What shall you have in mind when buying property in Cyprus?
Investing in any country is an inherently risky concept. While certain risks are common in investments globally (such as market risks where the entire market is declining in value), it is prudent for people investing in Cyprus to keep in mind the following considerations when investing in real estate.
It never hurts for people to re-consider whether real estate is the investment they want. When people wish to obtain citizenship, for example, other areas of investment are permitted (such as investments in businesses). However, considering that the decision to invest in real estate is made the following considerations are worth keeping in mind.
1. Compare prices of different sellers
This should go without saying; however, it is common for people to like the salesperson of a real estate agent or a property developer and trust what he says. Irrespective of that, it is always prudent to consider other choices in the market in making an informed decision. Sometimes properties with similar specifications may be valued very differently. For example, more prominent developers may have higher prices than smaller developers. While people may buy the “brand” of big developers to feel more confident in Cyprus, people may find similar or better alternatives if they search the market. Most Cypriots do not buy from big developers.
2. Location
Location matters; however, one should look into this more closely. Is it worth the extra money to buy a house on the back of a seafront building complex without a sea-view? Does the proximity to the sea make a difference if not purchasing an investment property? Distances in Cyprus are typically small so people can access the sea within 5-10 minutes (especially in Paphos).
Properties in touristic locations in Cyprus may also have a premium. If one is buying a holiday home, then buying in a touristic area may not be vital unless one intends to rent the property for some days a year.
3. Independent lawyers
The importance of using an independent lawyer when purchasing real estate in Cyprus cannot be overestimated. Many times real estate agents and developers will introduce to buyers a lawyer, which creates a risk of conflict of interest for the lawyers who may not be 100%
The risk is that lawyers who get significant business referrals from estate agents and developers will not want to upset their introducers. As a result, when the interests of a buyer and a seller conflict, the lawyer may not do his or her utmost to protect the client against the future.
An independent lawyer will be able to press a developer for a discount where possible, protect against construction issues in the future, stop a transaction if there are fundamental problems with the purchase and will be honest with his/ her client.
4. Pre-contractual promises on returns
Many times, salesmen will make promises to a potential buyer about a “fantastic return” or an “excellent investment opportunity”. Estate agents and developers depend on achieving sales, and sometimes they will present things rosy for the buyer. You should treat these representations with caution. If you are buying a property for investment reasons, ask whether these representations can be given to you in writing and whether the seller can guarantee them. Besides, you should ask where they base their estimations to see if they have relied on expert research.
5. Construction and property condition
People buying off-plan must make sure that the construction level of the developer is of a good standard. The best illustrator of this is previous projects of the developer of at least 5-10 years before. Are there cracks on the walls? Are their projects well maintained? There is a 12-month statutory guarantee for the construction of properties which can, however, be extended by contract. When buying off-plan, an independent lawyer should make provision for the buyer to appoint its experts to check the quality and progress of construction.
For used properties, one must check the house. If there are illustrations of damp or cracks on the wall, this may mean that a may illustrate signs of bad construction.
6. Projects with identical properties
It is not unusual for property developers in Cyprus to copy-paste 1 or 2 types of houses in a big project as it makes construction cheaper and more efficient for them. One should, however, consider how this affects one’s living experience and how future buyers may react to such projects before deciding to invest.
7. Common expenses
When buying in a project of several houses with common areas such as swimming pools and gardens, a buyer should enquire the seller on the expected monthly fees he would be paying. While this might seem immaterial when buying a Cyprus property, the reality is that ordinary expenses may run from €50 per month to €500.
8. Energy efficiency certificate
The seller of a property must provide to the buyer an energy efficiency certificate. Many estate agents and lawyers do not ask their clients for this, and others do not inform them. The cost of an energy efficiency certificate typically ranges between €200 – €400.