Government Policy with Regard to Permission for Acquisition
Precautions to Take
Checklist of Requirements
In Cyprus like most democratic states, the right of ownership in immovable property is
constitutionally protected as one of the fundamental human rights. Article 23 safeguards
the right of each person to acquire, possess, enjoy or dispose of any movable or
immovable property and to demand of others to respect this right. It is not an absolute
right and certain restrictions may be imposed on grounds of public safety, health or
morality, or for town planning purposes, public utility or the protection of third parties.
The Constitution affords protection to the right of ownership to everyone which includes
non-Cypriots who have legally acquired property in Cyprus.
Further the right of property is protected by international treaties to which Cyprus is a
party and by the Charter of Fundamental Rights of the European Union.
Contracts concerning real estate assets in Cyprus are subject to stamp duty which is
imposed in accordance with the following table:
The sale of building land and of second - hand buildings is exempt from VAT.
As regards new buildings before their first use, VAT at the rate of 15% is charged which
is calculated on the basis of the accumulative selling price for the land and the building.
A VAT refund is available for the purchase or construction of a new house used as a main
and primary place of residence, the total covered area of which does not exceed 250m2.
The amount of the refund depends on the type of the property and its size, based on the
130m2 calculation which is extended according to the number of children in the family.
The grant is given to Cypriot citizens and EU citizens residing permanently in Cyprus.
Sale of immovable property for which a valid application for planning permission was
submitted before May 1st 2004 is exempt from VAT.
Capital gains tax is imposed on gains from the disposal of immovable property situated in
Cyprus including gains from the disposal of shares in companies which own immovable
property in Cyprus unless these are listed in a recognized stock market. The tax is
imposed on the net profit from disposal at the rate of 20%.
Immovable Property Tax is imposed annually at the following rates on the market value
as at 1 January 1980 of immovable property situated in Cyprus and owned as at 1st
January each year:
Transfer fees are payable by the purchaser to the District Land Registry Office based on
the market value of the property at the time of purchase as follows:
Due to the economic crises, the Cyprus Government has passed legislation as an incentive, by which the purchaser, depending on the type of immovable property, should not pay any transfer fees or part of these fees, if the contract of sale is signed and submitted to the land registry duly stamped before the 31/12/2012.
Historically legal regulation of immovable property issues date back to the time Cyprus
was under the Ottoman rule. The legal rules later evolved when Cyprus was a British
colony. The modern legal framework is set out in the Immovable Property (Tenure,
Registration and Valuation) law. It was enacted in 1945 and in its last amended form
prior to Cyprus’ independence it was compiled into Chapter 224. The law abolished
certain categories of immovable property which were still governed by an Ottoman code
and codified the contemporary law. The Immovable Property law is a comprehensive
legislative measure governing the most important aspects of immovable property and is
regularly amended to provide for new developments.
According to the definition in section 2 of CAP 224 immovable property includes
Private ownership of immovable property extends to the surface of land, beneath the
surface and above the surface to the extent that it is reasonably necessary for enjoyment
of the land. However ownership does not extend to minerals.
Apart from Cap 224, a series of sectoral laws regulate specific issues concerning
immovable property, such, as sale of land, compulsory acquisition of property and trusts.
This law offers protection to buyers who cannot transfer the title of the property to their
name upon purchase and opt for depositing the contract of sale with the competent land
registry office. The main conditions for a valid deposit of a contract are the following: (a)
the purchaser deposits the contract of sale with the land registry department of the district
where the property is situated; (b) the original contract and the copy are duly stamped;
(c) the contract is deposited together with Form Δ.E. 129 (Declaration of Document) which states the parties name
and address and is signed by the purchaser; (d) the property is registered in the vendor’s
name. A valid deposit of a contract creates an encumbrance on the purchased property
preventing the vendor from selling, transferring or charging the property, and if certain
conditions are met, the contract has priority over other encumbrances submitted prior
the submission of the contract. In case the vendor refuses to comply with the contractual
obligations, the purchaser may obtain a court order directing the registration of the
property in his name.
Any property may be subject to compulsory acquisition by the Republic, a municipal
authority, a legal entity of public law, or a public utility organization on which a right to
acquire property compulsorily is conferred by law. Property may be acquired compulsorily
for a purpose which is to the public benefit. An authority needing to acquire property
in this way should follow the procedures prescribed by the law. An offer is made to
the owner concerning the compensation that may be granted to the full and final
settlement of his / her claims relating to the property in question. If the compensation
is rejected or accepted with reservation, an application to the Court may be initiated for
the determination of the final amount.
