Buying guide on purchasing property in Cyprus

Cyprus continues to enjoy property price rises and the growth seems to be accelerating

1) Determine your budget

Buying a home is the largest single investment many will make in their lifetime. We have prepared the purchase process stages with some hints and tips that will help you understand the process of purchasing property in Cyprus.

What is your budget?

The price of your new house or apartment in Cyprus is obviously for you to decide. What additional costs are involved in purchasing a property in Cyprus? You will have the following fees that need to be paid for a € 170 800 property but see the full schedule under property costs.

* Will be reduced if you purchase the property jointly with another person. The transfer costs will in such event be reduced to € 5,126.

Mortgages

Cyprus mortgages with different products on the market rank amongst the best in the market today. And Cyprus banks are introducing new products every year. Generally, mortgage lenders will lend you about four times your annual gross income. If you are buying with a partner, then they may lend you an extra amount equivalent to four times his or hers annual gross salary as well.

The common rule of thumb is to spend no more than one-third of your monthly net-income on mortgage repayments. This is a big commitment when you consider that most mortgage terms last about 25 years. We recommend that you seek advice from an independent financial advisor about the best mortgage package to suit you.

Repayment or Interest Only or Interest Only for fixed period

You have three choices in how you repay your capital - you can either pay it back with a conventional mortgage (repayment mortgage), or pay it all back at the end of the contract term with interest payments between or interest only for a fixed period with the conventional mortgage for the remainder period.

- Conventional mortgage - each month, you pay off part of the capital as well as part of the interest due on the loan. At the end of the term, the mortgage is clear. This is the least risky type of loan.
- Interest only - you make monthly payments to pay off the interest on the loan. You don't pay off the capital during the term of the mortgage unless you offer to do so.
- Flexi mortgage - You may pay interest only during the first five years of the loan. For the next five years you pay the conventional method, that is, interest and capital, and for the remaining years a slightly higher installment calculated to pay off the balance.

2) Determine your needs

We all have needs and wishes. Before you begin your search, spend a few minutes deciding what is absolutely vital in your new Cyprus property, and what would be ideal for you and the family.

Location

Maybe you dreamed of living in a 3 bedroom villa in Paphos close to the beach, or in a renovated village house, but now is the time to be realistic about where you can afford to live. Location is critical to your decision. Do your homework. Get to know the area, the public transport routes, the roads, the amenities and the atmosphere of the place.

If you are moving to Cyprus, you may wish to consider renting for six months before buying. On our website you will find background information on different areas.

Old or New

Do you want a new home or an old one which you can renovate? Do you like renovating yourself, or would you prefer to have everything ready from the moment you step in the door? There are advantages and disadvantages to options.

The advantage for new homes is that everything is new - roofs, walls, boilers, heaters, appliances, etc. are all shiny and in mint condition. Many home buyers are choosing newly built properties in Cyprus because of the design, quality, sustainability and choice they offer. These provide compelling reasons to opt for a new home rather than an older property.

- The average new home is up to four times more energy efficient than an old property and has good insulation and the latest energy saving devices.
- When you buy a new property in Cyprus, you can move in as soon as it is finished. There is no red tape to consider, so the whole process is much less stressful.
- High specification and great value for money come as standard in new homes in Cyprus.
- New homes come with a warranty.
- New homes are designed to minimise waste and to work in balance with the environment. This means lower running costs compared to traditional homes, and a more eco-friendly way of living.

In addition, buying a new home in Cyprus means that everything is brand new; you can start living straight away and don't need to spend money or time on redecorating and repairing your home.

Older traditional properties in Cyprus have character and history though. While they usually need some work (unless they've been recently fully renovated), these renovations can give you the opportunity to significantly increase the value of your home. See the properties listed on sale on our site.

Requirements checklist

The best way to keep you focused on your needs is to make a checklist of requirements. Below is a list of options that you might want to define.

Basics:

- Price
- Location
- Old or New
- Flat or House

Size and State of Interior:

- Bedrooms
- Bathrooms
- Reception rooms (separate living room and dining room?)
- Kitchen
- Hall
- Storage space
- Heating
- Water supply

Exterior considerations:

- Garden or outdoor space
- Parking/Garage
- Paint
- Walls and Painting
- Roof
- Drains/Gutters
- Window frames

Proximity to:

- Work
- Public transport
- Schools
- GP
- Shops
- Health club
- Family and friends

Other considerations:

- Age of property
- Amount of renovation needed?
- What direction does property face?
- How long has it been on market?
- Is it in a quiet or noisy area?

3) Set times for Viewings

Properties for sale in Cyprus are advertised in many ways and places, from windows of estate agencies, to local papers, to websites like ours. Our advice is to spread your search as wide as you can, using as many sources of information as you can.

