“Our house in Cyprus is a very very very fine house”

Dorian Kokas gives advice and helps foreigners cut through bureaucratic
red-tape in Athens.

What would the same situation be in Cyprus? This is my contribution to
Dorian’s story !!

Greek Real Estate: Buying Property in Greece & Cyprus Real Estate: Buying Property in Cyprus

Our house is a very very very fine house
With paperwork so grand
And taxmen on our land……..

By now you’ve made a fortune and are thinking of buying an apartment or land in Greece which you’ve fallen in love with. Your fiancé or wife is thrilled with the idea and even King Cobra and Arnold have made friends. What now? Looking for something to buy is much the same as looking to rent; however there are many more pitfalls and quite serious ones if you’re not careful. By law, Anyone of any nationality can by property in Greece providing it’s not on any “sensitive” areas, as the Greek govt. refers to them. For EU citizens this does not apply but for the rest of the world these areas are: eastern Aegean, Dodecanese islands, northern Greece, Crete, Rhodes, and Dorian’s home in Athens. Of course these restrictionsare old and take it all with a grain of sea salt. Notice that these areas are bordering Greece’s mortal enemies: the Albanians, communists, and Tito’s malevolent empire. No one has taken these laws off the books mainly because the govt. can’t afford to hire anyone to find them. One has to “slither” through dusty, yellow old books in some forgotten cellar of some Ministry. Now here’s a job for our old friend King Cobra.

In Cyprus anyone can buy as much property as they wish, however, the Cyprus Government restricts the amount of property that foreigners may own.

If you are a national of an EU member country and you are resident in Cyprus, the government ownership rules allow you to own as much ‘immovable property’ (a term that includes both land and property) as you wish. To confirm your residency, take your passport and Temporary Resident Permit to your local District Administration Office where the officers will issue a ‘Certificate of Permanent Residence’ confirming your status. (Please note that this is not the same as the Certificate of Permanent Residence issued by Immigration)

If you are a national of an EU member country and you are not resident in Cyprus, the government ownership rules permit you to own as much land as you wish (and I believe commercial premises such as a shop). However, if you wish to buy any other sort of ’immovable property’ your ownership is restricted to one house or one apartment for which approval from the ‘Council of Ministers’ is needed.

If you are a national of a non-EU country, then the government ownership rules require you to seek the approval of the Council of Ministers before you can own any type of immovable property. Furthermore, unless there are exceptional circumstances, your ownership will be limited to:

• An apartment
• A house
• A building plot or land up to approximately three donums (4,014 sq.m.)

On its accession to the EU Cyprus abolished many of the restrictions placed on investments in real estate by citizens of other EU member states. But to protect its sensitive property market, it agreed a five-year transitional period with the EU preventing EU citizens who are not permanent residents of the island from owning secondary residences.

It is widely anticipated that the current government ownership rules applicable to non-resident EU citizens will be relaxed by the time this five year EU transitional ends in 2009.

Below are the following things you should know.

Step 1) Fos, nero, telephono. That means light (electricity) water and telephone. So many people, I for one, have been maliciously misled by agents selling property (land) where you can’t, by law, have any of these amenities. That is because it is outside the town planning zone. That means it’s too far from the village or town for the local authorities to bother bringing any elec. Or water or telephone there.

The landowner, this time the male, not female as is the case with renting, takes you to see it. He thinks selling it is worth one day off from bringing the bacon home.

(Arnold breathed a sigh of relief) You see the majesty of the scenery, the quietness, the occasional ringing clank from a goat, and buy it. Twenty years later that’s all you have; the quietness. The goat died long ago together with your dreamhouse. How do you protect yourself? First find out if it’s in the town planning zone or just look around and see if others, if there are any others, have elec. Water and telephone. This could be misleading, though, as is usually the case the almighty “fakelaki” or small envelope containing bribe money goes over the law. Just make sure the agent or “mesiti” in Greek is honest.

Note: DEH is the electric company. It stands for Den Echo Electriki. (I don’t have electricity.)
The phone company is called OTE. It stands for Oute Telefono Echo (Nor Telephone I have).

In Cyprus for planning purposes, Cyprus is divided into various zones. These include residential, agricultural, animal rearing, industrial, green belt, and tourist zones. Some zones limit or prohibit the construction of domestic dwellings. You must ensure that the land you buy is in an appropriate zone.

Build Factor: The maximum number of square metres that you are allowed to build expressed as a percentage of the land area.

Site Coverage: The maximum area of the site that can be occupied by a building’s ground floor expressed as a percentage of the land area.

