Tips for Non EU citizens for Buying Property in Cyprus
This article was published on Thursday 07 February, 2013.
Demand in the Cyprus Real Estate Market comes primarily from the foreign market although the local market has also had a strong share over the years. For many reasons Cyprus has emerged as an increasingly popular place for doing business, for retirement and the acquisition of holiday homes by foreigners. For a long time the foreign market was dominated by the British, who have always had a majority share, however due to the global economic crisis the Russian market has been acquiring an increasing percentage. Due to the financial difficulties now experienced in Cyprus as well Cyprus banks have now introduced new stricter rules on funding and securing a loan is now a time consuming process. This has led to a downturn in sales also adversely affected by the high borrowing rates.
This reduced demand in the real estate market has also led local property prices to fall. In general real estate prices in tourist areas have reduced by around 30%-35% and in residential areas by approximately 20%-25%. These means that very good bargains are now available and especially prices from re-sales, primarily offered by foreign buyers – mainly British- are easy to achieve and may prove a wise move, once the market begins to recover in the coming years.
The most recent development in the Cyprus real estate market is an increasing demand from China. Indeed, although property prices in Cyprus have fallen by around 15% since 2007, an official survey published recently has indicated that between August and October 2012 more than 600 properties were sold to Chinese buyers, 90% of which were in the western area of Pafos.
Attracting buyers from China and other non EU member states is a policy implemented by the Cyprus government as well as by other EU states in an attempt to reinvigorate their stagnant property markets. Cyprus however is an attractive option because local property prices are still much lower than those of other competitive European countries, such as Spain and Portugal, by approximately 15% for holiday homes and by 25% for other types of properties.
The opportunity to secure permanent residence in an EU member state is a huge attraction for Chinese nationals because it offers them visa-free travel throughout the 27 member states of the European Union, whilst an extra incentive for Chinese parents to obtain permanent EU residence is that they can then enroll their children to schools in Europe and be able to visit them without difficulty.
Ever since the accession of the Republic of Cyprus to the European Union on 1st May 2004, nationals of all EU member states are treated as locals and are therefore allowed to buy all types of real estate property in Cyprus without any kind of restrictions whatsoever. This applies both for individuals as well as for companies. Foreigners however, who are nationals for non EU countries are only allowed to acquire either one apartment, or one house or one building or land of a size that does not exceed 4.000 m².
Additionally, offshore entities are allowed to acquire premises for their business or for use as residences of their foreign employees provided such residences are registered on the individual employees' names. However, the permission of the Council of Ministers is a prerequisite for any transfer of any type of real estate property on an alien’s name. In general terms, all genuine applications are granted such permission provided that the property to be transferred 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 investment can convincingly claim to be enriching tourism and employment opportunities for the local economy.
Due to the new accelerated procedure, obtaining a permanent resident status through purchasing property is becoming increasingly popular. Potential investors however, should pay particular attention not to fall victims of crooks who might want to trick or overcharge them. In this sense they should be particularly wary of individuals who ask for big sums in order to act as “facilitators” or middle-men. Visa applications can be done through local lawyers who will usually carry out such a task for a reasonable, fixed rate of about €2.000.
Moreover, potential investors should make sure that they make all their decisions based on the true facts to avoid any nasty surprises in the future. This entails having a clear picture about the cost of living, health costs, maintenance costs, insurance etc. Furthermore they have to ensure that they have an independent valuation of the property they are interested in, so that they do not pay more than its true market value. It is also important to check for mortgages or other impediments to transferring the property, such as having a lawful building permit. Prior to committing to buy, they should also have a clear view of all sums required for transfer fees and other relevant property taxes as well as common expenses that might take their purchase off budget. Lastly, if the buyer will be away from Cyprus for long periods it is also a good idea to demand monthly reports from the developer about the progress of the construction progress and once the building is completed to employ someone locally to look after their property.