Searching Online

There are dozens of websites that advertise properties for sale in Cyprus. But it is difficult to know which sites are reliable and up-to-date. We update our website daily, so you can be assured that you are seeing the most recent changes from owners who supply us their property details. Here are some advantages to using a top-quality property site like ours:

- Ease of searching - you choose your desired location, property type, no. of bedrooms, and price range, and we show you immediately what is available.
- Indicates market strength - you'll see how strong or weak the market is from the numbers of properties available, and the asking prices posted.
- Helps you find agents - when you see a property you like, you may find estate agents in Cyprus have other similar properties available. This can help you decide which agencies you wish to work with.
- Saves you time - by finding properties first on the web, you save yourself a lot of time viewing properties that don't suit you.

Searching Offline

There are literally hundreds of offline places you can search through to find your ideal home. Set out hereunder is a list of some of them:

- Newspapers - classified and property sections advertise property for sale in Cyprus everyday. Remember that some local papers are only printed once a week, so properties advertised may no longer be available by the time you buy the paper.
- Cyprus Estate Agents - speak to estate agents and ask to see their list of currently available properties for sale. You'll be able to tell if the firm is worth working with by the response they give to your request.

Enlisting with Cyprus Real Estate Agents

When you find a property that you like, you will want to take a look at it in person. To view a property, contact the advertiser (usually an estate agent) who is marketing the property to arrange a convenient time. The advertiser will probably ask you a few questions to check that you are serious and to determine your buying position. This is simply to exclude casual lookers and to keep the process as quick as possible for all involved.

Try to view as many properties as possible to give you an idea of what is available and what house prices are like in the area. Remember that this is a competitive market. The estate agent is instructed by the seller and will try and get the best deal possible for him or her. It is usually best for you to arrange to view the property as soon as possible.

Understanding the language of agents

Estate agents and property developers in Cyprus may not make "false or misleading statements" about the properties that they are marketing. This means that estate agents cannot lie about the state of a property. But, they do use many terms that are unfamiliar to most of us. Such as:

GAZUMPING - A term used to denote a situation where the vendor has accepted an offer but subsequently accepts a higher offer from another purchaser.

Viewing checklist

It is important to rate all the properties you view against the criteria you have set yourself.

4) Submitting your offer

You've found your dream home in Cyprus. You are prepared to take the first serious step in the buying process - you want to make an offer. The negotiation now begins.

How much to offer?

The answer depends on how much you are willing to pay, and how much the seller is willing to accept. Before you submit an offer, you should decide:

- The lowest amount you want to offer
- The highest amount you are willing to pay for the property

Then, consider all these other variables:

- The asking price
- The price the property was valued at
- Interest in the property
- If the property is new on the market, interest may be high
- If the property has been on the market for a long time, there may be a better chance for negotiation on the asking price
- The seller's circumstances - does the seller need to move by a certain date? Has the seller already bought another property to move into?
- How confident are you in the strength of your offer and your ability to negotiate?
- How much are you going to offer and how much you are prepared to negotiate?

Submitting in your offer

The easiest way to make an offer is to call the estate agent directly.

When you make an offer, the estate agent in Cyprus will ask you some questions such as:

- What percentage of the price is being paid by a mortgage if required?
- Is the mortgage pre-arranged?
- What is your time-span for the move?
- Do you need to sell your property first?

This is to help the agent determine your eligibility. He should communicate your situation to the seller. This may be the deciding factor if there is a lot of interest in the house.

While the estate agent acts as the middleman in the negotiation, in the end, he or she is acting for the seller. Remember that he will always press to get the highest price for his seller.

When you put your offer to the seller, emphasise your positive points as a purchaser. Usually, buyers whose offers are not dependent on outside factors (such as the ability to sell their current home, mortgage approval, etc.) will fare better than those who are tangled in chains.

- First-time buyers are in a strong position. They are not in a "chain," so they are available to move in as soon as the seller is ready to go
- Having a pre-arranged mortgage saves time in the buying process. This may be an influential factor for the seller
- Ability to pay cash for a house, without waiting for mortgage approval, is also a benefit.

5) Offer accepted: Next steps

Congratulations. Your offer has been accepted. Now, the hard work begins of working through the legal steps to secure ownership of your new home. Once your offer has been accepted...

- It is legally binding
- Usually, you'll arrange surveys and solicitors before making an offer on the property
- Some estate agents or developers in Cyprus will insist on you paying a small deposit to show that you are serious about the purchase. However, you should consult your representative before parting with any money or signing the Contract of Sale
- If the survey highlights any factors that you think should be reflected in the price, now is the time for re-negotiation

These are the steps you'll need to go through:

1. Check your costs
1. Get property taken off the market
2. Get offer from mortgage lender in writing
3. Agree costs of solicitors in writing
4. Insure your new home from the delivery date
5. Set a completion date
6. Notify all contacts about your new address
7. Exchange contracts

6) Surveys

Surveys will tell you the condition of the property and point out weak areas. They are not usually required, but they can give you the peace of mind of knowing just what you are buying.

Surveys are not to be confused with valuation reports, which are commissioned by mortgage lenders to confirm that the property is adequate collateral for the mortgage loan.

Types of survey

There are two types of surveys that you might want done on your new home.

