An investment in real estate is a worthy deed

An investment in the Cyprus real estate sector has always been profitable, and it will be so despite the current global economical recession says George Coucounis.

A proper look at the current financial situation around the world makes everyone in Cyprus believe that the best investment is in real estate. Cyprus has always been an attractive place to live, work, conduct business, invest or have holidays. Being an island in the Mediterranean, with good climate conditions, proper services, low criminality, a country member of the European Union, low taxation, it offers financial stability and many other potentials including real estate.

Moreover, nowadays, with the market prices becoming stable, anyone could find a property suitable for his needs at a reasonable price which can be negotiated on mutually accepted terms. The market offers new properties to be built, used ones, newly built and land in the towns, holiday locations and rural areas. Distances are no longer an issue because of the motorways and services can be found everywhere and you can be at your place shortly.

Another factor which can be taken into account is the low tax rates imposed on properties and land. One should also bear in mind that Cyprus has introduced a subsidy for purchasing or building a new residence to be used as a main, permanent residence, in lieu of the VAT.

The amount granted by the Grants and Benefits Service is considerable depending on the size of the property which must not be more than 250 m² and it applies for properties for which the application for the town planning permit has been filed with the relevant authority after the 1st of May 2004. There is no issue for paying immovable property tax since one must own immovable property totally valued over €170,860 as at the 1st January 1980 and if he purchases a property without a separate title deed and he is asked to pay this tax, he is entitled to claim it after the property is transferred to him. VAT is not imposed or payable on the transfer fees and the Land Registry deducts the VAT before assessing the transfer fees payable.

People buy or invest now in the real estate in Cyprus without any serious problems because they seek advice from consultants to ensure and ascertain their choice and to protect their rights, instead of relying on trust. A new legislation is discussed to be passed in order to amend the law of specific performance in many respects, extending its applicability to meet the new requirements and to resolve the issue of separate title deeds.

It should also be noted that Cyprus is a small place where anyone can find out easily the trustworthiness and the credibility of every person involved in the real estate market, a developer, a builder, an architect or civil engineer, a real estate agent, a banker, an accountant, a valuer, a lawyer or any other consultant.

The purchasers of an immovable property to be built, either a house or an apartment, must seek professional advice in advance in order to establish:

  • the size of the property,
  • no variation or alteration will be made on the approved architectural plans during the construction period without their written consent,
  • the communal areas will be described in detail and will not be changed later,
  • that no unit is given an exclusive right of use of any part of the communal areas,
  • the use of the units will be the one approved and cannot be changed,
  • that no cancellation fees or any other fees will be charged upon the purchasers and that they will have the freedom to re-sell the property before the issue of the separate title deeds and the vendor will have the respective obligation to sign a new sale contract and a cancellation agreement,
  • that the property is not mortgaged and if so, a bank waiver to be secured,
  • the building works will not start without the vendor obtaining the necessary permits and approvals,
  • the mode of payment will be according to the progress of the work and the issue of a certificate proving it,
  • a detailed description to be given regarding the technical specifications,
  • the completion date to be stated and an obligation to be placed on the vendor with regard to the good workmanship of the building and the quality of the materials used for a minimum period.

The above are some of the terms to be included in a sale contract so that to avoid the phenomenon of a purchaser to buy a mortgaged property, a part of the communal areas to be sold for the exclusive use of a certain unit, thus the vendor making unjustified profit, a shop or an apartment on the ground floor to change its lawful use becoming a pub or a club causing unbearable nuisance to the owners of the other units, the issue of the separate title deeds to be delayed because of alterations and illegalities, to avoid the refusal of the vendor to facilitate the purchaser in the re-sale of the property by claiming unlawfully cancellation fees, the appearance of defects, moisture and subsidence, the lack of electricity, water and road services by the appropriate authorities, the inability to complete the construction of the building and many other problems that can be found in an individual case or situation.

About the author

George Coucounis

George Coucounis is an experienced lawyer practicing in Larnaca, Cyprus. Educated at University College (London) and Thessaloniki University (Greece), George is fluent in English and has been practicing law in Cyprus since 1982.

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