The law contains detailed provisions in relation to the amount of the compensation which
is generally assessed on the basis of its current market value.
Rent agreements come within the sphere of contract law. In addition tenancy relationships
are regulated by the rent Control Law which aims at protecting the tenant. It applies to
dwellings and shops to be let in designated areas. The increase of rents is subject to
very restrictive Iimitations, whereas the safeguards for tenants against eviction limit
substantially the enjoyment of property by owners. According to the definition of a
“tenant” the term does not include non citizens or legal entities controlled by foreigners.
Thus the law does not cover foreign tenants.
This law provides for minimum energy performance requirements for buildings and sets
out the system and the methodology for the inspection and control of these standards.
Buildings which are constructed, sold or rented out should be subject to assessment
of their energy performance. An energy performance certificate is issued by qualified
accredited surveyors which the owner is required to present to a potential purchaser or
tenant. The categorization of the building as stated in the certificate will have an effect
on height of the purchase price or rent accordingly.
It is worth noting that a new EU directive has been adopted for the purpose of further
enhancement of sustainable utilization of energy. Member States shall transpose the new
EU directive 2010/31/EU of the European Parliament and of the Council on the energy
performance of buildings by July 2012 the latest. When new legislation is enacted the
existing law will be repealed.
As regards the acquisition of immovable property by foreigners, special procedural
requirements and certain limitations are set out in the Immovable Property Acquisition
(Aliens) Law Cap 109. The law regulates the acquisition and ownership of immovable
property by foreigners and imposes certain restrictions on the size of immovable property
to be purchased and its use.
International Law recognizes the right of states to impose conditions on the acquisition
of immovable property by foreigners, such restrictions may be necessary to serve their
economic policies and their foreign policy objectives.
The degree of control over direct investment and acquisition of property is dictated by
the local conditions. In the case of Cyprus, the restrictions are obviously dictated by the
following main considerations:
Nevertheless, restrictions are gradually lifted in particular in connection with EU citizens
in compliance with principle of non discrimination and with the fundamental freedoms
of the EU.
By and large, the government policy in this matter is encouraging in all bona fide cases.
The implementation measures taken under this law by the competent authorities facilitate
inter alia (a) the housing of companies’ offices and directors, (b) the introduction of new
technologies in the industrial sector and (c) acquisition of a home in Cyprus by private
The law should be read taking into account the predominant policy to attract foreign
investors, promoting tourism and turning Cyprus into a financial centre. This is evidenced
by the existence of tax incentives, the legal and administrative measures taken to
facilitate the setting up of Cyprus companies and to increase the efficiency of the public
Further the comprehensive laws on immovable property, on contracts and inheritance
issues, coupled with the traditional hospitality of Cypriots provide the appropriate
framework for an effective and reliable legal environment for investors.
In the following paragraphs we analyze the main provisions of the Immovable Property
Acquisition (Aliens) Law Cap.109. The origins of the law date back 1936 at a time when
Cyprus was a British Colony, us. At the time the law aimed at controlling the acquisition
of immovable property by enemies or by persons who were not British subject, i.e. an
“alien” or foreigner. Subsequently however, since Cyprus gained its independence in
1960, the definition of ‘an alien’ has come to have a different meaning.
No foreigner may acquire immovable property in Cyprus, other than by reason of death
without the prior permission of the Council of Ministers. Legal issues related to property
acquired by reason of death are governed by inheritance law. The authority of the Council
of Ministers to grant permits under this law was vested to the District Officers to whom
the relevant applications are submitted.
In order to clarify the above restriction, it is important to interpret the word “Alien” as
provided for in the present law. An alien is defined as any person who is not a Citizen of
the Republic of Cyprus including:
Further, according to section 2, the term “alien” does not include:
At the accession of Cyprus to the EU a five year transitional period was granted regarding
the acquisition of secondary residence. This was lifted in May 2009. Thus citizens of EU
member states and EU companies can acquire and invest in any type of property and
will be treated as ordinary Cypriots after May 2009.
