Buying a property under development, otherwise referred to as “off-plan” or newly developed, means there is no independent, separate, title deed which can be transferred to the buyer at the time of purchase. Specifically, when buying a house, an apartment or an office from a developer of land, as a general matter, the title deed most likely still relates to the land, where the property is being developed and not the apartment, house or office being purchased. There is bureaucratic process which customarily takes a few years from the moment of completion of construction until separate title deeds are issued. Only once the said process is complete can the buyers receive a title, namely legal ownership, in their name. For this reason, it is imperative that a proper contract of sale is in place which will safeguard the interests of the buyer in the property from the moment of purchase until a separate title is issued.

Yes, absolutely. Property bought “off-plan”, “under development” or newly developed generally has no independent title deed, and the title deed relates to the land on which the property is being developed. A relevant title deed is issued only after a bureaucratic process, customarily within a few years after the construction is completed. The only way a buyer can safeguard their interests, until a separate title is issued (which can be transferred to their name), is through a proper contract of sale. Such a contract, once duly stamped, can be lodged with the Land Registry for specific performance, namely, to legally enforce its terms, and will serve to create an encumbrance on the land, preventing the seller from otherwise disposing of the same property. Such a contract of sale will specifically govern the commercial and legal terms of the sale of the property, including, a detailed description, plans and specifications of the property being bought, the price, the payment terms, the date of delivery, certain warranties on behalf of the seller such as, delivery of title within a specified period, good workmanship guarantee, breach and other terms.

There is no specific or prescribed content or format. Customarily a contract of sale for newly developed property includes, at least, a detailed description, architectural plans and specifications of the property being bought, the price, the payment terms, VAT related issues, the date of delivery, certain warranties on behalf of the seller such as, delivery of the title within a specified period, good workmanship guarantee, and other warranties. Other terms include certain restrictions or limitations during the period of delivery and when a title deed is issued, and issues related to bills and expenses prior to and after delivery. If its co-ownership, issues governing the co-ownership and certain other provisions for resale, prior to when title deed is issued, may also be included. Very importantly, such agreements customarily include annexes including a recent Land Registry search showing whether the land is mortgaged or encumbered and, if so, a bank waiver. These are recently required by mandatory provision of law. Other annexes include the architectural plans, the legal permits, namely planning and construction permits, the specifications of the property and of course the title deed.

Yes, VAT applies on the purchase of newly developed property. It is typically 19% on the agreed purchase price unless the buyer is eligible, applies for and secures a consent for a reduced 5% VAT. To be eligible, the buyer must be a natural person who will use the property acquired as their primary residence. Certain conditions and limitations apply. For more information on 5% reduced VAT see the dedicated topic. Where VAT applies, there are no Land Registry transfer fees when the property is ultimately transferred from the seller to the buyer, after a separate title deed has been issued.

No. Firstly, Land Registry transfer fees are only relevant at the moment of transfer of the property, thus, in the case of newly developed property, it is not relevant upon signing a contract of sale and us is only relevant a few years after the property has been constructed and delivered. In any event, transfer fees will not apply and will be exempted because VAT applies on the purchase of newly developed property. For more information see the dedicated FAQs topic of Transfer Fees.

Yes, stamp duty does apply on the written contract of sale for the sale of newly developed property. For more information, see the dedicated FAQs topic on Stamp Duty.

Unless agreed otherwise, the buyer is responsible for the stamp duty on the contract of sale of newly developed property. For more information, see the dedicated FAQs topic on Stamp Duty.

The amount of stamp duty depends on the value of the subject matter contract. For amounts up to €5,000, no stamp duty is charged. For amounts between €5,001 and €170,000, a rate of 0.15% is applied. For amounts exceeding €170,000 a rate of 0.20% is applied. There is a maximum of €20,000. There are several online calculators to assist with the calculation including the official tax authority website. It is paid within 30 days from signing or, if signed abroad, within 30 days from bringing the document into Cyprus. If the contract of sale is not duly stamped, it will not be accepted by the Land Registry for purposes of depositing the contract of sale for specific performance purposes. For more information, see the dedicated FAQs topic on Stamp Duty.

Having a written contract of sale for newly developed property, duly stamped, and lodging it with the Land Registry is beneficial to the buyer, as it creates an encumbrance on the land, duly recorded by the Land Registry, and it further permits the buyer to apply for specific performance. In other words, the seller cannot re-sell or otherwise dispose of the land, and the buyer, if they deem so, may apply in court to enforce the terms of the contract of sale, namely, force the owner to accept the agreed purchase price and transfer the property to the buyer. This is especially beneficial in the case of newly developed property, where there is no separate title, the property may be incomplete and, customarily one or more advance payments were made, upon signing the contract of sale, before construction or delivery of the property and before a separate title deed is issued.

