Acquisition of immovable property in Cyprus by aliens

THE acquisition of immovable property by British citizens after 31.12.2020 when the transitional period due to Brexit ended is divided between those who purchased an immovable property before that date, for whom no permission is required from the District Officer and those who will acquire an immovable property through purchase, donation or inheritance after the aforesaid date, for whom the relevant permission is required. For them, as well as for citizens or legal entities of non-EU countries, who wish to acquire an immovable property in Cyprus, the current legislation, Cap.109 and the regulations issued by the Council of Ministers and the relevant circulars are applied. According to them, a permission for the acquisition of an immovable property by an alien is granted only for the acquisition of up to two units, which can be in different developments and be either two housing units, or a housing unit and a shop of up to 100 sq.m., or one residential unit and an office with an area of up to 250 sq.m. Also, a permission is granted for the acquisition of a plot or land that has not been divided into plots with an area of up to 4.000 sq.m. if it is intended for the construction of a house for private residence. In the case of spouses, only one permission is granted.

Regarding a citizen or a legal entity of an EU member state, no permission is needed from the District Officer to acquire an immovable property and there are no restrictions regarding the extent, type and purpose of the real estate that can be acquired. Therefore, any alien can set up a Cypriot company and acquire an immovable property regardless of its management or shareholding structure without any restrictions. The reasonable question which arises is why the above restrictions exist for physical persons, since they can acquire an immovable property through a company. It also appears that Cap.109 needs to be reformed, since many of its provisions are not applied or the current situation has substantially changed.

The relevant provisions of Cap.109 constitute a paradox, since they impose restrictions on both physical and legal persons, while for legal entities they are not applied in practice. An alien who is a physical person is not allowed to acquire an immovable property in Cyprus of an extent of more than 4.000 sq.m. nor is he entitled to deposit his sale contract at the Land Registry for specific performance purposes and there is even a restriction for the purpose of acquiring it. It is possible to purchase an immovable property larger than the allowed extent, but it is not allowed to deposit the sale contract at the Land Registry for specific purposes, as this would violate the law. Consequently, an alien can, under the present circumstances, acquire a contractual right but not an estate in land over the immovable property he purchased and as a result he will not be able to have it registered in his name.

Based on the provisions in place for the acquisition of an immovable property by an alien physical person, he must submit an application – type 145 to the District Officer, in which information is requested of the applicant, such as his country of origin and address of permanent residence or his address of residence in Cyprus, details of his passport, occupation, marital status, number and age of children, financial status, details of any other real estate in Cyprus belonging to the applicant or a member of his family. Also, he must provide details of the property for which the application is made, details of its registered owner, price and purpose for which the property is purchased, details of the applicant’s visits to Cyprus and whether he intends to settle permanently in Cyprus in the future and other relevant information. Moreover, he is requested to submit a topographical plan, a copy of the title deed, a copy of the building permit unless the title deed was issued, a copy of the duly stamped sale contract, a floor plan of the house or apartment excluding old houses mentioned on the title deed, whereas in cases of division of land into plots, a division plan must be submitted; in areas of residential development, a plan must be submitted showing the position of the house in relation to the entire holding.

It is understandable to require specific information from aliens wishing to acquire an immovable property in Cyprus, especially the source of income and the financial status of the applicant, but the government should emphasize on the control regarding the use of the property and the income it brings to the applicant after its purchase, in order to avoid any tax evasion. There is a need for reform of the relevant legislation for the acquisition of immovable property by aliens and the government should examine it the soonest.