Buying a Property in Cyprus: Case Study
By Ayesha Chagla, Property World Issue 3
In recent years the number of foreign visitors to Cyprus has steadily increased and more and more people are starting to consider it as a perfect place for a second home. Although the island currently provides an idyllic place to stay, it hasn't always been this tranquil. Roman, Byzantine, Greek and Frankish influences have all had a bearing on life in Cyprus. Turkey occupied Cyprus for more than three centuries from 1571 to 1878 and after that it became part of the British Empire. Independence from the United Kingdom was approved in 1960. Hostilities in 1974 divided the island into two autonomous areas. Since then, a United Nations buffer zone has separated the Greek Cypriot area, which is controlled by the internationally recognised Cypriot Government, from the Turkish-Cypriot area. Nestling on the west coast of the island is Pafos or Paphos. The town has always been an important part of Cyprus' past and its history dates back to the 4th century B.C. In Hellenistic and Roman times it was the capital. These are just . a couple of reasons why, for thousands of years, people have been drawn to this beautiful area.
Echoes of the past resound throughout the region. Legend has it that in 1200 B.c., Aphrodite, the Greek goddess of love and beauty, rose from the sea near Pafos and a huge stone called the Petra tou Romiou, or Aphrodite's Rock, marks the spot. Excavations have unearthed 3rd -5th century-mosaics of the Houses of Dionysus, Orpheus, and Aion. There are ancient ruins, tombs, theatres and houses dotted all around the area. Pafos is so rich in relics that the entire town has been placed on UNESCO's World Heritage List. But we'll return to the Pafos of this century, or more specifically, August 2001.
Paul and Claire Townsend, British nationals, currently residing in Dubai, decided to head to Cyprus for a family holiday. Their Cypriot neighbour kindly offered to let them stay at his house in Pafos. The Townsends fell in love with the town and began looking into how much it would cost to own a home there. They got in touch with their neighbour's developer and never looked back. But this isn't just a story about a family building a home in a foreign country. It's also a story of how one can still find instances in this fast-paced and increasingly impersonal world, where a person's word counts for something. Claire and Paul met the property developer who was as they put it "...a small time developer", explored options and sites and then put down a £1,000 deposit for an £80,000 house. Their holiday soon came to an end and after returning home, they started looking for mortgage options. Unfortunately events on September the 11 th 2001, made it rather difficult for a couple living in the Middle East to get a mortgage. Nonetheless, their developer back in Cyprus trusted that they would somehow find the money and continued working on the project. Construction started in January 2002 and in the same month after much looking around, the Townsends finally secured a mortgage. They paid for the house in installments which they negotiated with the developer.
It took 18 months to build the three bedroom, 2 bathroom, house, which is part of a compound of five villas with a shared pool. Claire and Paul visited Pafos a few times while the house was being built, but since they weren't able to be there continuously they depended on their developer to get the work done properly. Their developer took them around to find tiles and cabinets and also let them have extra things built at no additional cost by letting them swap for items that they didn't want which were included in the price. At the end of construction Claire and Paul had only paid £3,000 for extras.
For foreigners wishing to buy a house in Cyprus there are a few points to note. As a non-Cypriot, you are entitled to freehold ownership of one property, a villa or an apartment or a piece of land up to 4,000 square metres. Each plot has rules which govern the percentage of land that can be built on which gets classified as "covered area". Building on two floors doubles this space. One can also have a cellar and an attic which will be included in the same house space and there are other tricks like not having a door on the garage so that it doesn't get considered a "covered area". However; Cyprus will be joining the EU in 2004 and so some of these restrictions may no longer apply for British citizens
After making an offer and it's accepted it's normal to put down a deposit, which will secure your purchase. Once your contract is ready to sign, although the Townsends didn't have to do this, it's normal for the buyer to pay at least 20-30 percent of the value of the property. The remaining sum will be paid according to the terms agreed with the seller. Paul and Claire recommend that you keep the final payment until any snags have been ironed out. They also suggest that you go to Cyprus in winter because it does get cold and it rains. This means that your new house may leak and you'll want these problems to be corrected before you pay your last installment. The Townsends have put in a fireplace and also have air conditioning units which can be used as fan heaters.
Claire and Paul's developer also took care of the next steps in buying a property. Once the contract is signed it must be deposited at the land registry office. This basically blocks the property and doesn't allow the seller to re-sell it. The next step is to apply to the Council of Ministers for approval of a nonCypriot to buy property. For this one requires: a bank reference, a character reference, verification that the land size is within the legal limits, that only one property is owned in Cyprus and that the buyer has the minimum required funds to live in Cyprus. Once you own a property in Cyprus you automatically get a residence visa, but a work permit has to be obtained separately.
In terms of furnishing the house, Claire says that furniture and household items like washing machines are fairly expensive. She recommends that you buy these during the sales in August and January. She also brought a lot of the smaller items like garden furniture, duvets and pillows over from Dubai where it was cheaper to buy them from. The Townsends paid £300 for a water connection fee but they say that their water and power bills are not high at all, neither is their local council tax. They were also rather surprised at how little it cost for them to get their home and contents fully insured.
In terms of prices, it's not that expensive to live in Cyprus compared with the high standard of living it offers. The country is small and the people are very welcoming, with the added advantage that a lot of them speak English. One can ski and go to the beach on the same day and the crime rate is very low.
For the Townsends, buying a house in Pafos wasn't just an investment. It's having a home in a place that offers the tranquility of living in the countryside with in reach of the centre of town and the harbour side in ten minutes. And it's also a place they can go to with the knowledge that they are surrounded by friendly and trustworthy neighbours in a truly historic part of the world.
