Don't make a bad investment in Cyprus

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in Cyprus: scams and pitfalls

Last updated on 

risks pitfalls buying real estate Cyprus

Everything you need to know is included in our Cyprus Property Pack

Foreigners are increasingly eyeing Cyprus for real estate investments, given its Mediterranean charm, favorable climate, and potential for growth.

For those who aren't familiar with the area, getting into the property market there can be quite a challenge. You may encounter unexpected issues and pitfalls, so it's essential to stay vigilant.

Our network of customers who bought properties and our on-site local advisors have highlighted several issues. We've listed them all in our Cyprus Property Pack.

This article provides a brief overview of potential pitfalls that may arise during the property buying process in this country.

Is it safe or risky to invest in real estate in Cyprus?

At first glance, buying property in Cyprus appears attractive.

The government's "Golden Visa" program, which offers residency permits to non-EU nationals in return for sizable property investments, has enticed many. But beneath this allure, there are complexities.

One cannot discuss Cypriot property without addressing the division between Northern and Southern Cyprus.

Take the coastal town of Varosha, for example. Once a bustling tourist hotspot, it became a ghost town following the 1974 Turkish invasion. Properties here were primarily owned by Greek Cypriots who fled during the conflict.

While there have been recent attempts to rejuvenate the area, buying property here is laden with risk due to potential disputes over original ownership.

Several high-profile cases have highlighted issues in the Cypriot property market.

In one notable instance, British buyers purchased homes in the Oroklini region, only to discover their properties were built on mortgaged land. When the developer defaulted on the loan, banks threatened to auction the homes, leaving the buyers in limbo. Such examples underscore the importance of thorough legal checks.

Beyond bureaucratic hurdles, foreigners often grapple with cultural misunderstandings.

An expatriate may expect a fast-paced, deadline-driven transaction process, in line with practices in countries like the UK or USA. In contrast, the Cypriot approach can be more relaxed, emphasizing relationship-building and trust, which can be misinterpreted as inefficiency.

In response to past irregularities, Cyprus has made strides to bolster the integrity of its real estate sector.

For example, the recent introduction of the "trapped buyers" law aims to protect buyers who have paid for their property in full but have not received their title deeds due to the developer's debts. However, the effectiveness of such reforms remains to be seen in practice.

While the Cypriot legal system is rooted in British law, property disputes can be long-winded.

In some cases, foreign buyers have waited years for resolutions. The Paphos region saw numerous cases where property buyers, lured by the beauty of the coastal city, later faced lengthy legal battles due to title deed complexities.

While the Cypriot government actively promotes real estate investments through incentives, some argue that more robust regulatory oversight is needed.

In light of the 2008 financial crisis, which hit the Cypriot banking sector hard, there have been calls for greater scrutiny of property-related loans and more stringent developer regulations.

Many foreigners who've purchased properties sing praises of the Mediterranean lifestyle and the warmth of the Cypriot people.

However, forums and expat communities often buzz with tales of delayed title deeds or unexpected fees, signalling areas where improvements are needed.

Buying real estate in Cyprus can be risky

An increasing number of foreign investors are showing interest in Cyprus. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Cyprus

Potential real estate buying mistakes in Cyprus

The issue around "Title Deeds"

One specific pitfall you should be aware of when buying residential property in Cyprus, particularly as a foreigner, is the issue surrounding "Title Deeds."

In Cyprus, the concept of Title Deeds (known locally as "Ktimatologio") is unique due to its complex legal and historical background. This issue is particularly prevalent in areas like Paphos or Limassol, but it can occur anywhere on the island.

In some cases, properties in Cyprus are sold without clear or finalized Title Deeds. This can happen because of delays in the Cypriot bureaucratic process or due to unresolved disputes over land ownership stemming from the island's divided history.

As a result, you might end up purchasing a property only to find out later that there are legal complexities related to its ownership.

This issue is not rare and has been a significant concern for many foreign buyers.

What makes it particularly tricky in Cyprus, as opposed to other countries, is the historical and political context that often underpins these legal issues.

To safeguard your interests, you should thoroughly verify the status of the Title Deeds before proceeding with any purchase. It's advisable to engage a local lawyer who is well-versed in Cypriot property law to conduct this verification.

