Rental Agreements in Cyprus

Overview of Rental Law in Cyprus

The rental property market in Cyprus is governed by a dual legal framework. Older properties in designated urban areas fall under the protective provisions of the Rent Control Law, Cap. 23, while newer properties and those outside controlled areas are governed by the general law of contract and the principles of freedom of agreement. Understanding which regime applies to a particular property is essential for both landlords and tenants, as the rights, obligations, and remedies differ significantly between the two systems.

Philippou Law Firm advises landlords and tenants across all types of rental arrangements, from residential lettings and short-term holiday rentals to large-scale commercial and industrial leases. Our lawyers draft, review, and negotiate rental agreements that protect our clients' interests while ensuring compliance with all applicable legal requirements.

The Rent Control Law, Cap. 23

The Rent Control Law was originally enacted to protect tenants from excessive rent increases and arbitrary evictions during periods of housing shortage. It applies to properties that satisfy both of the following conditions:

• The property was constructed on or before 31 December 1999
• The property is located within a controlled area -- specifically, the municipal limits of Nicosia, Limassol, Larnaca, Paphos, Famagusta, and Kyrenia as they existed at the time the law was enacted

Key Protections Under Cap. 23

For properties falling within the scope of the Rent Control Law, tenants enjoy the following protections:

• Security of tenure: A landlord cannot evict a tenant except on the specific grounds set out in the law (e.g., non-payment of rent, nuisance, the landlord's own need to occupy the premises, reconstruction). Even where grounds exist, the landlord must obtain a court order from the Rent Control Tribunal.
• Rent regulation: Rent increases are regulated by the Rent Control Tribunal and must be justified. The Tribunal assesses fair rent based on factors such as the property's age, condition, location, and prevailing market rates.
• Statutory tenancy: Even after the expiry of the contractual lease term, the tenant is entitled to remain in possession as a statutory tenant under the same terms, unless the landlord obtains a court order for eviction on one of the permitted grounds.
• Succession rights: In certain circumstances, the tenant's spouse or family members may have the right to succeed to the tenancy upon the tenant's death.

Grounds for Eviction Under Cap. 23

The Rent Control Tribunal may order eviction only on specific grounds prescribed by the law, including:

1. Non-payment of rent
2. Breach of a material term of the tenancy agreement
3. Causing a nuisance or allowing the premises to deteriorate
4. The landlord reasonably requires the property for personal occupation or for a member of their family
5. The landlord intends to demolish and reconstruct the building
6. The tenant has alternative suitable accommodation available

Free-Market Rental Agreements

Properties built after 31 December 1999, or located outside the designated controlled areas, are not subject to the Rent Control Law. Rental agreements for such properties are governed by the general principles of contract law, granting both parties substantial freedom to negotiate and agree upon terms. In practice, the vast majority of modern rental transactions in Cyprus fall into this category.

Essential Clauses for Rental Agreements

A well-drafted rental agreement should include the following provisions:

• Duration: The fixed term of the lease (e.g., 12 months, 24 months) and whether it renews automatically or requires a new agreement
• Rent: The monthly rental amount, the due date for payment, the accepted payment method, and any provision for annual rent increases (e.g., linked to the consumer price index or a fixed percentage)
• Security deposit: Typically one to two months' rent, with clear terms regarding its purpose, the conditions for deductions, and the timeframe for return upon lease expiry
• Permitted use: Whether the property may be used for residential purposes only, or whether commercial or professional use is permitted
• Maintenance and repairs: Allocation of responsibility between landlord (structural repairs, major systems) and tenant (day-to-day maintenance, minor repairs)
• Utilities: Clarification of which party is responsible for electricity, water, communal charges, and municipal taxes
• Termination: Notice periods required for early termination by either party, break clauses, and the consequences of early termination (e.g., forfeiture of deposit, payment of a penalty)
• Subletting and assignment: Whether the tenant may sublet or assign the lease without the landlord's consent
• Inventory and condition: A schedule documenting the condition and contents of the property at the commencement of the lease, serving as a benchmark for assessing deposit deductions at the end

Stamp Duty on Leases (Abolished)

Stamp duty in Cyprus was abolished from 1 January 2026 following the repeal of the Stamp Duty Law. Previously, rental agreements were subject to stamp duty calculated on the total rent payable over the lease term at rates of 0.15%--0.20%. Landlords and tenants entering into rental agreements from 2026 onwards no longer need to pay stamp duty or stamp their agreements.

