A PROPOSED bill to amend Cyprus’ property legislation and lift several restrictions could soon see a boost to foreign investment in real estate on the island.
The bill aims to modify existing legislation to repeal limitations on immovable property ownership for EU and European Economic area nationals.
According to the bill’s accompanying explanatory report, which daily Philelefteros said was signed by Attorney-general Petros Clerides, restrictions on buying second homes in Cyprus would be repealed for European citizens and companies owned by residents of other countries.
Under the terms of the amendment, the paper says, companies that will be able to acquire property without giving up their constitutional base, central administration or main establishment either in an EU or EEA state.
Until now, legislative processes relating to the buying property have been much stricter – partly due Turkish invasion in 1974 –The paper says, restrictions near the buffer zone are even tighter.
Before Cyprus joined the bloc, EU citizens had to get approval from the Cabinet if they wished to acquire a residence in Cyprus. This was ditched when the island became a member state but permission was still needed to buy a second home in Cyprus.
With the new amending bill, the need for a permit by Cabinet or local authorities will be annulled, and a company that has been recommended based on the legislation of an EU member-state and has its constitutional base or its main establishment/headquarters in that country, will be able to acquire property, for example, on the Green Line, without facing any obstacles.
Property tax reductions are also reportedly under discussion by the government, after lobbying efforts by the Land & Building Developers Association and the Land & Property Owners Association.
According to local property expert Nigel Howarth, the proposals include a 5.0 per cent VAT reduction for first-time home buyers for residences up to 250 square meters – and maintaining it at 15 per cent for residences between 250 and 300 square metres.
A suspension of property transfer fees for a three year period is also under discussion.
Howarth said: “The Island’s property market has been in trouble for quite some time. Sales have fallen for 13 consecutive months and are now down by almost 20 per cent on the numbers sold last year. Unemployment in the sector has risen and the business climate deteriorated.”
Were the proposals to be accepted, Howarth said: “They should go a long way in relieving the problems of the industry and should also help to clear the backlog of Title Deeds waiting to be issued.”
