Aug. 29, 2016
Cyprus is an island, which has 10 months of summer, it's sunny 340 days of the year. The unique microclimate, clean Mediterranean sea and high living standards for years attract foreigners. First they come as tourists, and then come back to acquire their own apartment or villa. Fortunately, the taxes and the costs of housing remain low.
What is happening on the property market in Cyprus after the banking crisis of 2013? How Brexit and fall of the Russian currency affected the sales statistics? Have the rules for obtaining citizenship and residence permit for investment changed? Regina Porter from licensed Cypriot real estate Agency "ABC Cyprus Homes" answers the questions of EE24.
The British contributed to the growth of prices
We should start with the fact that the composition of the buyers of property in Cyprus is international. Among buyers there are the British, French, Germans, Dutch, Scandinavians, a lot of immigrants from countries of the former USSR. They, like the wealthy citizens of China, are attracted by the opportunity to obtain a residence permit or even citizenship for the purchase of housing.
As for the British, Cyprus has always been a kind of "patrimony" that is why traditionally they make up a large part of foreign buyers. About 8 months ago, when the position of the British pound compared to the Euro has become very strong, many British citizens turned their attention to Cyprus property. Pensioners (and not only) began to purchase apartments and houses and to move for a permanent place of residence. Many bought homes with the purpose of renting. It has created a definite shortage of housing.
As a result of banking crisis, prices have bottomed out and now are currently growing; according to official statistics – for the past few months.
Many realtors in Cyprus expected that after the referendum the British will get rid of their property, but this did not happen. On the contrary, during the week after the vote we received about a dozen letters from British clients who uploaded on our website their homes and apartments. They asked to remove objects from sale.
The flow of Russian customers continues unabated
As for the Russians, they are also not in a hurry to sell off their square footage in Cyprus. Russians are still interested in apartments and houses. And since last November there is another interesting trend – many of them came for the second or third object.
Paphos and its property
Most of our clients have traveled the entire southern part of the island and stop at Paphos. Paphos is a small green town with a developed infrastructure. In 2017 he will become the cultural capital of Europe. In the suburbs of Paphos is located international airport. Here there are no industrial areas, so it is very good environment.
Limassol is a large city, a business environment with all the ensuing consequences (noisy traffic on the roads, industry). Ayia Napa can be compared with Ibiza in the summer - here comes so many young, party people – so that the search on the beach free place turns into a real adventure. November is the end of the season, the city is "dying." Police is the complete opposite of Ayia Napa. Is a small and charming city with many natural beauties, but it is suitable only for those who is looking for real privacy.
Thus, Pathos is the "golden middle", which offers the optimum conditions for holidays and for permanent stay. Life here flows comfortably, but quietly, without haste.
A comfortable one-bedroom apartment in Paphos with an area of about 50 sqm cost from €60 000. Two-bedroom apartment can be found from 80- €90 000, depending on location. The closer to the sea, the more expensive. Townhouses are marketed from €120,000 and above. Prices for villas (130 sq. m, plot of approx 4 acres) are for sale for € 250,000 and above. The cost of the villa on the first line can reach €1 million and above.
Property in Cyprus, especially near the sea, has high investment potential. When renting out to tourists by the week, in a year you can get income of about 5-7% (depending on the advertising of the object and its service). For example, the family has 2 apartments – one for their own living and another for rent (you advertise it, organize cleaning, meeting guests etc). For permanent residence is better to choose a property away from the sea, on the ventilated hills, as the closer to the water, the hotter and more humid it is.
The process of buying
After selecting the object and holding of the auction (if necessary) our clients access to an independent lawyer and sign a power of attorney to conduct transaction. Open the euro account in a local Bank, pay the deposit.
All further steps can be carried out without the physical presence of the buyer. Your lawyer will request from the seller’s lawyer all the necessary documents to check the legal side of the object, will sign a contract, register ownership at the Land registry office, will connect the apartment to water, electricity, etc. It will take 1-2 months.
The cost of processing transactions and maintenance of housing, taxes
Lawyers charge for their services is about 1% of the property value. Also during the registration of the transaction is paid the stamp duty, the amount of which is determined by the formula:
- when you buy a property up to €170,860 - 0.15%,
- when you buy a property over €170 860 - 0.2%.
Annual property tax in Cyprus is calculated on the value of the property in 1980. For villa priced €300 000 it will amount to approximately €200.
Municipal fee (street lighting, rubbish removal) is €150 per year. Also homeowners pay utility bills (amount appoints the management company).
Residence permit and citizenship
For property owners in Cyprus there are 2 types of residence permit – Pink Slip (pink card) and permanent residence (category F). The pink card must be renewed annually and when leaving the country for more than 3 months it will be canceled.
Permanent residence permit is issued in Cyprus when buying property in any amount! A necessary condition is having in your disposal at least €60 000. But if you buy a house for the sum of €300 000, time of applications will be reduced (from 6-8 months to 2-3 months).
Cyprus citizenship can also be obtained in exchange for investments. For this the applicant needs to invest at least €2.5 million in one property or €3 million in a few objects, or he can invest a certain amount in securities and to buy a house for €500 000.
During the banking crisis one of our customers "lost" a big sum in the bank of Cyrous. The funds lost in deposits in Cypriot banks can also serve as a basis for citizenship. So to obtain local passports it only remained for him to buy the property in the amount of €500,000 – that’s what he did.
Text – Alena Eliseeva, ee24