Property is legally bought through a transfer process in the Land Registry. The process can be initiated only once a separate title is issued on the newly developed property, which is customarily a few years after it is constructed. In other words, at the time of buying newly developed property, only the contract of sale is relevant. At the time when a separate title deed will be issued, and the property can be transferred, as a buyer, you need to present identification (ID or passport). If the buyer is a foreigner, they will also require relevant approval from the District Officer pursuant to relevant laws on foreigners buying property. If the buyer is a company or any other legal entity, they will need copies of all corporate documents, such as the certificate of incorporation and certificate of directors and secretary of the company from the Registrar of Companies. If the buyer is acting through a representative, they need to also have a duly signed power of attorney, duly certified by a certifying officer, or otherwise legalized, if signed abroad. The seller will also need to present a number of documents, including tax and other clearances.

Eventually yes. Buying newly developed property initially entails signing a contract of sale which is lodged in the Land Registry. This can be done by the buyer, seller or their representative by physical attendance at the Land Registry. When a separate title deed is issued, property transfers in Cyprus cannot be completed online. Both parties (or their representatives) must physically visit the Land Registry. The buyer or the seller can alternatively appoint a representative through a properly certified power of attorney. However, the representative must bring all necessary documents, to the Land Registry, including the original power of attorney duly certified by a certifying officer, or otherwise legalized, if signed abroad.

Once an independent title deed is issued on the newly developed property, in the name of the developer (or other seller) the seller, pursuant to its contractual obligations under the contract of sale, must pay all taxes and dues and secure tax and other clearances necessary to transfer the property in the name of the buyer. These documents must be presented to the Land Registry for a prima facie check, and if they are satisfied, they will set a date for the transfer. The seller will typically invite the buyer to receive the property in their name. On the date of the transfer, the parties, or their representatives, must physically attend the Land Registry for the transfer process and physically deliver all necessary documents. Once formalities are finalized, the parties will attest that the payment is duly made in front of the Land Registry clerk, and if necessary, sign certain documents, and the transaction will be completed. The clerk will process the transfer and, as per current practices, will issue a new title deed on the name of the buyer.

Yes, non-EU nationals can buy newly developed property in Cyprus. Once a separate title deed is issued, typically within a few years from when the property is constructed and delivered, the foreign national must apply and secure written consent from the District Officer, in accordance with applicable law, before the property can be legally transferred in their name, personally. For more information, see the dedicated topic on Foreigners Buying Property.

A reservation agreement is a preliminary contract where the seller, typically a developer, in the case of newly developed property, agrees, not to sell the land to others for a specified period of time, while the buyer completes the due diligence exercise, and the parties negotiate a final contract of sale. It typically involves a refundable or non-refundable deposit and can provide clarity on initial commercial agreed terms such as the purchase price, payment terms, and timeframe of entering into a formal contract of sale. A reservation agreement is not legally necessary. It’s advisable to have one in place especially for newly developed property, where there may be mortgages and other complications, which create the need for some time for the parties to negotiate before they can finally enter a formal contract of sale. Another reason is to lock in the negotiated price, creating a burden, namely the deposit, before either party changes their mind freely.

A buyer, through their lawyers and representatives, must conduct due diligence before buying or even committing to buy newly developed property. Due diligence ensures the property is free from legal issues such as lack of required permits, mortgages, encumbrances, and other issues, and generally that it is suitable for the intended purpose of the purchase. It protects the buyer from unexpected legal or financial complications after the purchase. For more information, see the dedicated FAQs topic on Due Diligence.

Generally speaking, a buyer should at least obtain and review the title deed to verify ownership and the characteristics of the land where the property is situated. They should also ask for a Land Registry search to determine if there are mortgages and other encumbrances on the land and/or the particular property being purchased. Specifically, they need to check if there is any other contract of sale lodged for the same property. Furthermore, a buyer should request the necessary permits for the development of the property, namely the planning permit and the construction permit. Other permits may also be relevant depending on specific facts or circumstances. If applicable, a buyer should also obtain any permit variations. In line with the permits, a buyer should ask for architectural plans of the property and the entire development (if it is a building complex), and the list of specifications of the property, such as materials, installations (or provisions), sanitary appliances and fixtures, etc. Lastly, a buyer should perform a physical inspection to identify any issues not appearing on papers such as, nuisances, elevations, new or lack thereof, traffic, etc. Ideally, a buyer should seek and obtain a valuation by professional chartered surveyors to determine a reasonable market price, in comparison to the asking price, especially if the property will be bought with finance and banks will seek to mortgage the property based on market value.

Yes, always. Physical inspection is necessary to validate certain characteristics which are typically advertised upon selling newly developed property such as the likelihood of a view, distance to road network, and other points of interest, and generally the characteristics of the area, whether it is quiet, busy, or whether there are other environmental nuisances, or land features that may not appear in documents.

No, the buyer of newly developed property does not pay any direct tax on the purchase, except VAT. Even so, VAT is paid to the seller, in addition to the purchase price, who in turn must register with VAT authorities and pay it to them. When selling land, it is the seller who must pay taxes. If it’s a development company, most likely the seller will pay corporate tax at 12.5% or, in some instances, capital gains tax at 20%. The seller will also pay property taxes, municipal tax, water and sewerage dues, etc., at least until the property is delivered to the buyer.