Tax Implications for Landlords

Landlords in Cyprus are subject to tax on rental income. The tax treatment depends on the landlord's tax residency and domicile status:

Income Tax on Rental Income

Rental income is subject to personal income tax at the standard progressive rates (0% to 35%). Landlords are entitled to deduct either 20% of gross rental income as a flat-rate expense allowance, or actual documented expenses (including repairs, maintenance, insurance, management fees, and interest on loans used to acquire the property), whichever is more advantageous. Rental income is aggregated with the landlord's other income to determine the applicable tax bracket.

Special Defence Contribution (SDC)

SDC on rental income was abolished from 1 January 2026. Previously, landlords who were both tax resident and domiciled in Cyprus were subject to SDC at 3% on 75% of gross rental income. Rental income is now subject only to personal income tax and GHS contributions.

General Healthcare System (GHS) Contribution

A GHS contribution of 2.65% is levied on gross rental income for all landlords who are tax resident in Cyprus, subject to an annual cap of EUR 180,000 across all income categories. Non-residents are not subject to GHS.

VAT on Rental Income

The rental of residential property is generally exempt from VAT in Cyprus. However, the rental of commercial property may be subject to VAT at the standard rate of 19% if the landlord opts to register for VAT. Short-term holiday rentals (furnished accommodation for periods of less than a defined threshold) may also attract VAT, and landlords in this category should seek specific advice.

Tenant Rights and Protections

Beyond the specific protections of the Rent Control Law for qualifying properties, tenants in Cyprus benefit from general contractual protections. Key rights include:

• Right to quiet enjoyment: The landlord must not interfere with the tenant's peaceful occupation of the property
• Right to habitable premises: The property must be fit for the purpose for which it was let
• Right to return of deposit: The security deposit must be returned within a reasonable time after the lease ends, less any justified deductions for damage beyond normal wear and tear
• Right to proper notice: The landlord must give the notice stipulated in the agreement before requiring the tenant to vacate

Commercial Lease Considerations

Commercial leases in Cyprus require particular attention to several additional matters:

• Fit-out and reinstatement: The agreement should address the tenant's right to carry out fit-out works and the obligation to reinstate the premises to their original condition at the end of the lease
• Exclusivity clauses: In retail settings, tenants may negotiate exclusivity provisions preventing the landlord from letting adjacent units to competing businesses
• Rent review mechanisms: Long-term commercial leases typically include periodic rent review clauses, often linked to market rates or indexed to inflation
• Assignment and subletting: Commercial tenants often require flexibility to assign or sublet, which must be explicitly addressed in the lease
• Guarantees: Landlords may require personal guarantees from company directors or parent company guarantees for corporate tenants
• Insurance: The allocation of insurance responsibilities (building, contents, public liability) should be clearly defined

Our Drafting and Review Services

Philippou Law Firm provides comprehensive legal services for all types of rental arrangements in Cyprus. Our team assists with:

• Drafting bespoke residential and commercial rental agreements
• Reviewing and negotiating lease terms on behalf of landlords or tenants
• Advising on the applicability of the Rent Control Law, Cap. 23
• Representing clients before the Rent Control Tribunal
• Advising landlords on tax-efficient structuring of rental income
• Handling lease disputes, eviction proceedings, and deposit recovery claims
• Structuring short-term and holiday letting arrangements

Whether you are a landlord preparing to let your property or a tenant entering into a new lease, our property lawyers ensure that your interests are fully protected. Contact us today for professional advice tailored to your situation.