There are hundreds of properties across the island in need of restoration, both in the villages and in the towns and, for some expatriates, the idea of purchasing a run down Cypriot property and restoring it to its former glory is a dream come true. With government grants and tax incentives available, the advantages of undertaking such a project can seem immense. However, prior to deciding to restore an old Cypriot property, it is important that budding developers take into account all of the risks and possible problems involved in restoring a property. In this article I will outline some of the issues to consider prior to undertaking a renovation.
Cyprus has a complicated system of forced heirship that can result in multiple people inheriting a property. As time passes and a property is passed through the generations, more and more members of the family can become involved in a stake of the property. Village houses are particularly prone to this effect and problems can occur where owners disagree about terms of sale or even whether the sale should happen at all. If you are purchasing a village property, you are well advised to obtain a copy of the title deed early on and check who owns the property and that all of the owners agree to the sale. All of the owners need to sign the contract of sale and there is no point in negotiating an agreement if one co-owner has no intention to proceed.
You will need to find out whether the property is listed. Government grants are only available for listed properties and so if you wish to take advantage of such grants you will need to make an application before you undertake any work. The application is made to the Department of Town Planning/Housing but, be warned, it is not a quick process - applications can take up to 18 months.
Government grants are available for the renovation of listed properties. However you need to be aware that where such grant is made available, the influence of government on the restoration itself will be considerable. The government will control what you can and cannot do to the property. Developers need to weigh the benefit of the grant against what may be perceived as interference in their concept.
It is very important to be realistic when first viewing a restoration project property. Whilst there are many properties with massive potential, the fact is that a large number of village properties in Cyprus may lack even basic amenities such as connection to electricity, water and sanitation. The cost and time involved in arranging such connections should never be underestimated and the possible financial gains of the sale of a restoration project should be carefully balanced against the time and effort involved in arranging these basics.
There are a number of taxation advantages from which the owner of a restored property may benefit. For instance, income tax provisions allow up to 20% of gross rental income to be deducted for tax calculation purposes. An accountant should be consulted to ensure that maximum benefit Is obtained from such provisions.
A good and successful restoration project will depend upon the developer assembling a team of experts to assist him. You will need:
A restoration project on even a small scale should not be underestimated in terms of costs, time and stress. It is critical to enter into such a project with an understanding of the process involved in restoration. Consulting legal, architectural, engineering and accountancy experts will greatly increase the developer’s understanding and cut back on the potential of problems arising.