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Wonderful climate, high living conditions, convenient geographical location and numerous Blue Flag beaches make Cyprus an ideal country for owning a holiday home, or even a place for raising children.
Prior to evaluating various aspects of buying a property in Cyprus, it should be noted that following the Turkish invasion and occupation of Northern Cyrus in 1974, the island has been divided on Northern (Turkish) and Southern (Greek) Cyprus. The Northern (Turkish) Cyprus is not part of the EU and is not officially recognised by United Nations.
Most of the properties on Northern Cyprus territory have very high risk involved for potential buyers. Their current rightful ownership and therefore right to sell such properties is being heavily disputed between current occupiers and the legal owners who were forced to abandon these properties in the heat of conflict of 1974. The issue with such properties is still a very sensitive and one of the most heated problems on the island, and while at the moment there is no solution for this problem, many Greek-Cypriots from the southern side consider sale of the properties in Northern Cyprus by Turkish occupants illegal, making such property purchases very dangerous for potential buyers.
Luckily, European side of Southern Cyprus has no shortages of beautiful property options. The process of buying a real estate in Cyprus is relatively simple. It is however highly recommended to use a service of a qualified independent lawyer who has no connections with the seller or developer of the property being purchased. The lawyer will verify that there is no loan or any kind of claim on this property, that it truly belongs to the selling party, confirm that relevant planning permissions as well as building permissions are in place, and study the Sale Agreement on your behalf to make sure there is no underlying problems for the buyer and that the agreement is legally binding. It is also important to check that there is no problem with Title Deeds. Non-European citizens also require a formal permission from Council of Ministers to buy property in Cyprus, which should usually be obtained without problems. After signing the agreement and transferring payment to the seller, the agreement has to be taken to the local tax office for stamp duty payment, which must be done within 1 month after signing the Sale Agreement to avoid a fine. Also, within 2 months after Sale Agreement is signed it has to be submitted to the District Land Office to officially register the purchase and secure buyer’s rightful ownership of the property.
There is a vast difference in property prices in Cyprus depending on location, and most importantly final aims of the buyer. In many places it is possible to find a property with an asking price of around EUR 100,000, but sky is the limit as some of the most expensive properties are being sold for multiple millions of euros.
Property prices in some areas are being heavily influenced by governmental investment programmes.
Cyprus Investment Programme requires purchase of residential property at the price level of minimum EUR 500,000 + VAT. Above that, the programme requires additional investment of EUR 1,500,000 in one of the specified by the programme ways of investor’s preferred choice, with one of such choices being real estate. Therefore, many investors opting in to provide additional EUR 1,5 million to purchase of properties, fuelling prices in luxury segment of real estate in Cyprus. Since introduction of the Cyprus Investment Programme in 2013, there has been a sharp rise in construction on the island providing luxury villas as well as elite multimillion apartments in high-rise buildings with direct see view.
Some of the most expensive properties are sold in Limassol, which has seen prices rocketing over the past years. Limassol is a favourite among international buyers and Cyprus Investment Programme applicants and has been filled with build-to-match-investment-requirements real estate. Closely followed is Paphos, which has seen the construction of luxury private villas, these usually come with private pool and a garden.
Residence by Investment Programme in Cyprus is another accelerator of real estate prices. The programme allows non-European applicants to reside in Cyprus if they can prove stable income flow from abroad and buy a property for minimum EUR 300,000 + VAT. Obviously, much more properties fall under the price range of slightly above EUR 300,000 + VAT than EUR 0.5 mil. or even higher required for Cyprus Investment Programme, while EUR 0.3 mil.+ VAT can still buy very attractive property on the island.
For European citizens who can afford to make their property selection without observing any minimum amount investment rules, the choice is greater. The prices in the same city in Cyprus can vary considerably.
For example, in holiday town of Ayia Napa 2 bedrooms apartment may be purchased for under EUR 100,000, as well as for over EUR 1,5 million, depending on time of construction, quality of the residential development, proximity to the beach etc. Having said that, even some of the cheaper scale properties on the island often offer high standard of living in comparison to many other European countries, and good deals are definitely to be found.
Additional expenses for fees and taxes should be taken into account when buying a property. As experience shows, property buyer should allow up to 10% of the purchase price for the purchase-related charges such as legal and surveyor’s fees, stamp duty and land registry fees. Additionally, a VAT tax is applicable for new build properties in Cyprus (from 5%).
A careful consideration of long-term goals of the buyer is required to make the right decision about the location. Some of the factors that should be considered are:
Many people relocating to Cyprus permanently choose Limassol as the most active and cosmopolitan city with selection of international schools and many companies basing their offices there. Also, should you wish to rent out your property out to tenants, properties for rent are currently in high demand in Limassol due to the shortage of supply and increasing demand in mid-market price range. Living in Limassol, however, comes at additional cost.
Nearby Paphos has advantage of an airport, and is generally considered to be cheaper, but with many jobs located in Limassol, some chose to live in Paphos to save on living expenses and travel to Limassol for work on the daily basis. Paphos provides more laid-back environment in comparison to Limassol, with most of the properties currently sold being private houses, not flats (like in Limassol).
Nicosia, the capital of Cyprus, also has selection of private schools and good potential to let property out due to stable demand coming from domestic market (many Cypriots work in the capital). However, Nicosia is located inland and does not have direct see access, which makes it not attractive as holiday home or short let opportunity.
Many other coastal holiday cities blossom during the summer months, while the winter season sees them stagnated in anticipation. Such cities might be suitable for more affordable holiday homes to be used during the high season, but probably less suitable for round-the-year living. Ayia Napa, Paralimni and Protaras are all good examples.
Larnaca offers proximity to Larnaca Airport (1 out of 2 airports in the country), location on the seaside, and very affordable property prices in comparison to Limassol, or even Paphos. Considerably smaller in size than for example Limassol, the city is considered by some local real estate agents as currently undervalued investment opportunity.
Cypriot laws surrounding tenancies can be tricky. If you are looking to buy a property in Cyprus which you will potentially let out, taking professional legal advice and discussing rental laws surrounding this specific property is strongly recommended before you commit to any purchase decisions. Broadly speaking, tenancies in Cyprus are divided on Free Market tenancies and Statutory tenancies. Both follow very different rules with regards to important aspects of the tenancies such as eviction process (should you wish at some point for tenants to vacate the property and in case they refuse to do so), or potential rent increase in the future.
Statutory tenancies provide much more protection for the tenants than Free Market Tenancies, and many international and Cypriot landlords alike find themselves struggling to take possession of their own properties or increase the rent in line with current market prices if the Tenancy they are locked into falls under the category of Statutory Tenancy.
One of the main legal requirements for the tenancy to be considered Statutory is for the building to be built before 31 December 1999, making it therefore safer choice for future landlords to buy properties constructed after that date. In case of resale properties, your lawyer will be able to receive proof of construction date from the developer who originally build the property, and the Electricity Authority Cyprus confirming when property was connected to electricity for the very first time (usually when it was constructed).
Renting out your property in Cyprus can provide a good cash flow, however, you need to prepare well in advance and for best outcome it is highly advisable to discuss the above-mentioned nuances with independent lawyer before purchase of a property is made.
Whether your goal is investment, relocation or ownership of a holiday home, Cyprus has it all and with a good due diligence done with assistance of the lawyer, properties in Cyprus can prove to be wonderful homes and profitable investments for years to come.
We work with reliable developers to help you make the right choice. Contact us to receive comprehensive advice.
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