Property Purchase Process | Property Purchase Costs | Mortgage Finance
Introduction:
Unless investment property in
1. Finding a Lawyer
Before hiring a lawyer, compare the fees charged by a number of practices and obtain quotations in writing. Always check what’s included in the fee and whether it’s ‘full and binding’ or just an estimate (a low basic rate may be supplemented by much more expensive ‘extras’). You must employ a lawyer to check the contract before signing it to ensure that it’s correct and includes everything needed, particularly regarding any necessary conditional clauses.
2. Selecting your property
The first step to owning property in
- Requires significant refurbishment.
- Is built in an older style
- It's located in a remote area
- Only has an outside toilet
Many new developments, especially on the coast, are sold "off plan" which means that they are currently under construction. You need to ensure that the relevant terms and conditions are included in the preliminary contract - ask your legal advisor for assistance.
3. Making the offer
Once a property has been selected, an offer is made via the vendor’s estate agent. It is essential at this stage that the service of an independent lawyer is engaged in order to examine the sale contract and check that the conditions of sale are within legal guidelines.
4. Paying the ‘holding deposit’
In many cases, the seller will request a holding deposit. This is usual in the case of a new property; in the case of a resale, you may pay a deposit only on signing the sale contract. A deposit reserves your property and it should be paid directly to the vendor; it isn’t kept in a separate (bonded) account until the transaction is completed as in some other countries.
Although the payment of a holding deposit is normal procedure in
5. Lawyer's checks
Once the sale price has been agreed or a holding deposit paid, your lawyer will begin to draw up the sale contract and make the following checks, which usually takes around a month:
- Verifying with the Lands Office that the vendor has legal authority to sell the property and that there are no debts attached to the property;
- Ensuring that, in the case of several owners, they all agree to the sale and sign the sale contract.
- Checking the ownership of any trees on your land (which may be owned by people other than the registered property owner);
- Establishing the exact boundaries of the plot. This is done automatically by the Lands Office, but you can wait up to a year, so it’s preferable to arrange for a private surveyor to do so and to have your lawyer send his report to the Lands Office.
- Verifying that there are separate title deeds for your property or plot. This is very important when you buy a property in a new development. It may be difficult to get these from a developer and provision must be made in the contract in case the developer or vendor fails to supply them. Your sale contract must be deposited with the Lands Office to protect your rights and put a charge on the property.
- Making sure that, in the case of a property under construction, all the required planning and building permits have been obtained.
- Checking that, in the case of land purchase, you have proper access to your property. You won’t be granted planning permission unless you have access to a public road. This must be confirmed before you can apply for planning permission. The regulations state that the distance to a public road must be less than 600ft. If the distance is less than 600ft but you don’t have right of access, you must apply for it to the Lands Office, which is a lengthy procedure.
- Verifying planning zones and regulations with the Lands Office. Zoning areas were changed in 2003 and you’re permitted to build only on land zoned for building. Your lawyer should also check the zoning of nearby land to ensure that your plot isn’t close to an industrial or agricultural zone, which may affect your enjoyment of the property.
- Checking the legal building density (how many square metres of land you can build on) and that the intended use, height and number of floors of any planned buildings are permitted.
- Making sure that the proposed building isn’t within a seashore protection zone, which usually extends approximately 300ft from the sea and where no building is permitted.
- Checking whether there are any ancient monuments close to where your plot is, and consulting the Inspector of Antiquities. Ancient monument areas are usually marked ‘A.M.’ on Lands Office plans (known as the ‘Lands and Surveys’).
- Verifying that utilities can be connected to the property. Usually electricity can be brought to any part of
IMPORTANT: A lawyer’s checks don’t cover such things as motorways or major roads being built near your home or any other construction which may affect your enjoyment of the property, and you should check this yourself with the local Town Planning Department.
Many estate agents will carry out the above checks for you and pass the information on to your lawyer. However, it’s still advisable to have your lawyer double check.
