Cyprus, the third largest island in the Mediterranean, has been one of the stars of the overseas property market in recent years. Around 60,000 Brits own property there, making it our third most popular choice behind Spain and France, and despite stiff competition from emerging markets around the globe, the immediate future for Cyprus looks decidedly upbeat.
Cyprus is on track to join the Euro Zone in January 2008, the two main airports in the south, Larnaca and Paphos, have just had a €622m facelift and now low-cost flights are starting up from several UK airports. Along with an improving infrastructure of new roads, marinas and golf courses, it's no wonder that families and retirees are eyeing up this island in the sun for their home abroad.
The only cloud on this sunny horizon is the political situation on the island. Since 1974 Cyprus has been split between the Greek Republic of Cyprus in the south and the Turkish occupied north - the Turkish Republic of North Cyprus (TRNC). Encouraging signs - such as the relaxation of the 'Green Line' between the two republics allowing easy travel from one side to the other - imply that the two governments are working towards a settlement. Until then, however, the capital of Nicosia remains the only divided city in the EU and property buyers heading to the north need to take particular care to ensure they have excellent and impartial legal advice.
As an island, Cyprus is chiefly reliant on air travel to bring the holidaymakers and homeowners who visit every year. In 2006 Cyprus welcomed 2.4m visitors, well over half from the UK. Only 34,000 travelled to the north of the island though this number is widely predicted to grow year on year.
More than 40 airlines and 60 charter companies operate over 260 flights every week into Cyprus: the two main scheduled operators are British Airways and Cyprus Airlines. The big news for the island is the start of low-cost flights from the UK. Despite being the birthplace of easyJet founder Stelios, Cyprus was always considered too far away to make it economical for the budget airlines to fly there. But in 2007 three airlines announced plans to run a UK to Cyprus route. Monarch offers a four times a week service from Luton to Larnaca from March 2007 with Flyglobespan and XL set to follow.
There are two airports in The Republic of Cyprus, Larnaca on the south-east coast of the island and Paphos on the south-west coast. Both receive flights from 18 different UK airports from Exeter to Edinburgh.
Larnaca is the largest and is in the middle of major improvements that will see it handling up to 7.5m passengers every year. A new terminal is being added to Paphos airport where currently 120 flights from the UK land every week. This new development will take its annual capacity up to 3m passengers. In high season, Wednesday is the most popular day for charter arrivals into Cyprus and is well worth avoiding if you can.
There are no additional airport taxes to pay on arrival or departure into The Republic of Cyprus.
The Turkish Republic of North Cyprus (TRNC) has one main airport at Ercan but can only accept direct flights from Turkey. There are around 15 flights a week from the UK that have a brief touchdown in Turkey en route to Cyprus. Visitors can ask for their passport not to be stamped on entry into TRNC and arrivals from the EU do not pay any taxes.
The main ports in Cyprus are at Larnaca and Limmasol on the south coast. Limmasol is the busiest, both for commercial traffic and passengers. It is also a hub for cruise ships, using it to as a stop over on longer international journeys and as a base for short excursions to destinations in Greece, Egypt and Syria.
Cyprus has two marinas at Larnaca and St Raphael, outside of Limmasol, but there are plans to add another three at Paphos, Limmasol and Protaras. Plans are also underway to treble the capacity at Larnaca to 2,500 berths.
Cyprus has no railway system.
The Cypriots - both in the north and south - drive on the left. The roads in the south are generally good between the main towns and cities with regular improvements being made to the infrastructure. The maximum speed on motorways is 100km per hour and police can issue on the spot fines for offenders. Visitors can drive in Cyprus using a valid driving licence from their home country.
Public transport is limited in Cyprus, especially in the north. In the south, buses within the major towns run frequently and fairly efficiently. There is no service on Sunday and outside of the main tourist season, services can stop as early as 6pm. Timetables are available from bus depots and local tourist centres. A common and inexpensive way to travel longer distances between the major population centres is by taxi or minibus.
Travel between the north and south is now generally straightforward and taxi companies are allowed across the borders. In practice, though, taxi drivers from the south are generally unwilling to cross into the north. Travellers heading to the north who have arrived at Larnaca airport usually arrange for a taxi from the TRNC to come over to the south to collect them.
Both north and south Cyprus are blessed with some of the best weather in Europe, a good mix of Middle East sunshine and Mediterranean blue skies with long, dry summers and mild winters. Locals brag about enjoying over 300 days of sunshine a year.