Also, be cautious of properties that are significantly cheaper than the market rate, as this can sometimes indicate unresolved Title Deed issues.

The risk of "Immovable Property Tax" or IPT

Another specific pitfall you should be aware of when buying residential property in Cyprus, especially as a foreigner, relates to the "Immovable Property Tax" (IPT).

The IPT, unique to Cyprus, is a tax levied on the ownership of immovable property on the island. While the tax itself is not unusual, the way it's calculated and applied in Cyprus has specific nuances that can catch foreign buyers off guard.

In Cyprus, the IPT is based on the combined value of all the immovable property registered in your name as of January 1st of each year.

The key point to note here is that the valuation of the property for tax purposes may not always align with the market value or the price you paid.

This discrepancy can arise from the outdated property values used by the Cypriot tax authorities, which are often based on 1980 prices.

As a property buyer in Cyprus, you need to be mindful of the potential for a sudden increase in your IPT liability, especially if the Cypriot government decides to update its property valuation to reflect current market values.

Such a change could significantly increase your annual tax bill.

To navigate this, you should inquire about the IPT rate and how it's calculated based on the property's valuation.

It's also wise to budget for possible future increases in this tax.

Consulting with a local tax advisor or a lawyer who understands the intricacies of Cypriot property tax law can provide you with a clearer picture and help you avoid unexpected costs.

Don't lose money on your property in Cyprus

100% of people who have lost money in Cyprus have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.

buying property foreigner Cyprus

"Specific Performance Law" risk in Cyprus

A lesser-known but significant pitfall when buying residential property in Cyprus, particularly for foreigners, is the potential issue with "Specific Performance Law."

This aspect is unique to the Cypriot legal system and can have serious implications on your property purchase.

Specific Performance Law in Cyprus provides a safety net for property buyers. According to this law, if you have duly signed a contract of sale and submitted it to the Land Registry office within a specific timeframe, your rights to the property are protected.

This means that even if the seller changes their mind or encounters financial difficulties (like bankruptcy or debt), they cannot easily back out of the sale.

As a foreigner, you might not be aware of the critical importance of promptly submitting the contract of sale to the Land Registry. Failure to do so in the stipulated timeframe can leave you vulnerable.

If the seller encounters financial issues or decides to sell the property to someone else, you might find yourself entangled in legal complications or, in worst-case scenarios, lose your claim to the property.

To avoid this pitfall, ensure that immediately after signing the contract of sale, you or your legal representative submit it to the Land Registry office within the specified timeframe. Given the legal technicalities involved, it is advisable to work with a reputable local lawyer who is familiar with Cypriot property law.

This step is essential to safeguard your rights as a property buyer in Cyprus and can prevent potential heartache and financial loss down the line.

"Zone of British Sovereign Base Areas" or SBA

Another unique and often overlooked pitfall when purchasing residential property in Cyprus, particularly for foreigners, is related to the "Zone of British Sovereign Base Areas" (SBA).

This is a very specific issue tied to the presence of British military bases on the island.

The British Sovereign Base Areas in Cyprus, primarily located in Akrotiri and Dhekelia, cover significant land, some of which is attractive for residential property development. However, purchasing property within or near these zones comes with its own set of challenges and restrictions.

Properties in or near the SBA zones may be subject to specific regulations and restrictions imposed by the British authorities. These can include limitations on construction, alterations, or even future sales.

Moreover, the proximity to military areas can mean additional security measures or potential inconveniences.

As a foreign buyer, it's crucial for you to be aware of these zones and understand the implications of buying property in or near them.

It's not just about the present convenience but also about future implications, such as resale value or potential development limitations.

To navigate this, you should conduct thorough research or work with a real estate agent and a lawyer who are well-versed in properties around these areas.

They can provide insights into any restrictions or special conditions that apply to properties in the SBA zones.

Get the full checklist for your due diligence in Cyprus

Don't repeat the same mistakes others have made before you. Make sure everything is in order before signing your sales contract.

buying property foreigner Cyprus

The concept of "Maronite Villages"

A more specific and unique pitfall to consider when buying residential property in Cyprus, especially as a foreigner, involves understanding the complexities around the "Maronite Villages" in the Northern part of Cyprus.

