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Mrs M. McDonald, Pafia 4, 2005
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| Frequently Ask Question |
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 | Investing | |  | Why is purchasing a Pafilia property a safe investment? |  | Demand for property in Cyprus is high, so much so that almost all property is sold off-plan and there is a guaranteed re-sale market. A strong tourism industry ensures that rental yields also remain high. Affordable borrowing is an additional plus, with low deposits and low foreign currency mortgages being readily available. Another bonus is low capital gains tax, and the absence of inheritance tax. Of course you can be sure that all of Pafilia’s properties are sold freehold. |
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| | When is the right time for me to invest? | | Property prices have rocketed in recent years, and some feel they could have missed the boat. This couldn’t be further from the truth. Prices are still highly competitive in comparison to other EU destinations. Cyprus has recently joined the Eurozone, with the Euro due to be introduced in January 2008. Capital appreciation is set to jump again. This is the perfect time for investors to purchase property in Cyprus, whilst the market is still in the early stages of growth. |
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| | What safeguards are in place to protect my investment? | | The land registry in Cyprus is based on the British system, and safeguards the purchaser’s rights in many ways. Above all, it provides a legal instrument called “specific performance.” Once the sale agreement is signed and a deposit of 30% paid, the contract is deposited at the Land Registry to protect the purchasers’ ownership rights until issuance and transfer of the title deeds into your name. This cannot be withdrawn by anyone and ensures no one but the purchaser can lease, sell, transfer or mortgage the property. If clients wish, a bank guarantee for issuance of the title deeds of your property can be provided, however the cost is borne by the purchaser. Whilst you are in Pafos, Pafilia is happy to answer any questions that you may have on this matter. |
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| |  | | Cyprus | | | | How easy is it to find work in Cyprus, and will I need a work permit? | | Since Cyprus entry into the EU on May 1st 2004, all EU citizens have the right of free movement, to live and work in Cyprus without restrictions provided that they hold an EU passport. However, non-Cypriot citizens must still follow the formality of registering at the local immigration office in order to obtain a social security number. Finding a job in Cyprus can be done through visiting the Labour Office, or simply through the local newspapers. Now that Cyprus is an EU member, the co-operate network EURES can be used to assist mobile workers in all aspects of living and working in EU countries such as Cyprus. The EURES website is http://www.europa.eu.int/eures/index.jsp |
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| | Can I receive my pension in Cyprus? | | UK pensions are easily transferable to Cyprus. For individuals, CYP 2,000 of pension income from abroad is received tax free p.a., and thereafter income tax is applied at the very low rate of 5% to amounts above this. Additionally, Cyprus has double taxation agreements in place with many countries including the UK to prevent double taxation of income. We can refer you to a tax advisor in Cyprus to answer any individual questions you may have. |
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| | Is there crime in Cyprus? | | Cyprus is virtually crime free and that is why it is such a popular destination for tourists. Street criminality is absent in Cyprus. |
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| | What do I do if I need a doctor? | | If the medical condition is urgent, it is best to go to the General Hospital. There are also numerous Private Clinics who will treat you as long as you have insurance. However, there is also a private 24hour medical service and the details can be obtained from Pafilia Services. |
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| | Why buy in the South, when prices are cheaper in Northern Cyprus? | | Secure title deeds are those with a pre-1974 Turkish provenance or British provenance, which are difficult to find therefore making it risky to purchase property in the North. Title deeds dated from 1974 when the TRNC gave Turkish Cypriot refugees from the Cypriot homes and land in the South are not recognised anywhere but Turkey and the North of Cyprus. Buying in the North is also an act of taking part in a political conflict, which has been taking place for more than 30 years. Thus investing property in the North is not a secure investment. |
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| | | | Property payment | | | | When do I pay the final balance? | | If you are coming out to take delivery of the property, the money should be paid in advance to Pafilia or deposited into your personal account in Cyprus. It can then be transferred into Pafilia’s account when you take delivery of the property. If you are not planning to come out when the property is ready, the final payment should be paid on completion of the property. |
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| | | | Loans | | | | Is it difficult to get a loan in Cyprus? | | The banking system in Cyprus is similar to the British system. Non-Cypriot citizens may open foreign currency and local deposit accounts without difficulty therefore with a foreign deposit account, payments and transactions can be made. The procedures for extending foreign currency loans to non-residents for the acquisition of immovable property in Cyprus are fairly easy. The terms and conditions of the loan facility are as follows:
• Amount - No maximum amount in any one of the three major currencies, Euro, US$ and Sterling.
• Repayment period - Maximum of 10 years (Currently being revised and extended) 15-20 years lending period for Cyprus Pound (CYP).