Full building survey

This is the most comprehensive of the two types of survey, also called a structural survey. It takes several hours to prepare, with each element of the property inspected to determine its condition. Any necessary repairs will be identified. You will know, at the end of the survey, if the house needs a new roof or a new electrical system. It is recommended for those who need a building to be thoroughly inspected.

Defect report

This survey concentrates on a particular defect specified by the client. For example, if you noticed that the walls had several cracks in them, you may want a surveyor to come in and figure out the cause and risk associated with the problem.

Where to find surveyors

You should commission your survey only by a Chartered Building Surveyors. Our offices can refer you to surveyors in Cyprus.

Cost and time of the survey

The cost and time to complete your survey will depend upon which type of survey you have commissioned, and the size, condition and location of your home. It is best to get two or three quotes from different surveyors in the area to assess market rate. You may also wish to speak to your estate agent about typical costs in the area.

7) Legal work Conveyancing is the transfer of ownership of property or land from one person to another. It is necessary to insure that the new owner has proper legal title to the property.

Who does the legal work?

Legally, conveyancing can be undertaken by anyone. However, the process can be time consuming and most people prefer to employ a professional.

Many people opt to use specialised conveyancers, who are qualified in property matters. We can undertake the process for you alternatively refer you to a qualified Solicitor in Cyprus.

Prepare draft contracts

This contract is a legal document that sets out the terms of the sale. It is initially drafted by the buyers' conveyancer. It will contain details about the property, items that are to be included in the sale, the buyer's and seller's particulars, how much the property will be sold for, and the transaction date. The Conditions have information about the proposed completion date and any deposit required when contracts are exchanged.

Questions from buyer's conveyancer

Usually, the buyer's conveyancer will submit a list of questions to the seller, such as:

- What is included in the sale? What contents will the vendor leave behind?
- What are the boundaries of the property? Who owns and is responsible for any perimeter structures (like fences, hedges, etc)?
- Is the property connected to all the appropriate utilities?
- If it is a freehold?
- Is the owner up to date with service charge bills?

You approve draft contract

After your conveyancer has prepared the contract, you review and approve it if you are satisfied. Once all parties are satisfied (and you've seen the formal mortgage offer from the bank), a final printed copy of the contract will be sent to you for signature. You sign it, and send it back to your conveyancer who by this time:

- Organised searches at the local authority on your behalf, and asks you for a sum on account of such expenses
- Receives replies to questions raised, and requests your deposit if not already paid
- Receives mortgage offer and deals with all the conditions on your behalf
- Receives search results and deals with any problems revealed.

What follows after signature:

- The conveyancer receives the total purchase price if the purchaser is paying cash for the property
- Prepares the deeds for the registration at the Land Registry
- Conveyancer pays the necessary transfer tax which he has collected from the purchaser
- Attends Lands Registry to register and transfer the property into the purchasers name. If the purchaser has obtained a mortgage loan the registration of the mortgage is done simultaneously with the transfer and the conveyancer is paid the proceeds of the mortgage loan.

8) Conclusion

This is the moment you've been waiting for. This is when you finally complete the sale and take possession of the keys. Below is a quick rundown of the final steps involved in the process. Seller receives payment

Once contracts are exchanged, the purchase of your property is legally binding. No backing out now. At this stage, the money starts moving in the seller's direction.

1. The seller receives your deposit (if there is one), when you exchange contracts
2. Your conveyancer finds out how much the seller still owes on his current mortgage (if any)
3. Your conveyancer approves the transfer deed - which formally transfers ownership of the property to you - and arranges for the seller to sign it
4. Your mortgage bank will send the balance of the purchase fund to the conveyancer if you are taking a mortgage loan
5. Your conveyancer will clear the balance of the seller's mortgage. For example, if the seller still owed € 51,258 on his mortgage, the conveyancer would pay that off from the funds sent by you
6. Your conveyancer will send the remainder of the money to the seller
7. Open the champagne, your purchase is now completely finished!

A point of note is that the registration at the Land Registry and transfer of the property in your home only applies if the Seller is in possession of the Title Deeds of the property. If not then you do not take transfer now but only when the deeds become available. Instead your conveyancer will merely register the Contract (which will be signed between you and the original and registered owner) in the Lands Registry to afford you protection under the Specific Performance Act.

Checklist before you over

There are so many things to think about, that it is helpful to have a quick checklist handy to know you've done it all.

- Arrange for your post to be redirected to new address
- Arrange for meter readings (electricity, gas) and disconnection of services at your current address
- Arrange for phone service to end on moving day at your current address
- Confirm date and time with Removal Company
- Write out instructions for any appliances you are leaving behind at your current address
- Settle any local bills at your current address
- Plan process for moving your pets
- Make sure all your essentials are packed in one place
- Put all your valuables and documents in a safe place and you should move them yourself
- Insure all meters have been read, and services are disconnected at your current address
- Go through every room, closet and cabinet to make sure you have not left anything behind
- Check that all the items listed in the inventory are in your new home and in condition you expected
- Check for instructions on how to use all the appliances in your new home
- Insure you have a final meter reading on electricity and gas from previous owner of your home
- Go through every room, closet and cabinet to make sure you are satisfied that nothing has been left behind.