By Antonis Loizou FRICS
We have reported in the past that one of the best investment returns are villas to let, especially for such popular localities as the Famagusta region and to a lesser extent Paphos.
Due to the increase in tourist numbers and the lack of beds, this ‘new’ method of leasing which is on most occasions tax free (not declared – quite illegal) has encouraged investors and villa owners to opt for this type of investment, which is quite lucrative and can show a net return of around 8-10% pa, based on value of the property.
The prevailing minor problems under this new method of let have not surfaced as yet but it will not be too long that it will become a big problem.
The agents are very happy to let out a villa/house, with no questions asked as long as the tenants pay (in advance) the required rent. The end result is that the let property is occupied by numerous people (the more people the less the cost for the tenants), no restrictions are placed (family etc), which can cause all sorts of problems to neighbours.
In a recent case where a neighbour of loud tenants could not have his peace, called the police on several occasions. The neighbour could not put up with the next door villa to let due to the noise, foul language etc and having no response even after the police came at three in the morning, left for his Nicosia house!!
We could suggest the following:
l Let properties require a CTO licence if let for less than 30 days. If the lets are as such there is a case for an illegal let to be reported to the CTO.
Based on this:
l Write a letter to the letting agent and the owner stating that you will report the lettings as being illegal to the CTO as well as to Income Tax.
l Sue them, both, if no satisfactory response (you must be patient based on the Cyprus legal system – waste of money and time) but seek an order of a sort not to let the property illegally.
l This is a good business and a lucrative one for investors/agents and others and indeed it helps the tourist industry and by projection the income from foreign currency, but this article is written with the interests of the neighbours in mind. Villas to let offer can cost less than staying in a hotel and also help the local establishments (they have to shop for the food and drink, eating out etc). Based on the Hoteliers Association report, around 20 per cent of foreign visitors do not stay in hotels. So out of the three million tourists, 600,000 opt for the villa to let properties. This is a large number and they bring with them positives and negatives.
Of course, this type of let is not unique to Cyprus but it is worldwide causing reactions. This state of affairs will not end but it will increase based on international market trends as long as we have a shortage of tourist beds.