“It is necessary to reform the legislation applicable to the acquisition of real estate by foreigners”
The acquisition of real estate by UK citizens after December 31, 2020, the end date of the Brexit transition period, is split among those who bought it before that date, for which no authorization is required from the district officer and those who acquire property by purchase, donation or inheritance after, for whom authorization is required, as well as for citizens of non-EU countries, in accordance with Cap 109 and regulations issued by the Council ministers and the relevant circulars.
According to them, the authorization is only granted for the acquisition of a maximum of two units, which can be located in different developments and be either two residential units or one residential unit and a store of Maximum 100 m², ie a living unit and an office with an area of up to 250 m². In addition, an authorization is granted for the acquisition of land or land which has not been divided into plots with a maximum area of 4,000 m² if it is intended for the construction of a residence. private. In the case of spouses, only one authorization is granted.
In the case of a citizen or legal person of an EU Member State, no authorization is required from the district officer and there are no restrictions on acquisitions.
Any foreigner can set up a Cypriot company and acquire property regardless of its management or shareholding structure without any restriction. The reasonable question that arises is why the above restrictions exist for natural persons, since they can acquire real estate through a company. It also appears that Cap 109 needs to be reformed, as many of its provisions are not applied and the current situation has changed considerably.
The relevant provisions of Cap 109 constitute a paradox, as they impose restrictions on both natural and legal persons, while for legal persons they are not applied in practice. A foreigner who is a natural person is not allowed to acquire real estate with an area greater than 4,000 m² or to deposit his contract of sale in the land register for specific enforcement purposes and there is even a restriction on purposes of acquiring it. It is possible to buy a property larger than what is allowed, but filing the contract for a specific purpose would violate the law. Consequently, a foreigner may, in the present circumstances, acquire a contractual right but not be able to register it in his name.
Based on the provisions, a foreigner must submit an application – type 145 to the district officer, in which information is requested, such as the country of origin and the address of permanent residence or the address of residence in Cyprus, passport details, occupation, marital status, number and age of children, financial situation and details of any other real estate in Cyprus owned by the applicant or a member of his family. In addition, they must provide details of the property for which the application is made, details of its registered owner, the price and purpose for which the property is purchased, details of the applicant’s visits to Cyprus and whether he has the intention to settle permanently in the country and other relevant information. In addition, they must submit a topographic plan, a copy of the title deed or a copy of the building permit, a copy of the duly stamped sales contract, a plan of the house or apartment excluding old houses. mentioned on the title deed, and in case of division of the land into plots, a division plan; in residential development areas, a plan must be submitted showing the position of the house in relation to the entire farm.
It is understandable that specific information from foreigners is required, especially the source of income and financial status of the applicant, but the government should focus on 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 to reform the relevant legislation and the government should review it as soon as possible.
George Coucounis is a lawyer in Larnaca and founder of George Coucounis Llc, [email protected]