The interesting thing about Cyprus is that it has a population of around 1 million, but receives as many as 2.5 million tourists each year. Tourism is big business in Cyprus. It is also a popular destination for those looking to buy an overseas property. Yet, there are many homeowners, especially Brits, who are looking to sell property in Cyprus fast.
It’s easy to see why. Property prices in Cyprus have come down by over 65% over the last 6-7 years. The country was on the brink of bankruptcy before it was rescued by the European Central Bank through a comprehensive bailout package, not dissimilar from what has been given to Greece.
All the major banks in Cyprus have been under severe pressure. Some have been liquidated, because of their failure to meet their financial obligations towards customers. The reason for this was the lack of discrimination exercised by the banks while distributing loans, when the economy was on the up back in 2006-07.
A lot of people were given loans to buy property in Cyprus back in the days of the economic boom, even those who lacked the means to pay the loans back. What followed could have been easily predicted by anyone – when the economy failed and the banks wanted their money back, most people defaulted on their loans. The banks were left with little choice but to foreclose on the properties.
This led to a glut of foreclosed properties in the marketplace, which drove home prices down throughout the country. Suddenly, the entire real estate sector in Cyprus collapsed and homeowners realized, much to their horror that their properties were worth a lot less than what they had bought them for.
Now, the United States faced the same situation as well, back in 2008, when the housing crash threatened to blow the US economy apart. The difference is that the United States is the world’s largest economy, while Cyprus is just a tiny country which is completely dependent on the European Union and financial bodies such as the International Monetary Fund for its survival. So, the US was able to stage a smart recovery from the economic recession of 2008, while in Cyprus, the wounds are yet to heal.
Even so, one cannot blame the Cyprus government for not trying hard enough. A concerted effort has been made to turn the economy around. Banks have been refinanced because assistance from the IMF and the ECB, and have much stricter standards now when it comes to lending to home buyers.
The government has made it a lot easier to get title deeds on a property. Earlier, the Land Registry Office in Cyprus used to take 5 to 6 years to deliver title deeds. The waiting period has been cut down by a substantial extent now, and those buying a home in Cyprus can expect to get the title deeds within a week or so.
This is a positive development indeed, especially for those looking to sell their property in Cyprus in a hurry. A lot of people held back on buying property in Cyprus in spite of falling in love with the island because of how hard it was to get title deeds on a newly acquired property. That issue has now been solved permanently.
Stamp duty on new properties has been reduced by 50 percent and transfer tax on property sales has been fixed at 3 to 8 percent – which is very reasonable.
Here’s the best part, especially if you are a seller - any property purchased before the end of 2016 is not subject to capital gains tax on its sale. So, while property prices in Cyprus are still pretty much depressed, there’s a lot to be happy about, for both buyers and sellers of properties in Cyprus.