CYPRUS Trends and Developments Contributed by: Marios Konstantinou and Stalo Konstantinou, George K. Konstantinou Law Firm
effect that the reduced VAT rate of 5% applies as follows: • the primary residence of 130 sq m and total value of EUR350,000 gets the reduced 5% rate; • primary homes between 131 and 190 sq m and up to EUR475,000 in value get 5% for the first 130 sq m and 19% for the remainder; • primary residences over 190 sq m and EUR475,000 in value do not qualify for reduc - tion; and • persons with disabilities receive the 5% reduced rate on the first 190 sq m of primary residence. The European Commission approved this scheme in January 2024. Change of Rules for Buying Without Title Deeds The purchase of real estate without title deeds has been an ongoing issue for several years. This sometimes happens because the seller has already mortgaged the property and cannot transfer it. The House of Representatives responded by passing the Sale of Property (Specific Perfor - mance) Law of 2011 (81(I)/ 2011). Under this law, the buyer of property without title deeds could be protected by using the remedy of spe - cific performance, whereby the side in default is ordered to carry out its contractual obligations. The buyer could be protected provided they: • deposited the contract of sale at the Depart - ment of Lands and Surveys (DLS) within six months; • paid the mortgage; and • sought specific performance against the seller through the court.
This law was amended on 12 December 2023 to strengthen the protection available to buyers. Under the new amended provisions, the deposi - tion of the contract of sale at the DLS must be accompanied by either of two documents: • a declaration from the mortgage owner(s) and seller that once the buyer has repaid 95% of the mortgage, they will lift the mortgage (once the receipt of payment is also submitted, the DLS will then transfer the property to the buyer); or • a declaration from the buyer that they do not wish to accompany the contract of sale with the first type of declaration. Moreover, the seller is obliged to integrate in the contract of sale a search certificate concerning the real property. The search certificate, an offi - cial document issued by the DLS showing bur - dens on the property, must not be older than five working days from the signing of the contract. If there is a mortgage and the seller wishes to repay it (as above), the mortgage owner(s) are obliged to accept payment. Once the buyer has repaid 95% of the mortgage, the DLS will trans - fer the real property to the buyer. The amendments to the law concern contracts signed after 12 December 2023. Contracts signed before that date are covered by the pre - vious law. Mortgage to Rent (MTR) Programme Due to recent economic considerations, vulner - able real estate owners in Cyprus have been concerned about their ability to repay mortgage loans. On 12 July 2023, the Council of Minis - ters approved the Mortgage to Rent (MTR) pro - gramme, aiming to protect the primary residence of specific vulnerable groups. The programme
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