CHOOSING AN ESTATE AGENT

The Law and Estate Agents in Cyprus: Choose Carefully

All estate agents must be registered and obtain a licence. A registered estate agent must satisfy the Cyprus real estate Law 273(1) 2004 which stipulates and regulates the manner in which registered estates agents should embark on their business. A registered estate agent must meet certain preconditions including professional indemnity insurance and as the current law exists for a minimum sum of CYP100,000, before being issued with a licence to practise.

A registered estate agent must display prominently his/hers registration certificate.

Why Choose a Registered Estate Agent

Other than the protection afforded by choosing a registered estate agent the Purchaser can also receive financial rewards later.  Those who deal with non-registered and illegal estate agents  may forgo their legal right to have the commission charged by an estate agent deducted for income/capital gains tax purposes.  That is to say, at the time of re-sale the tax authorities will only apply the approved allowance for commission against tax if the purchase and hence payment of commission was made from and to a legal, registered estate agent.

Commission

Beware of illegal activities by non-registered estate agents.  Many unregistered agents may charge as much as 14%  if not more for a sale!  Under the Law, registered estate agents can charge between 3 and 5% on the price plus VAT in addition.  What is actually charged depends on the geographical/local conditions applying at the time of purchase so you should be clear how much you will be charged on the concluded purchase. If there is an agreement this must not exceed 5% . Anything more than that  it is illegal unless of course a higher rate is agreed beforehand and the parties to the agreement give their mutual consent. Commission is always paid by the seller and no  purchaser should be asked to contribute to such costs.

 

PURCHASING AND REGISTERING PROPERTY

 

The Process and the Law of Buying, Transferring and Registering a Property

The following is a brief summary extracted from  © Prof. Dr. Andonis Vassiliades and Maria Chimonides, The Law Office, (2006) article In Touch, issues 2 and 3, pp.30-31, 36-37 respectively. They can be contacted on 0035724624449, e-mail. thelawoffice@cytanet.com.cy

1. Once you have located the property of your choice and wish to proceed to contract seek independent legal advice and assistance.  It is sometimes a false economy to skip such professional advice.
2. The contract of sale must be in writing. 
3. Prior to the writing up of the contract and signing it ensure a thorough search on the property and its title has been carried out.
4. The seller may not necessarily be the legal owner(s) and the property may be heavily mortgaged.  Ensure that the true legal owners and the property are free from any legal and financial restrictions. 
5. If a contract of sale is offered by the seller, or his/her representative or anyone remotely associated with the sale it is advisable, if in doubt, to have it checked by your independent legal adviser. Beware of the “off-the-shelf” ready made contracts too as they are likely to lead to serious legal tangles and liabilities later. If in doubt, customers are again advised to seek professional assistance prior to entering into any agreement.
6. Once the contract of sale is completed and signed it must be deposited and thus registered at the District Land Registry Office within two months of the date of signature.  Once done it affords protection to the owner and the title rights. It prevents any illegal re-mortgaging of the property or the risk of being re-sold without the purchasers consent.
7. Registration of contract of sale at the District Land Registry does not though equate with ownership unless title deeds are transferred and registered on the new owner’s name. 
8. On completion of the contract of sale the purchaser may take vacant possession of the property but that does not secure tenure without title deeds.
9. In Cyprus many properties come without an immediate transfer and registration of title and it may take a few years for a brand new property for instance to have such title deeds approved by the relevant authorities.  For that matter, the contract of sale must stipulate and regulate responsibilities of the seller to ensure provision of transfer and registration of title deeds when available.
10. Transfer of title deeds can only take place once such title deeds become available and where applicable the purchaser secures a Council of Ministers Permit to register the property on their name. This permit is not required if a plot of land is bought.  It refers to dwellings. For EU citizens this requirement is relaxed from 2008. It is worth mentioning that this requirement is normally a formality rather than a hindrance to acquiring property in Cyprus.  Furthermore, these  rules are different for the acquisition of immovable property by Companies registered in Cyprus.  There is no limit to how many properties are acquired and registered by registered Companies.

Taxes, Fees and Rates Paid in the Process of Buying Property

1. Stamp duty is paid by the purchaser at the time of signing the contract of sale.  The current rates are thus:  the first CYP100,000 @ 0.15%. Over CYP100,000 @ 0.20%.
2. Transfer Tax, is paid by the purchaser at the time of the transfer and registration of title deeds and is based on the value of the property thus: 

      up to CYP50,000 @ 3%. 

            50,001-100,000 @ 5%

            Over CYP100,000 @ 8%

Clear savings can be achieved if the property is registered on two names as they are both entitled to separate allowances.

3.Immovable Property Tax is an annual immovable property ownership tax based on the value of the property (but as in 1980 which is of course much lower than the real present market value). This is paid annually by the registered owner.  The rates stand thus:

Up to CYP100,000           exempt

100,001-250,000                0.25%

250,001-500,000                0.35%

Over 500,000                      0.40%

4.  Local Authority Taxes and other Duties are also met by the purchaser/new owner which cover local authority services such as sewerage, refuse collection etc.  These vary but expect anything between CYP50 to over CYP100 per annum per property.

  

Disclaimer

Prices, quotations, references and any other information provided by N & C Kyriakides Estates Ltd is for guidance only and no liability is accepted for any errors whatsoever. Prices are subject to change at any time without prior notice.  N&C Kyriakides Estates Ltd whilst they accept properties and descriptions of properties for sale by individuals and/or Companies including Construction firms  in good faith and are doing their best to promote and convey accurate information to prospective customers they bear no responsibility and liability for any errors, inaccuracies or misrepresentations which may be found in such information.