The Cypriot Parliamentary Committee on Home Affairs on Friday 31st January discussed the issue of active acquisition of Cypriot property by foreigners.
MPs expressed concern that the deals are being done in a chaotic manner, often with the owner of the property being the one who is willing to pay the most.
As an example, officials cited Paphos, where in the last ten years some 72% of the total number of property transactions were made by foreigners. Of these: 56% of properties were bought by third country nationals and 16% by EU citizens. At the same time, the share of non-Cypriot buyers generally reaches one third in all regions of Cyprus.
In particular, in Limassol, Larnaca and the free districts of Famagusta, foreign transactions accounted for around 50% of all sales. In Nicosia this figure is much lower, at only 15%.
In terms of land ownership, foreigners are dominant:
- 9.6% of the Paphos area,
- 7% of Famagusta
- 6% of Limassol,
- 5%of Larnaca,
- 1.5% of Nicosia.
It should be noted that the real figures are much higher, as the official statistics do not take into account legal entities registered to foreign companies.
The MPs noted that the uncontrolled purchase of property by foreigners is contributing to the rise in property prices in Cyprus and exacerbating the housing crisis among locals. The lack of rigorous checks on the reliability of buyers is also a cause for concern, they said.
Although the scandalous 'citizenship for investment' scheme was abolished several years ago, the so-called 'golden visa' scheme, which allows foreign buyers who invest in property to obtain residency in Cyprus, is flourishing on the island. According to the MEPs, this leaves loopholes for money laundering and other financial fraud through the property market. The MPs called for the development of a system to regulate the sale of property to foreigners.
Currently, Cypriot legislation requires cabinet approval for the purchase of property by foreigners, and also sets a limit of 2,000 m2 for the purchase of land. However, many investors circumvent these restrictions through law firms and trust funds. The new legislative initiatives provide for stricter controls, including mandatory checks on buyers by real estate agents and other responsible persons. Representatives of the Ministries of the Interior, Land Registry and Legal Services continue to discuss possible regulatory measures.