This issue is deeply rooted in the island's political and historical context.

The Maronite Villages are predominantly inhabited by the Maronite community, a unique religious and ethnic group in Cyprus. These villages, including Kormakitis, Asomatos, Ayia Marina, and Karpaseia, are located in the Northern part of the island, which is under the control of the Turkish Republic of Northern Cyprus (TRNC).

This area is not recognized by any country other than Turkey, leading to a complex situation for property buyers.

If you're considering buying property in these Maronite Villages or nearby areas, you'll face a unique set of legal and political challenges. The ownership and property rights in these areas are subject to dispute and ambiguity due to the ongoing Cyprus dispute.

Therefore, you might find yourself in a situation where the legal standing of your property ownership is uncertain or contested.

It's crucial for you to be extremely cautious and conduct thorough due diligence before proceeding with any property purchase in these areas.

Engaging with a legal expert who specializes in Cypriot property law and understands the intricacies of the Northern Cyprus situation is essential.

They can provide you with the necessary guidance and help you navigate the complex legal landscape.

The importance of the "Enclaved Properties" risk

Another specific and crucial pitfall to be aware of when buying residential property in Cyprus, particularly as a foreigner, is related to the "Enclaved Properties" in the Turkish-controlled area of Cyprus.

This is a unique situation resulting from the island's division and ongoing political situation.

Enclaved properties refer to properties located in the Turkish-controlled area of Northern Cyprus, which originally belonged to Greek Cypriots before the Turkish invasion in 1974. While some properties in this region are offered for sale, their legal status is often highly complex and disputed.

The Republic of Cyprus, which is internationally recognized and a member of the European Union, does not exercise control over these areas, and the properties are considered by many to be owned by displaced Greek Cypriots.

The specific pitfall for you as a potential buyer is that purchasing such a property carries significant legal and ethical implications.

The ownership of these properties is contested, and buying them could involve legal risks, including potential future restitution claims from the original owners or their descendants.

To mitigate this risk, it's imperative to conduct thorough due diligence on any property you're considering in Northern Cyprus.

This should include checking the original ownership of the property and understanding the full legal implications of purchasing in this area.

It is highly advisable to consult with legal experts who specialize in Cypriot property law and are familiar with the complexities of the Cyprus conflict.

Don't sign a Cypriot document you don't understand

Buying a property in Cyprus? We have reviewed all the documents you need to know. Stay out of trouble - grab our comprehensive guide.

buying property foreigner Cyprus

Risks regarding "Fractional Ownership"

Understanding the intricacies of "Fractional Ownership" in inherited properties is a more specific pitfall you should be aware of when buying residential property in Cyprus.

This issue is particularly unique and prevalent due to the Cypriot laws and cultural practices regarding inheritance.

In many cases in Cyprus, properties are passed down through generations without clear division among heirs. This situation leads to fractional ownership, where a property might have multiple partial owners, each holding a fraction or share of the property. These shares are often undivided, meaning the property hasn't been physically divided among the owners.

If you're interested in buying a property that is under fractional ownership, you might find yourself in a complex legal situation.

The sale of such a property requires the agreement of all fractional owners. In some cases, not all owners might be easily locatable, or there could be disagreements among them about selling the property.

Additionally, there might be unknown or undisclosed heirs who could later emerge and contest the sale.

To navigate this situation, thorough due diligence is crucial. Before purchasing, you should ensure that all fractional owners have been identified and are in agreement with the sale.

This often involves extensive legal work, including searches for wills, death certificates, and other legal documents to establish the rightful ownership and obtain consent from all parties involved.

Engaging a lawyer experienced in Cypriot property law is essential in these cases.

They can help unravel the complex web of ownership and ensure that the property purchase is legally sound and free from future disputes.

Complexities around "Exchange Titles"

Delving into a more specific and nuanced pitfall, when buying residential property in Cyprus, especially as a foreigner, you need to be aware of the complexities surrounding "Exchange Titles" in the Turkish Republic of Northern Cyprus (TRNC).