There is no prescribed period, and it depends on facts and circumstances, including how prompt are the actions of the seller to apply and receive a certificate of final approval, and the workload and process of the relevant authorities. Currently, the process takes approximately 1-5 years. Recent reforms promise faster processing in the future. Once an independent title deed is issued in the seller’s name, the transfer process is instant. Presently, the new title deed is issued on the spot on the date of the transfer.

Yes, in fact, this is the standard practice, but this must be explicitly stated in a written sales contract. Payment terms should be agreed upon before signing the contract of sale

There are no prescribed terms. Everything is subject to negotiation. Having said that, typically there is a minor initial payment, as reservation deposit, before a contract of sale is signed, most likely on the basis of a reservation agreement. Under a contract of sale, there is typically a significant payment upon signing the contract of sale. This will, again typically, be a percentage matching the progress of the development of construction of the property, vis à vis the purchase price but it is typically not less than 30% before the seller will agree to release a signed contract of sale to be lodged in the Land Registry. The remaining purchase price is customarily broken into several tranches, which match the progress of construction of the property (or complex), with a final, and typically largest, payment upon delivery of the property. It is advisable for the buyer to keep an amount of the purchase price pending, until title deeds are issued and the property is transferred into the name of the buyer. This will keep the seller incentivized to finalize the process. This is an administrative issue, so the seller will typically accept only a nominal amount such as €3000- €5000. Everything is subject to negotiation and specific facts and circumstances of each purchase.

No, unless it is below €10,000. Recent anti-money laundering legislation prohibits real estate transactions from being made in cash, in an amount above the aforementioned, with very severe consequences to those in breach, including fines and imprisonment. In any event, all forms of payment, including cash, must be duly legally declared for tax purposes, whether embedded in the purchase price or otherwise, again with very severe consequences to those in breach, including fines and imprisonment.

Yes, banks, especially Cyprus banks, with whom the seller maintains an account, will conduct rigorous due diligence on the buyer on account of anti-money laundering regulation, to determine their source of wealth and source of funds, and validate that the funds originate from legitimate activities. It is often the case that parties enter into contracts of sale and even make preliminary payments, only for the bank to later refuse or significantly delay the acceptance of further payments. It is strongly advisable that both the buyer and the seller seek and obtain pre-approval from both the paying and recipient credit institutions.

If there are encumbrances, like mortgages or liens, on the land where the property is developed which are lodged in the Land Registry then, once an independent title deed is issued, the property cannot be transferred to the name of the buyer. They must be cleared by the beneficiary, for example the bank, before or simultaneously with the transfer from the seller to the buyer. Where a buyer identifies a mortgage or encumbrances in the due diligence exercise, they should not conclude an agreement unless the seller ensures, and they independently verify, the beneficiary of the mortgage is prepared to lift it, thus permitting the sale. This is customarily done by securing a written legally binding “bank waiver”, namely an undertaking from the bank that they are prepared to remove the mortgage if the buyer has paid all the purchase price. Such waivers are now legally mandatory and take a specific format under law, and accompany the contract of sale.

There is no legal requirement to pay tax, nor to have a tax identification number, at the time of buying property under development, namely when signing a contract of sale. After the property is duly delivered and the developer has secured a separate title deed on the property, they must transfer the legal ownership of the property to the buyer. To do so, they must secure tax clearances. As per recent practices of the tax authorities, the seller needs to produce a tax identification number of the buyer, in the context of securing the necessary tax clearance for the transfer, even though no tax occurs or accrues on the buyer at this time. Accordingly, yes, as a matter of practice, a buyer will have to obtain a tax identification number to register the property in their name, even if they are foreigners and not Cyprus tax residents. To clarify, obtaining a tax identification number does not mean that the buyer becomes a Cyprus tax resident. It is obtained purely for property related purposes and will become relevant when the property is sold or rented, where any such transaction may be taxable.

There is a very wide range of legislation which is relevant to the purchase of newly developed property, or aspects thereof. This includes the Immovable Property (Tenure, Registration, and Valuation) Law, Cap. 224, Contract Law, Cap. 149, Transfer and Mortgage of Immovable Property Law, L.9/1965 (as amended), Specific Performance Law, L.81(I)/201, Income Tax Law, L.118(I)/2002 (as amended), Capital Gains Tax Law, L.52/1980 (as amended) Value Added Tax Law, L.95(I)/2000 (as amended), Special Contribution for the Defence Law, L.117(I)/2002, The Assessment and Collection of Taxes Law, L.4/1978,The Local Authorities Laws, Land Registry Fees Law, Cap. 219, Planning and Housing Law, Cap. 96, Anti-Money Laundering Law, L.188(I)/2007 (as amended) and others. Myriads of regulations, decisions, decrees, guidelines and other secondary legislation are also relevant.