When buying land, it is important to get the documentation translated. When I was given some copy documentation for the first piece of land that I wanted to buy, I found an independent person who was a professional translator from greek to english. I then discovered a greek word that I found time and time again across Greek speaking countries buy Building land - in Greek οικόπεδο (pronounced ikόpedo). It means “for sale ” and is technically associated in Greece and Cyprus with Building Land. If the word οικόπεδο appears on the Title Deed and this means that utilityservices (water, electricity and telephone) will be available on the land and there will be a right of way giving vehicular access to the plot.

Having found land that you wish to buy, the next stage involves a land search.

You can carry out the search yourself by visiting the District Lands’ Office and Town Planning Office and speaking with the officials there. However, it’s probably best to have your lawyer do this on your behalf.

But if you wish to conduct this yourself you can.

In Cyprus the Electricty Authority is AIK. I haven’t found any jokes about them yet !!

But I can say something about the Telephone Company, CYTA.

After digging to a depth of 100 metres last year, Russian scientists found traces of copper wire dating back 1000 years, and came to the conclusion that their ancestors already had a telephone network one thousand years ago.

So, not to be outdone, In the weeks that followed, American scientists dug 200 meters and headlines in the US papers read: “US scientists have found traces of 2000 year old optical fibres, and have concluded that their ancestors already had advanced high-tech digital telephone 1000years earlier than the Russians.

One week later, the Cyprus newspapers reported the following: “After digging as deep as 800 metres, Cypriot scientists have found absolutely nothing. They have concluded that 5000 years ago, their ancestors were already using wireless technology.”

Step 2) AFM or Ah-Fi-Me. This is the Greek tax roll number and every foreigner and Greek must have one for any kind of transaction. Contrary to what many believe and have the audacity to write, you don’t need to be living in Greece or to have a residence permit to have one. For foreigners living abroad there is one place in central Athens belonging to the ministry which issues it. It’s fast and painless.

In Cyprus there is no equivalent of the AFM but beware everything is now tracked on computer !!

Step 3) Pothen esches. This means; where the devil did you get the money from? This is a very contemporary problem in Greece and is talked about every day from street corners to t.v. news. In short, how can you be driving a Mercedes and have a beautiful villa on the beach in Rhodes when you’re only a pig farmer? (sorry Arnold) So what do you do? First is you must have proof of where you got the money. This can be by showing the tax people “pink slips” ( not the ones women wear or the ones you get when you’re fired) which are the receipts you get from transferring money from one currency to another. Airports do this too. An other proof is bank statements showing transfers from your bank to a bank here. An other way is a sworn statement from your local Mafia boss stating you are fully employed as a hitman and have made “so much” in the last few years.

In Cyprus all the banks, lawyers and accountants are well versed on the laws relating to money laundering and require you to provide proof of the legal ownership and provenance. Nevertheless there are many transactions undertaken in cash and this is called locally “Black Money”. No receipts are given. From time to time the Government declares an amnesty for tax purposes. What on earth will happen to all the cash under Cypriot beds when the change to the Euro takes place in 2008?

Step 4) Taxes. The buyer has to pay the transfer tax which is paid before the purchase. You also have to make a tax declaration for property tax. This varies according to the value of the property. Who assesses the value is an entirely different story. What the law says and what the true value is could be as far apart as a lobster meal and a pork chop. Oh no, here I go again. The law also stipulates you “may” have to pay annual tax. The word “may” is interesting as no one seems to know completely what this entails. The law goes on to say you “may” be exempt if it is your first home. Yeah right, so where were you living before, in a tent? I think they meant in Greece, but don’t be too sure.

In Cyprus Land transfer fees are paid only when the title deeds are transferred to your name.

When the title deeds to the plot are first transferred to your name a transfer tax is imposed.

But before a house is built on the plot, as the law stands now, you will NOT be required to pay any transfer tax on the value of the house as you did NOT purchase a plot with a building on it. Also there is no contract filed at the land registry which states that you have bought a plot and house for an X amount.

The Land Registry has a “database” of valuations going back years. Actually the one I saw was a print out. They look up their valuation of plots and properties close to the development and make a judgement on value which is not necessarily the price in the purchase contract.

On what basis does the Director of Dept of Land & Surveys determine his revised market value? From a database of properties, which have already been assessed for transfer tax by the Land Registry, being “local” to the one being valued. In theory you pay the same as everyone else and nobody gets away with paying part cash and a lower figure on the contract for sale to reduce the transfer tax.

