A common question that I often get asked is if there are any licensing requirements or special considerations for non-EU citizens buying real estate in Cyprus.
Individuals and companies, whether EU or non-EU citizens, may purchase real estate in Cyprus freely. There are however certain restrictions that non-EU citizens should keep in mind when looking to buy real estate in Cyprus and most notably, the need to obtain a permission by the Council of Ministers before they can have title transferred on to their name(s).
The Legal Framework: Cap. 109
The right to own and enjoy real estate is safeguarded by the constitution of the Republic of Cyprus, which provides the right of each person to acquire, possess, enjoy or dispose of any movable or immovable property and to demand of others to respect this right.
This protection extends to every person, whether an EU citizen or a non-EU citizen, who has acquired real estate in Cyprus.
The Immovable Property Acquisition (Aliens) Law, Cap.109 regulates the acquisition of real estate in Cyprus by non-EU nationals. Cap. 109 (which in its original iteration may be traced back to when Cyprus was still a British Colony) aimed to prevent disproportionate ownership of real estate assets by foreigners to the detriment of the economy.
What it Covers & What Restrictions are in Place
The limitations of Cap. 109 do not apply to non-EEA (the EU plus Iceland Lichtenstein and Norway) nationals or companies incorporated in the EEA.
Non-EEA nationals wishing to buy real estate in Cyprus must first obtain the permission of the Council of Ministers of Cyprus.
Normally, permission is routinely granted to bona fide applicants wishing to buy a property for own use or land not exceeding three donums (approximately 4,000 square metres) for the erection of a house to use as a residence.
The Ministry of Interior provided further guidance on the matter and suggested that permission may be granted for the acquisition of a second property or even one residence and a commercial property.
Non-EEA nationals may acquire possession, live in and use his/her property up until title to the property is issued and whilst the relevant application is considered by the competent authorities.
International companies may acquire business premises as well as residential properties for their employees.
Permission may also be obtained for the acquisition of a second holiday home.
What amounts to an ‘acquisition of immovable property’
The following transactions fall within the ambit of Cap. 109:
- Acquisition of freehold property,
- Lease of real estate for a period exceeding 33
- Acquisition of shares in Cyprus companies which own real estate in Cyprus.
Future Disposal of Real Estate
After the permit is granted and title to the property registered in the purchaser’s name, there are no further restrictions or limitations. The property may be sold or disposed of freely (whether by will, trust or otherwise).
In the event of death of the original owner, the said property may be transferred and registered onto the legal owner’s heirs without the need for the above Council of Ministers permission.
Although this law is still in place, the concerns that motivated its introduction seem to being to the past with the Cyprus government actively encouraging the acquisition and investment by non-Cypriots in the Cyprus real estate market.
Also important to note that Cyprus law provides for freehold ownership of real estate assets. When one purchases real estate in Cyprus, one can register this asset on to his/her name for life (as opposed to other legal systems of leasing properties for extensive periods of time).
As a final note, many would consider the above to be a rubber-stamp exercise or a mere formality as permission by the Council of Ministers is rarely denied.
However, it is something that should be kept in mind as it could have important implication on the structuring of a real estate transaction.