Year round average temperatures range from 32ºC in summer to 17ºC in January when rainfall is at its highest. On the west coast cool breezes often temper the fierce summer heat when temperatures can hit a stifling 40ºC and the Troodos Mountains in the centre of Cyprus also provide a cool respite. The sea temperature remains warm enough for swimming well into October.
Greek and Turkish are the official languages of Cyprus though 85% of Cypriots speak English. Roads signs and information in the main cities and tourist towns of the south are in Greek and English.
Remember as an EU citizen to carry a European Health Insurance Card with you so that you can access the health service in Cyprus. Most permanent UK residents will register at a local state hospital. Private health insurance and medical charges are relatively affordable in Cyprus and therefore widely used.
The Republic of Cyprus has been a proud and enthusiastic member of the EU since 2004. This means that all EU nationals can enter the country, and work there, with a valid passport or identity card. No visa is required and there is no limit to the amount of time that EU nationals can spend there.
No visa is required to enter the TRNC though if you plan to spend any time in Turkey on your journey you will need to buy a £10 visa for entry to Turkey at the airport.
Property ownership and the buying process
The Republic of Cyprus - The South.
With a legal and conveyancing system based on the UK model, many British property buyers see the south of Cyprus as a manageable and understandable proposition for an overseas purchase. It is always sensible to use a bilingual lawyer to help you through the process.
Non-Cypriot buyers have to obtain permission to buy in their own names from the Council of Ministers. This requires filling in a written application form and supplying bank and personal references. For the vast majority of buyers this is a straightforward formality as long as they have no criminal record and can prove they are able to support themselves. While it can take several months to obtain permission, this should not delay purchasers taking possession of their new home.
EU citizens not living permanently in The Republic of Cyprus (the south) can currently buy one property or plot of land, with no restrictions on size. This restriction will stop after 2009 when EU citizens will be treated the same as Cypriots and be entitled to buy any property without restriction. There are no restrictions on selling.
Once an offer has been accepted, a deposit of around CYP£1,000 - £2,000 may be required. Unlike the UK, this is legally binding so gazumping is not possible. On signing the contracts, buyers pay between 20% and 30% of the purchase price with the remainder due on completion - or in stage payments if the property is a new-build.
The stamped and signed contract should then be registered at the Land Registry Office within 30 days of signing - a solicitor should arrange this.
The well-documented problems with buying in North Cyprus have all sprung from uncertainty over ownership before 1974. If you are buying here it is vital that you establish who owned the property pre 1974. If that is not possible, most experts advise you to walk away from any purchase.
Title deeds in North Cyprus are split into three categories: Turkish deeds, foreign deeds and TRNC deeds. The latter implies that the property was Greek-owned and therefore should be avoided to prevent potential disputes.
Again, buyers have to apply to the government for permission to buy and 99% of applications are approved within six to 18 months. Non-Turkish citizens can only buy one property.
A reputable, experienced and bilingual lawyer is essential and remember to make a local will that is valid in TRNC.
Fees and taxes
As elsewhere in much of Europe, buying costs in Cyprus are substantially higher than in the UK. The main charges are (2007):
Annual running costs include property tax of 2% to 3.5% on properties over CYP£100,000 and local authority taxes of around CYP£50 to CYP£150.
In TRNC buying costs for foreigners average 3% for Purchase Tax, Stamp Duty of 6% and solicitor's fees of around £1,500. Vat on new build property is 15%.
In 2004, The Republic of Cyprus had 418,400 landlines and 640,500 mobiles. Cyprus telecommunications are excellent and a useful tool in promoting the island as an offshore business centre.
Cyprus Telecommunication Authority (CYTA) is a state-owned communications company that until recently had a monopoly. Recent liberalisation of the sector has introduced some competitors.
Modern fibre-optic and satellite systems mean that the CYTA network provides direct dial access to over 200 countries worldwide. An international call costs as little as 16 cents per minute - cheap rate starts after 8pm and all day on Sunday. New rules allow property owners who will not use their landline for a few weeks, when they return to the UK for example, to cut the connection and not be charged for line rental for that period.
The international access code for The Republic of Cyprus is +357 and for TRNC is 90 392 via Turkey.
In TRNC in 2002 there were 86,228 landlines and 143,178 registered mobile users.
CYTA, in partnership with Vodafone, had a monopoly on the mobile network until the arrival of South African owned Areeba which has invested heavily in its own network. CYTA has its own pre-paid card scheme called 'symphony'. This requires no deposit. International mobile rates are fairly low.
