Legal Notes on Real Estate & Property in Cyprus - Introduction

Nowadays the world population is growing rapidly and so is the demand for land. The need for land is not limited to the residential sector; it occurs in the agricultural, industrial, commercial and tourist sectors as well. Land is a finite material and therefore its value worldwide is constantly increasing.

This increase in value is aggravated by inflation and by the instability of the monetary systems and fiscal policies of the countries that lead the race in the financial field, thus making investment in the safer sector of immovable property more attractive. The great technological progress in communication, transportation and international trading has made investment in this field easier and more accessible than in the past.

Man's affinity with the land stems from time immemorial and it is easy to understand why land has always been considered as one of the most precious commodities, closely connected with social and economic stability and progress, and why the various legal systems have always tried to regulate in detail the rights of possession, occupation and ownership of immovable property.

Cyprus
Cyprus is no exception to the rule. The economic and social evolution that has taken place in recent years and the sophisticated methods of cultivation and industrialization, together with the absence of alternative forms of investment, have diverted capital both from home and abroad to land ownership and land transactions.

This trend has necessitated the establishment of a suitable legal framework whilst allowing the involvement of Cyprus in the international land market, protects the social, economic, agricultural and industrial interests of the island and its people.

Cyprus has achieved this task. Despite its troubled history, it has managed to develop a constructive legal system for immovable property that is as efficient as similar systems in other advanced countries. It is operated through a series of laws which are regularly amended to meet everyday demands and balance conflicting interests in this vital sector of the economy.

CYPRUS IN THE INTERNATIONAL LAND MARKET
Foreign investments in immovable property
The location of Cyprus in the eastern Mediterranean at the crossroads of Europe, Asia and Africa, the safe and protective legal system, the perfect infrastructure, coupled with regular communication with all parts of the world, the relatively low cost of living, its excellent climate and the friendliness and hospitality of its people, are just some of the reasons that have made Cyprus attractive to foreign investors for over 20 years now.

Foreigners who seek to invest in immovable property in Cyprus may be classified in the following four main categories:
(a) Retired residents - These are people who settle permanently in Cyprus upon retirement. A series of incentives is given by the Cyprus Government to retired people, including duty-free facilities and very low taxation of their income which emanates from abroad. These people may also enjoy, under certain circumstances, the benefits of the Double Taxation Treaty of their country of origin with Cyprus, if there is one. Cyprus has signed 26 such treaties, regulating in effect tax relations with over 40 countries.
(b) Employed residents - This category includes foreigners who live indefinitely or for a fixed period of time in Cyprus as employees, either of their own offshore company or of a local or offshore firm, and who choose to purchase their own property in Cyprus rather than live in rented premises.
In this category are also included offshore companies purchasing houses for their Directors.
(c) Holiday Makers - Speculators
These people purchase properties in Cyprus as holiday homes or for possible permanent places of abode upon retirement, or for the sale thereof with a reasonable profit at a later stage.
Profits realized by foreigners from the sale of immovable property may be expatriated under certain restrictions.
(d) Business investors
These are foreign individuals and companies who acquire property in Cyprus for touristic or industrial purposes, making use of the location and climate of Cyprus, the excellent infrastructure and the various incentives offered for these purposes, especially in the area of taxation. To this end, the Free Trade Zone structure of Cyprus offers great inducements ranging from the provision of all modern facilities to low tax or tax incentive status.

Prices
The relatively small area of Cyprus and the great demand for immovable property, especially in recent years, have led to a considerable increase in the cost of land and accommodation in Cyprus. However, despite the increase, the prices of land and accommodation in Cyprus, as well as the cost of living, are still comparatively lower than those of most European countries or holiday resorts.2.3 Legal assistance

The complexity of the legislation on immovable property and the formalities which need to be considered when dealing in relevant matters render it necessary, especially when foreigners wish to invest in immovable property in Cyprus, to seek and obtain from the start reliable and efficient legal advice in order to avoid unpleasant results and future undesirable consequences.

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