Is it his considered opinion or is there a set formula?

No set formula - as above.

The way Immovable Property Tax (IPT) works is that the owner, in the case that the title deeds have yet to be registered in your name, the developer, is liable for IPT on all the property he owns. So if he owns (say) 20 properties each of which has an assessed 1980 value of (say) CYP 10,000, then the amount on which his IPT liability is calculated is CYP 200,000.When he gets his IPT bill, he splits it between those people who are the ‘beneficial owners’ of the properties (ie. those people who have bought properties, but who have yet to complete their purchase and get Title Deeds).So even though the assessed value of each individual property means that it is exempt from IPT (properties whose assessed 1980 value is below CYP 100,000 are exempt) the ‘beneficial owners’ are required to pay.

Step 5) Notary public or Simvoliographo. By law a contract is needed and only a notary is authorized to do it, making this position among the most powerful in all of Greece. The notary will not authorize any sale if he/she, (it’s back to women again as most notaries are women and indeed better informed and more able than lawyers), sees something “funny” going on with the title. This ‘who owns what’ mischief is rampant in Greece. (I’ll tell you what happened to a very close friend and me in the next part.) Of course you pay the notary, not the seller. It is usually about 1-2% of the amount listed in the deed of the sale. This probably, once again, has nothing to do with the real value.

In Cyprus the Lawyers rule the roost on fees but always tell them that you will only pay the scale of charges and fees set down by the Cyprus Bar Council.

Step 5) Lawyer. Yes, Yes. The more the better. There is no other aspect of Greek life more serious to Greeks than Property. More than any other issue, property ownership or “it’s mine not your” syndrome has resulted in the majority of family wars, divorces, murders, arsons, manslaughter, and yes, even minor disagreements. Now to the story of my friend. I was asked to assist in the paperwork, which later turned out to be actually “creating” a title for a small house with a collapsed roof in the beautiful town in the Peloponnese. He had been going there every summer for the last 12 years checking it out, cleaning a bit here and there for it was well known that he was the sole heir to the title as his father was known to have owned it. The only proof we had was a small, old wrinkled piece of paper that a former hippy out of work, former convict lawyer had kept for years. This read that my friend’s grandfather left it to his son who in turn left it to my friend. The trouble was that there were other names on that paper as well. These “other” people either were dead, or no one knew their whereabouts , and maybe don’t even know where Greece is on the map, let alone knowing about the house. With this and some smiles and “fakelakia” I proceeded to get it legalized under my friend’s name. This meant getting papers from town hall, paying the taxes, getting the ok. From the contractors, blue prints of the land and assessment of value. This done all that was left was the notary who already drew up the contract waiting for my friend to sign. A two month battle and only a minute and signature away. That minute could have been a century as it was one minute before we arrived at her office (yes the notary was a her) she received a phone call from America telling her to stop the transaction as the mysterious caller claimed the property as his. He turned out to be an uncle of my friend’s. The story spread like wildfire and soon enough another uncle and about 320 cousins sprouted out of nowhere. The end result? The house on the beach with a collapsed roof still stands today as is. Believe me my dear readers, this case is not the exception; it’s almost the rule. So Yes to a lawyer, preferably not just out of jail, to make sure the title is clean.

In Cyprus you must find a Lawyer who is registered at the Cyprus Bar and is independent of everyone except you. Hard yes, almost impossible. If you do get them to sign a warranty that they are.

Step 6) Civil engineer. He (always a man this time) will make sure the house is structurally sound. This is very important as Greece is prone to earthquakes, sometimes strong enough to rattle your window slightly for a second. Some old structures are so weak that even the sound of a motorbike or a car horn or some guy shouting at his cousin over land ownership, can make it collapse. He will also make sure the land is ecologically friendly to animals including Arnold and the King. They need friends too, don’t they? I mean how would they feel if they invited their friends to a house warming and they only warmth they get is from a leaky gas pipe which decided to explode. Yes, a contractor!

In Cyprus everyone you use must be registered. Lawyer, Surveyor, Architect, Building Contractor and Civil Engineer.

Three engineering students were gathered together discussing the possible designers of the human body.

One said, “It was a mechanical engineer. Just look at all the joints.”

Another said, “No, it was an electrical engineer. The nervous system has many thousands of electrical connections.”

The last said, “Actually, it was a civil engineer. Who else would run a toxic waste pipeline through a recreational area?”

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The Black Art of Buying Property in Cyprus™ ®
The Cyprus Informer™ ® ©
http://cyprusinformer.eu

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