The term “Alien Cypriot” is further defined to mean a person, not a citizen of Cyprus,
who was born in Cyprus at the time when his parents were ordinarily resident in Cyprus
or whose father was born in Cyprus at the time when his parents were ordinarily resident
in Cyprus and it includes an alien wife of alien Cypriot who is not separated from her
husband by virtue of competent court. This provision is significant as it allows complete
freedom of acquisition of immovable property in Cyprus by Cypriots who have emigrated
Acquisition under the Law, not only covers outright purchase of property but also the
following transactions by foreigners:
It should also be pointed out that the giving, otherwise than by will, or the sale and transfer
of immovable property or shares, or the assignment of leases amounts to “acquisition”
as far as the transferee or assignee is concerned and requires permission. However the
law provides that the Council of Ministers in granting permission in the first instance
may include a provision in the permit, to the effect that no further permission would be
required for the transfer of the property to another foreigner, if the transfer is consistent
with such conditions, if any, which might be inserted in the permit and in connection
with transfers. A general condition relating to transfers of immovable property held by
foreigners either to other foreigners or not, is that contained in regulations made under
the Law. These provide that the minimum extent to which an alien may for purposes of
sale, divide immovable property held by him, is into plots of not less than 1 ½ donums
unless the Council of Ministers otherwise allows.
It is also noted that in case of a trust coming within the ambit of this law, the foreign
beneficiary should be revealed when applying for a permit.
This may be granted only for industrial or tourist investment. In the case of immovable
property to be used for industrial purposes, permit may be given if the industrial sector
is beneficial to the economy and the industrial process will introduce new technology or
new technical knowledge.
Permission is not normally granted for investments in agriculture or estate development.
Acquisition of land for the creation of a farm would normally be refused if the farm is
intended for commercial exploitation, but small farms for the use of the owners are
This will be granted as a rule, in all bona fide cases where foreign individuals acquire a
flat or house or a piece of land for the erection of a house, intended for residence either
regularly or when coming to Cyprus for holidays or other stays. The same individual
cannot obtain permission for more than one property. Furthermore, no second permission
will be granted to the other spouse or to their children unless in the latter case it is for
their own actual residence or stay. In the case of undeveloped land, the area allowed would
usually be between one to two donums, which is ample for the erection of a luxurious
house or villa and its garages, swimming pools and other outbuildings.
An additional permission may be granted to a couple if due to their personal circumstances
the acquisition of a second home is justified. As for the children of aliens they are eligible
to apply for a permit if they are adults and have a family of their own.
Permission will usually be granted to a company for the acquisition of property for its own uses, such as office space, stores, residences for its directors or employees.
The criteria taken into account for the purpose of granting a permission to acquire immovable property include mainly the following:
In keeping with these principles it follows that, save in the case of approved business
investment purposes, the policy is that permission would be granted in the case
of intended personal or company use and not for the purpose of letting to others,
commercial exploitation, profiteering or speculation.
However, once the permission has been granted it is difficult to check or control the
actual use, because though the policy is as described above, no conditions are imposed
in the permit itself.
The demand by foreigners for property especially flats, is continually increasing
even though the market of immovable property has been affected by the global economic
crisis. At times of high demand the timeline for approval of applications by District
Officers will be between six to nine months or even longer.
The reasons for the interest in acquisition of immovable property by foreigners are many.
Cyprus has always been an attractive place for residency or merely for holidays and its
In addition, the removal of most restrictions since Cyprus’s accession to the EU in May
2004 has resulted in a further influx of demand and market activity which reached its
peak in 2007. In the last couple of years the real estate sector has been affected by
the world economic crisis. The demand for holiday homes has slackened somewhat in
certain areas of Cyprus. The prices in affected areas have fallen by 30% whereas in the
locations which are unaffected the prices remain high. It is expected that public and
private funding of large scale construction projects which are underway will contribute
to the recovery of the real estate sector.
Cyprus has one of the most efficient and well organized land registries worldwide ensuring
that its procedures guarantee absolute ownership. All land is registered together with
precise information and note is taken of all encumbrances and easements connected to
the entries in the registry.
The title deeds issued by the land registry are a definite proof of ownership.
As regards any benefits accruing from trusts concerning immovable property it should
be noted that a trust is valid if: (a) the trust is created by a trust deed signed by the
beneficiary, (b) the trust deed is registered with the Land Registry.