You cannot use a Cypriot mobile in the north as there are no roaming agreements but a mobile from elsewhere will work in both the north and the south. There are two mobile operators in the TRNC: Turkell and Telsim. Both are reasonably priced and pre-paid cards are available from newsstands.
Cyprus has nearly 300,000 Internet users. CytaNET is the largest Internet service provider in Cyprus. Users have to be a CYTA fixed line customer in order to get a CytaNET connection. Further information is available by calling free phone on 8000 80 80 or visiting a CytaShop. There are 10 further internet service providers.
In The TRNC there are four main service providers - Superonline, LedraNET, Comtech and Mahir. Connection is via dial up and wifi is not widely available as yet.
In the Republic of Cyprus there are currently eight television stations as well as ready access to satellite television. The Cyprus Broadcasting Corporation (CyBC) is the main broadcaster in the Greek Cypriot area. Take up of satellite viewing is high: Cypriots love their football and most are ardent supporters of UK teams and eager to watch the big matches live.
The official broadcaster in the north is Bayrak Radio Televizyon, operating four channels.
The currency in The Republic Of Cyprus, at least until 2008 when they hope to join the Euro Zone, is the Cypriot pound while in the TRNC the currency is the Turkish Lira. In the north it is common for retailers to accept Euros and Sterling and even Cypriot pounds.
The Central Bank of Cyprus regulates all banking in The Republic of Cyprus and the banking system is modern and efficient. Many UK banks are represented on the island, including HSBC and Barclays. Banking hours are normally 08.30 until 12.30 from Monday to Friday and 15.15 until 16.45 on Monday afternoon. Banks in tourist areas will generally open for longer in peak holiday periods and ATMs are easy to find.
It is not essential to open a local bank account unless you are becoming a permanent resident in Cyprus but it will undoubtedly make life easier. It is a simple process - no appointment is necessary and you should take a passport or other proof of ID and proof of your address, a utility bill for example. An important consideration when choosing a bank to use is to compare their rates for transferring money in and out of Cyprus.
In the TRNC there are Turkish-based banks and Turkish-Cypriot banks. There are also international banks - HSBC is popular with many British residents. Normal banking hours are from 08.00 until 12 and from 2pm until 4pm from Monday to Friday. Visa and MasterCard are widely accepted in the North.
Mortgages secured against Cypriot property are readily available in the south and are usually given on a repayment basis. They are available in all major currencies and the maximum term is for 30 years with full repayment expected before the applicant is 65 years old. Life insurance should be taken out with the mortgage.
The lender will carry out a valuation at the buyer's expense and an average arrangement fee will be 1% of the total loan.
Mortgages are assessed not on potential rental income but on the applicant's ability to service the loan. Buyers should be able to show that 33% of their net income can cover existing outgoings including the monthly loan repayments. For self-employed buyers, net income is assessed as an average figure over the past three years.
Traditionally, purchasers in the TRNC have been cash buyers - or have raised the money against their property in the UK. Some Turkish banks do offer mortgages but generally only to North Turkish residents.
In the Republic of Cyprus an individual is considered to be a tax resident if he spends more than 185 days in Cyprus in any one tax year. The day of departure counts as a day out of Cyprus while the day of arrival in Cyprus counts as a day's residence in Cyprus. Tax residents are then charged on all income earned both inside and outside of Cyprus. Non-tax residents are only taxed on income derived from sources within Cyprus.
Inheritance Tax was abolished in Cyprus as of 2000.
Capital Gains Tax, the difference between the sales proceeds and the original cost of the property, is 20% of the gain though interest on payments, money spent on the property and the inflation rate can all be deducted. The first CYP£10,000 of the profit from any property sale is exempt (CYP£50,000 if the seller lived there permanently).
No capital gains is payable on property transferred between close relatives.
In the TRNC personal income tax is 20% to 45%.
The Republic of Cyprus has a rather remarkable 15 days of public holiday every year - that's nearly double the UK's paltry tally of eight. The island has little religious friction, both in the north and south. The majority of Cypriots in the south, some 85%, are Greek Orthodox Christians and this is reflected in their feast days given as public holidays.
The main public holidays (with their dates in 2007):
All public services, banks and many shops are closed on these dates although some may open in tourist hotspots in high season. Cypriots are family orientated and love any excuse to get together with their extended family and have a party.
In the TRNC, where the majority of the population is Muslim, the main public holidays are:
Cathy Hawker is a freelance property writer who contributes regularly to The Evening Standard and BBC Good Homes Magazine.
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