• Customer’s Contribution - 30% of the total cost payable upfront prior to the disbursement of the loan. 70% can therefore be financed.
• Interest Rate - LIBOR + 2.5% (Currently being revised, and will eventually be less).
• Rates for Loans - 4.5% for Euro and 6% for sterling (rates are subject to change).
• Arrangement Fees - 0.5% on the loan amount payable in advance.
Security documents required include: first mortgage on the purchased property or a letter of guarantee issued by the seller of the property and assignment of the applicants right on the contract of sale (the contract of sale should be registered at the Land Registry), personal guarantees of one guarantor (not required for joint applications), and assignment of fire insurance.
Kindly note that the above terms and conditions can be amended at any time subject to the Banks Policies and Regulations. Each application will be evaluated on its own merit and its approval or rejection will be up to the banks’ discretion. |
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| | | | Electricity, water & telecoms | | | | Is the water and electricity registered on my own name? | | The water meter is automatically registered in your own name but the electricity is registered on Pafilia’s name. The meters will require to be transferred as soon as possible and you will be given directions and details of the documents you will have to take to the various offices. When you are transferring the names on the meters, it is advisable that you set up direct debits in order that future utilities bills will be paid directly from your bank. |
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| | How can I arrange to have the telephone installed? | | You contact CYTA (Cyprus Telecommunications Authority) and apply for a phone. Our engineers will already have installed the landlines and it only requires CYTA to check our paperwork and make the final connection. At best, this should only take 24 hours but sometimes there is a delay while the paperwork goes round the various departments within CYTA. |
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| | | | Financial | | | | How much is VAT, and is it included in the sale price? | | The decision of 15% VAT on new build property has been passed, with the exception of projects or buildings which have already applied for the planning permit prior to the 1st May 2004. This decision affects all new projects coming onto the market, but the price increase to clients will be closer to 10% due to some of the tax being applied to materials used. There is no VAT applied to the purchase of land up until 2007. VAT is also exempt for re-sale properties. |
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| | Do I need to make a will in Cyprus? | | It is advisable to make a will in any country where you have immovable assets you would like to pass on in a certain way. Inheritance tax has been abolished in Cyprus. |
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| | | | Legal | | | | When will I get the Title Deeds? | | At the moment, it is taking approximately four years for Title Deeds to be prepared. This delay is mainly due to the backlog of work within the Land Registry Office caused by the building boom in Pafos. |
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| | | | Property rentals | | | | Can I rent a property long term? | | If you wish to move to Cyprus before your Pafilia property is completed, we are happy to arrange long-term rental accommodation for you. Just let our Customer Care Team know when you wish to come to Cyprus, what type of property you would like to rent and they will provide you with a quote at special rates, as you are a Pafilia client. |
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| | How much rental income can I get from my property? | | This depends on the rental options you agree with Pafilia. Pafilia is offering:
• Seasonal Rental Agreement. This allows you to use your property upon request, provided you give us one months notice and no agreement with visitors for rental bookings have been made in advance.
• Tenancy Rental Agreement. This allows you to earn rental income based on one or more tenancy agreement which will be signed with tenants proposed by Pafilia, and/or a combination of seasonal and tenancy rentals.
• Rent on your own and Utilise our Services. This allows you to rent out your property yourself, and use our services to clean and maintain your property and do the laundry. |
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| | | | Property resales | | | | Can I re-sell my property and how do I go about it? | | Yes, Pafilia Property Developers can sell your property for you and this can be done even after the 30% has been deposited and transferred to your name through the contracts. Of course, you are not obliged to sell through Pafilia Property Developers. |
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| | | | Miscellaneous expenses | | | | What set-up expenses can I expect? | | You will have to insure the property and the premium can be anywhere from CYP150–CYP350. If you have bought a property, which is part of a development or has communal areas, which have to be maintained, you will also have to pay the Management Agreement in the amount of CYP600. Of this amount, CYP3000 relates to a deposit, which is returnable with interest, should you ever sell the property. The other amount of CYP300 is for the Communal Expenses and relates to the maintenance of the swimming pool, landscaping and gardening, maintenance of lifts, cleaning of corridors and stairwells and common usage of water and electricity. The Communal Expenses are paid one semester in advance. We will suggest that you set up a Standing Order with your bank to facilitate the future payment of Communal Expenses and we will arrange this for you from our office. |
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| | How much are the communal charges?
| | The communal charges cover maintenance of the communal areas in a development. For example, the garden, swimming pool etc. They vary from project to project, but generally range from around CYP 450-600 p.a. |
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| | Do I have to pay ‘Community Tax’? | | There is a charge set by the various municipalities but it will probably only be around CYP100 per year. Each municipality will set their own rates. |
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