The Director of the Land Registry is authorized by the law to settle boundary disputes if
she/he receives a request to do so. The decisions of the Director of the Land Registry are
subject to appeal. However, no court shall entertain any action related to such dispute
unless it has been settled at first instance.
It is important to enumerate and consider the steps and precautions which a foreigner
should take when acquiring immovable property in Cyprus.
When one buys a piece of land or a house, the seller as a rule must have a title deed in
his own name which can be transferred to the purchaser. However, if one buys a flat,
especially one still under construction, there is no title deed in existence for the flat and
sometimes the seller does not have a title deed even for the land on which the building
is being built because it may still be in the name of the original owner from whom the
developer has purchased the property and to whom he still owes money. These are
matters which the purchaser’s lawyer must consider and embody in the contract, as well
as take such other steps as may be necessary so as to safeguard the interests of the
All the above matters should, of course, be looked after by the lawyer of the purchaser,
but their enumeration and their following up by the purchaser himself is advisable and
Since May 1987, the government of the Republic of Cyprus has passed legislation
whereby all professional Real Estate Agents have to register with the Board for the
registration of the Real Estate Agents of the Republic of Cyprus.
In 2010 a new law was enacted harmonizing the Cyprus legislation with the acquis
communautaire in this field. The law repeals the previous legislation and provides for
the registration of real estate agents, the exercise of their profession and other related
matters, No 71(I)/2010.
A Cyprus national or a citizen of an EU Member State may register with the Estate Agents
Registration Council and carry a professional licence to deal in real estate, if he/she:
The latter safeguards prospective buyers so that, in the remote case the real estate
agent misinforms a prospective client, the client has the right to sue the agent to be
The law imposes a series of obligations on estate agents to ensure a high quality of
service, notably it provides that the agent has to inform the potential purchaser of all
data relating to the natural condition of the property and any encumbrances or other
restrictions. The agent is bound to assess the status of the property irrespective of
whether the agent was asked by the client to do so. If the agent is unable to carry
out this duty he / she shall inform the client accordingly before the latter finalizes any
It is recommended to buy from members of the Cyprus Real Estate Agents Association
(CREAA) as all members of CREAA are registered and licensed estate agents and they
all carry professional insurance.
Third country nationals acquiring immovable property in Cyprus may under certain
circumstances be eligible to apply for an immigration permit. Further, non-Cypriot
investors may receive citizenship through naturalization if they meet the criteria of
individuals providing services of high importance.
Applicants for immigration permit (Category E) are treated more favourably if they have
purchased a house in Cyprus at a price of at least €300,000 to be used as their private
residence. This category of immigration permit is equivalent to a permanent residence
As regards the acquisition of citizenship by non-Cypriot investors it is worth noting
that an investor having a permanent privately owned home in Cyprus and investing in
immovable assets exceeding the value of €10m or 5 year fix deposit to a Cyprus Bank
of at least €15m can apply to the Minister of Interior for naturalization.
Our office can offer you comprehensive services comprising legal and administrative
assistance in activities related to immovable property. The professional qualifications
and expertise of our lawyers in the corporate department and the litigation department
can assist you with the various stages of the procedure involved in acquiring the permits,
entering into transactions and completing the administration at the Land Office.
It is worth noting that our office has prepared the World Bank - Doing Business Report
on immovable property issues for 2010 and 2011
The evolution of the legal framework concerning immovable property has led to the
creation of a comprehensive modern system regulating with precision and efficiency all
aspects of real estate issues.
The land department runs an accurate registry of owners which guarantees ownership
and ensures transparency regarding the status of property and any restrictions in the
Further, the legal and institutional context relating to transactions in this field is enhanced
by long-existing laws in the area of contract, inheritance and taxation. In addition new
elements were incorporated harmonizing the real estate field with EU laws and policies.
All of the above together with the incentives for foreign investors provide an effective and
reliable legal system for investing in immovable property in Cyprus.
A bespoke 'offshore' solution can be complex and requires careful planning and execution. We
therefore encourage our clients to contact us directly, without obligation.
While all of our consultants in our offices provide a Free Initial Consultation, the
office and consultant listed below has particular expertise in this area and will gladly assist with advice
on how to approach your unique challenge.
Alternatively, to select one of our multilingual offices, click here for a list of our office contact details.
Languages spoken in this office: English and Greek
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