‘There is a need for reform of the relevant legislation for the acquisition of immovable property by aliens’
THE acquisition of immovable property by British citizens after December 31, 2020, when the Brexit transition period ended, is divided between those who purchased it before that date, for whom no permission is required from the district officer and those acquiring property through purchase, donation or inheritance after, for whom permission is required, as well as for citizens of non-EU countries, according to Cap.109 and the regulations issued by the Council of Ministers and the relevant circulars.
According to them, permission is granted only for the acquisition of up to two units, which can be in different developments and be either two housing units, or a housing unit and a shop of up to 100sqm, or one residential unit and an office with an area of up to 250sqm. Also, permission is granted for acquisition of a plot or land that has not been divided into plots with an area of up to 4.000sqm if it is intended for the construction of a private residence. In the case of spouses, only one permission is granted.
Regarding a citizen or a legal entity of an EU member state, no permission is needed from the district officer and there are no restrictions regarding acquisitions.
Any alien can set up a Cypriot company and acquire property regardless of its management or shareholding structure without any restrictions. The reasonable question which arises is why the aforementioned restrictions exist for physical persons, since they can acquire an immovable property through a company. It also appears that Cap.109 needs to be reformed, since many of its provisions are not applied and the current situation has substantially changed.
The relevant provisions of Cap.109 constitute a paradox, since they impose restrictions on both physical and legal persons, while for legal entities they are not applied in practice. An alien who is a physical person is not allowed to acquire an immovable property of an extent of more than 4,000sqm nor is he entitled to deposit his sale contract at the land registry for specific performance purposes and there is even a restriction for the purpose of acquiring it. It is possible to purchase property larger than allowed, but depositing the contract for specific purposes would violate the law. Consequently, an alien can, under the present circumstances, acquire a contractual right but not be able to have it registered in his name.
Based on the provisions, an alien must submit an application – type 145 to the district officer, in which information is requested, such as country of origin and address of permanent residence or address of residence in Cyprus, passport details, occupation, marital status, number and age of children, financial status and details of any other real estate in Cyprus belonging to the applicant or a member of his family. Also, they must provide details of the property for which the application is made, details of its registered owner, price and purpose for which the property is purchased, details of the applicant’s visits to Cyprus and whether they intend to settle permanently in the country and other relevant information. Moreover, they must submit a topographical plan, a copy of the title deed or a copy of the building permit, a copy of the duly stamped sale contract, a floor plan of the house or apartment excluding old houses mentioned on the title deed, and in cases of division of land into plots, a division plan; in areas of residential development, a plan must be submitted showing the position of the house in relation to the entire holding.
It is understandable specific information from aliens be required, especially the source of income and the financial status of the applicant, but the government should place emphasis the use of the property and the income it brings to the applicant after its purchase, in order to avoid any tax evasion. There is a need for reform of the relevant legislation and the government should examine it as soon as possible.
George Coucounis is a lawyer in Larnaca and the founder of George Coucounis Llc, [email protected]
Follow the Cyprus Mail on Google News