What follows below is the complete text of the announcement issued by the competent Ministry of the Interior of the Republic of Cyprus on 23 August 2012, entitled “New and accelerated procedure for granting Immigration Permit to applicants who are third country nationals and intent to invest in the Republic of Cyprus”, which succinctly explains all the terms and conditions now in place in order for third country (non-EU) nationals to be able to secure permanent residence status. Please read this announcement carefully if you are a third country national wishing to exploit this opportunity:
1. According to the provisions of Regulation 6(2) of the Aliens and Immigration Regulations, the Minister of the Interior decided to issue Immigration Permit to applicants, who are third country nationals, provided that they fulfill the following criteria:
(α) The applicant must prove that he has at his disposal a secured minimum annual income of €30.000, from sources other than employment in Cyprus. The required income of €30.000 could derive from salaries of employment abroad and not in Cyprus, pensions, stock shares, rents, etc. The necessary minimum annual income is increased by €5.000 for each dependent person.
(b) The applicant must submit the application form accompanied with a Title of ownership or contract of sale, of a property in Cyprus, a house, apartment or other building, of a minimum market value of €300.000 and proof of payment for at least €200,000. The contract of sale should already have been submitted to the Department of Lands and Surveys.
(c) The applicant must submit a confirmation letter from a Cypriot Bank stating that he has deposited a minimum capital of €30.000 in an account, which will be pledged at least for a three year period.
It is noted that the amounts mentioned in paragraphs (b) and (c) should be proven to have been transferred to Cyprus from abroad.
(d) The applicant must submit a Criminal Record Certificate (if the applicant resides abroad), which must be issued by the Authorities in his country of origin, and he should not constitute in general any threat against public order or security in Cyprus.
(e) The applicant should submit a Statement that he does not intent to work or be engaged in any form of business in Cyprus.
(f) The applicants should visit Cyprus at least once every two years.
PROCEDURE FOR THE SUBMISSION AND EXAMINATION OF AN APPLICATION
(α) The application should be submitted on Form (M.67) to the Civil Registry and Migration Department or to the District Offices personally or through post or through a representative. It is noted that the applications submitted to District Offices shall be transferred to the Civil Registry and Migration Department directly, without any processing.
(b) Applications which are submitted in Cyprus, personally or through a representative or by post, shall be filed in an ordinary file (the applicant should ensure that each relevant document of the application must be numbered with blue ink, from the first page to the last). Inside the file there shall be included a check list of all necessary documents, which must be submitted with the application form, which must be completed by the applicant or by a representative of the applicant.
(c) The application shall be examined by the Civil Registry and Migration Department and shall be submitted to the Minister of the Interior, through the Permanent Secretary of the Ministry, for a decision. For the purposes of the specific type of immigration permit, no personal interviews are necessary, except when the Permanent Secretary decides that an interview is necessary.
(d) The Ministry of the Interior shall inform the applicant or the representative of the applicant and the Civil Registry and Migration Department, about the decision of the Minister of the Interior.
(e) The Immigration Permit shall not be cancelled, provided that the applicant will visit Cyprus one time at least, every two years period.
3. After the publication of this Announcement, any third country national who has applied for an Immigration Permit for Category F, may submit additional documents to the Civil Registry and Migration Department, in order to meet the criteria of paragraph 1 and have the application examined according to the provisions of Regulation 6(2) of the Aliens and Immigration Regulations, regarding the above mentioned criteria and the relevant procedure.
4. Provided that the criteria described in paragraph 1 are fulfilled and no further questions arise with respect to the Criminal Record of the applicant, or Public Order, the application shall be examined by the Minister of the Interior in a positive spirit and the Immigration Permit shall be granted.
5. It is estimated that when applying the procedure described above, the period for the examination of the application, shall not exceed a period of 1-2 months.
6. The present Announcement and the following documents, which must accompany the application form, can be found in the website of the Ministry of the Interior: www.moi.gov.cy:
- Application Form Μ.67
- Check List
- Statement to the effect that the Applicant is not employed in Cyprus.