dimensions. It is important, however, to ascertain which area in square meters you are paying for. Most developers include part of the common areas (staircases, lifts etc) while others include the verandas and so on. If therefore, you are shopping around for the right price, make sure that you are comparing the same area. Our advice is to take the gross area of the unit (including part of the floors common areas, usually 10% of the unit extend), including covered verandas, in external dimensions. Where there are uncovered verandahs take 50% of their area. This will provide you with a good common basis for comparison of the price per square meter. Another factor also affecting the price is the payment terms.
  • Quality: In all advertisements for the sale of apartments you may find the word "luxury". What is luxurious accommodation may be distant from what you have in mind. If the flat you are buying is still under construction, have your property surveyor go through the specifications of the materials and finishes so that he can explain their meaning to you.
  • The quality of construction is another issue. If the unit is not built, normally the developer’s reputation and a visit to a previous project will give you an idea of what you can expect. Show a preference to blocksutilising low maintenance materials; sprits finish to a block, as opposed to decoration is an advantage; the use of timber as opposed to plastic/ aluminum ones is a disadvantage; a poor quality lift will cause you major future difficulties etc.

For the "Village Cottage" Purchaser
There is an increasing tendency by locals and foreigners (in particular the British) to acquire old village houses which are subsequently improved/ converted into modern residences. Before the "craze" of village cottages started, there were some real bargains for this type of property. Nowadays cottages of character and colour are relatively expensive and they amount, together with the repair/ improvement bills, in excess of what a new villa of the same size would cost. The best approach to buy a cottage is to visit the village of your choice yourself and seek information from the village muchtar (the chairman of the village parish). It is evident that the less popular the village is by foreigners, the lower the cottage’s price. Bargains can still be found at the remote villages of Pafos and those of Limassol and Larnaka. It is strongly suggested that before concluding a deal, you obtain a firm estimate of the repairs/ improvements required, using the services of a qualified Q.S. or an architect whereas what has been said previously about other property acquisitions holds good for this nature of property as well. In particular, you must check who your neighbours are, since in tightly knit communities, such as the local villages, people have there own way of living and ttitudes towards life. Check whether your neighbours keep any animals in their yard, since if they do, the smell may be unbearable. Check also the distance
from the town, the access, whether there is a telephone service, the nearest doctor, the frequency of the local post, public transport etc. Bear in mind that the cottage may be eligible for an improvement grant from the Government, if it is of historic interest. Your architect can advise you on this.

The Developer
Cyprus can boast on the standard of its developers. There is quite a large number of local contractors and developers who have activities also outside Cyprus and their size/ nature classifies them as one of the largest companies in the world. Buying property from such companies is an added guarantee, not only of having your home delivered on time and of the envisaged quality, but also you will realise various fringe benefits. i.e. letting, maintenance, issue of titles etc. Of
course having said that, it does not mean that all the smaller developers are not good. Because development in this island, however, is like a national sport, with people and companies of all backgrounds engaging in such ventures, it is highly recommended that, before committing yourself, you ask the developer certain simple questions. Questions could be on what projects he has completed before, the number of his staff, the name of his banker, if he is the freeholder of the land on which the property is erected, whether he has received a building permit for the project, whether the unit for sale has a title deed etc. Ask for a set of specifications and list of fixtures included in the price, the size of the plot, the size of the flat etc.

  • • Reliability: Be very careful to whom you are giving your money. A developer’s past performance is the best form of guarantee, but if you are afraid that the block will not be completed, ask for a bank guarantee (this will cost you 1.8% p.a. on the amount of the guarantee).

The Solicitor in a Purchase
Buying property in Cyprus is a simple procedure and for this reason most local and foreign purchasers do not use a solicitor for their transactions, (standard contract documents with blank spaces which are filled in, are normally used). It is better, however, if a solicitor is used in such a transaction, especially when a foreign party is involved (locals will most likely know the responsibilities of the developer/seller/agent etc). It is correct, however, to agree first on the solicitors fee for the preparation of the sales contract (which depending on the circumstances, could be anything between C£500 to C£1000). In addition to the sales contract your solicitor must be asked to investigate: whether the developer is the freeholder of the property and most of the questions raised under "The Developer" heading.

  • • Depositing your sales contract: For any purchase it is most important for you to deposit the sales contract with the Lands’ Office, within two months of the purchase, so that you will have some form of a right to claim and/ or seek specific performance if something goes wrong.

Estate Agents & Middlemen
CYPRIOT ESTATE AGENTS SHOULD BE REGISTERED WITH THE GOVERNMENT AND ONLY SUCH REGISTERED AGENTS CAN OPERATE LEGALLY. Inevitably, because the Estate Agent Act is only recent, many non-qualified and traditional estate agents, have registered with the Government. Thus until some time passes, a sizeable percentage of the local agents, cannot be said to have the same standard as other professions.

In addition to the local estate agents, you will find a lot of middlemen dealing in property as "estate Agents" and they can be anything from your airport taxi driver to the nice barman at your hotel and the owner of the local tavern. These middlemen may get a commission from the local developers if they introduce a client, which, in itself is not objectionable. What is objectionable is to place your complete trust in such impressionable middlemen and in so doing not to carry out your own research.