This issue is deeply rooted in the island's divided history and political situation.

Exchange Titles (or "Esdeger" in Turkish) refer to a particular type of property title found in Northern Cyprus. These titles were issued to Turkish Cypriots who, after the division of the island in 1974, were relocated from the south (the Greek Cypriot side) to the north and given properties that were left by Greek Cypriots.

These properties were essentially "exchanged" for the ones they left behind in the south.

The pitfall for you as a buyer is that these Exchange Titles are recognized only by the TRNC, which is not internationally recognized (except by Turkey). If you're considering purchasing a property with an Exchange Title, you face a significant legal grey area.

The original Greek Cypriot owners or their descendants may still have claims to these properties, and this could lead to legal complications, especially if the situation in Cyprus changes politically.

Before proceeding with any purchase of property with an Exchange Title in Northern Cyprus, it's critical to understand the full implications.

You need to be aware that the international community, including the Republic of Cyprus, may view such a transaction as legally questionable or invalid.

To navigate this, engaging with a lawyer who has expertise in Cypriot property law, particularly with respect to the Northern Cyprus situation, is essential.

They can help you understand the risks and legal standing of the property in question.

Thinking of buying real estate in Cyprus?

Acquiring property in a different country is a complex task. Don't fall into common traps – grab our guide and make better decisions.

buying property foreigner Cyprus

Restrictions to be aware of in the Natura 2000 sites

Focusing on another specific pitfall, when buying residential property in Cyprus, particularly as a foreign buyer, you should be vigilant about the complexities of "Development Restrictions" in Natura 2000 sites.

Natura 2000 is a network of nature protection areas across the European Union, and Cyprus has several such sites where development is highly regulated to protect biodiversity and natural habitats.

In Cyprus, these Natura 2000 sites include areas like the Akamas Peninsula, parts of Limassol, and the Paphos Forest. Properties within or close to these areas can be subject to stringent environmental regulations and development restrictions.

This can include limitations on building, renovating, or even land usage.

The specific pitfall for you here is the potential for investing in a property where your ability to develop, alter, or even use the property is severely limited by environmental regulations.

These restrictions might not be immediately apparent, especially if you're unfamiliar with the local environmental laws and the specifics of the Natura 2000 network.

To avoid this issue, it's crucial to thoroughly research the location of the property you're interested in. If it's within or near a Natura 2000 site, you need to understand the specific restrictions and how they might impact your plans for the property.

This might involve consulting with local environmental agencies, real estate experts knowledgeable about local regulations, and legal professionals who can guide you through the potential complexities.

Additionally, be aware that regulations in such protected areas can change.

What might be permissible now could become restricted in the future as environmental policies evolve.

Risks of "Ghost Town Investments" in the area of Varosha

Another specific pitfall to be mindful of when buying residential property in Cyprus, especially for a foreigner, relates to "Ghost Town Investments" in the area of Varosha, Famagusta.

This is a unique and very specific situation due to the historical and political context of Cyprus.

Varosha, once a thriving tourist resort in Famagusta, became a ghost town after the Turkish invasion in 1974. It has been fenced off and largely uninhabited since then. In recent years, there have been talks and moves towards reopening and redeveloping this area.

This situation has created a market for property investments in Varosha, appealing to those looking for potentially lucrative opportunities in a historically significant area.

The pitfall for you as a potential buyer is the highly uncertain legal and political status of these properties.

Many of the properties in Varosha were abandoned by their original Greek Cypriot owners during the invasion. The legal rights to these properties are still a matter of dispute, and investing in them could lead to significant legal challenges, including disputes over rightful ownership and potential future changes in the political situation.

Before considering an investment in Varosha, it's crucial to understand the complexities involved.

You should be aware of the potential legal risks and the fact that the future of Varosha is still very much subject to ongoing political negotiations and uncertainties.

Engaging with a legal expert in Cypriot property law, particularly one who understands the nuances of the Cyprus conflict and the Varosha situation, is essential.

They can help you navigate the complexities and assess the risks involved.

Make a profitable investment in Cyprus

Better information leads to better decisions. Save time and money. Download our guide.

buying property foreigner Cyprus