6. Final Checks
When you sign the sale contract, you agree to accept the property in the condition it’s in at that time, so it’s essential to check that the property is still in the same condition as when you last saw it, and that it hasn’t fallen down or been damaged in any way.
In
Your check should include fixtures and fittings and anything that’s included in the contract or purchased separately, e.g. carpets, light fittings, curtains or kitchen appliances. Check that these are still present and in good working order. You should also ensure that expensive items (such as kitchen apparatus) haven’t been substituted by inferior (possibly second-hand) items.
If you find that anything is missing, damaged or not in working order, you should make a note and insist on an appropriate reduction in the amount to be paid. In such cases it is normal for the lawyer to delay the signing of the sale contract until the matter is settled, although an appropriate amount could be withheld from the vendor’s proceeds to pay for repairs or replacements.
7. Signing the contract
In Cyprus it is common only to sign one contract rather than a preliminary and final contract. The solicitor usually draws up the contract whilst conducting title searches etc., and therefore an investor should only sign the contract when he is sure all checks on the property have been concluded satisfactorily.
The contract is signed by both the vendor and the property investor and depending on the nature of the real estate being purchased either a stage payment is then due or final monies are due. Off plan properties are commonly bought in
8. Transfer of property – Council of Ministers application
Having signed a contract of sale for your property, it is necessary to make an application to the Council of Ministers to grant its approval for a non-Cypriot to acquire immovable property.
The details required for the application form are as follows:
- Personal details of applicant
- Financial standing of applicant
- Particulars of the property
- Particulars of present owner
- Terms of payment
- The way of acquisition (i.e. Freehold, leasehold shares in property company etc)
- Copies of the government survey plan
The completed application form is submitted to the District Officer in the district where the property is situated. The District Officer together with other relevant Government Departments will make further enquiries and prepare a report, which is submitted, to the Council of Ministers through the Minister of Interior.
The letter of approval or refusal may take six to nine months or even longer. However, there is no restriction in taking possession of the property in the meantime.
The permit for the acquisition of immovable property by an alien is only granted only in the following situations:
- The house will be used as a residence
- The building plot or land does not exceed 2675 square meters.
- The land will be used for professional or commercial business
· The land will be used in manufacturing in areas where the Council of Ministers believes that it will be for the benefit of the
The permit has the following conditions and restrictions:
- The transfer must be completer within a year from the date of the permit or within three years in case of construction or building on the property
- The costs must be paid in foreign currency
- All taxes must be paid
The following points should be considered:
1. Should approval not be granted, you can re-apply.
2. Should approval not be granted, you have 17 years in which to sell your house.
3. You can live in your house from the moment you purchase it, prior to the Council of Ministers granted approval.
4. You can re-sell your property during this time. Inheritance rights are not affected by this process.
5. No
Applications can be made to any of the following offices:
United Nations Street
Tel - 24-801 002
dao.famagusta@cytanet.com.cy
2 Alkeos Street, Engomi, 1458 Nicosia
Tel - 22-804 122
nicosia.dao@nicda.gov.cy
Larnaca
Tel - 24-801 818
dao.larnaca@cytanet.com.cy
Gregoris Afxentiou Square
Tel - 25-806 400
dao.limassol@cytanet.com.cy
Paphos
Tel - 26-801 101
d.o.paphos@cytanet.com.cy
Double Taxation Treaties:
Draft agreements with additional countries are at the discussion stages. A Double Taxation Prevention Treaty, in principle, enables offsetting tax paid in one of 2 countries against the tax payable in the other, in this way preventing double taxation.
Another important factor is the grant of an exemption or tax at a reduced rate on certain receipts such as interest, royalties, dividends, capital gains and others that are connected with a transaction carried out between parties associated with the Double Taxation Prevention Treaty.
It is of the utmost importance to stress that the Double Taxation Prevention Treaty takes precedence over the Cyprus Income Tax Ordinance. In other words, if certain income is taxable under the Cyprus Income Tax Ordinance but there is an exemption (reduced tax) under any Taxation Treaty, the income is taxed, if at all, but only according to the provisions of the Taxation Treaty.
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