New rules for buying property in Cyprus

Rules for buying real estate in Cyprus — protecting the interests of buyers and stabilizing the market

In recent years, the Cyprus real estate market has faced a number of serious challenges. A sharp increase in demand, especially from foreign buyers, has led to a significant increase in housing prices and a decrease in their availability for the local population. According to parliament, in 2024, about 40% of all transactions were concluded by foreign citizens, and in some areas their share was even higher. A significant role in this was played by loopholes in the legislation, which allowed foreigners to bypass restrictions by registering local companies and buying up luxury real estate and land en masse]. This not only drove up prices, but also carried additional risks associated with possible money laundering and dubious origin of funds. The current situation required urgent intervention by the authorities to protect the interests of ordinary buyers, especially young families, and ensure balanced market development. There is a pressing need for a whole range of measures to increase the transparency of transactions, tighten control over foreign investment and stimulate the construction of affordable housing.

Key changes to property purchase rules

The new bill provides for a significant increase in the requirements for checking property transactions and restrictions for foreign buyers. Among the key innovations:

1. Thorough verification of sources of funds — law firms, realtors and accountants will be required to thoroughly check the origin of foreign investors' money to prevent money laundering and dubious transactions.
2. Mandatory criminal record checks — all foreign buyers will undergo a criminal record check to minimize legal risks for the market and local residents.
3. Restrictions on the number of properties — strict limits are introduced for foreigners: no more than one property per person, with a total area of ​​up to 2,500 square meters. Buying investment land will require confirmation of large capital of 20 million euros.
4. Relevance of legal documents — in the Republic of Cyprus, purchase and sale agreements must now include a fresh property search report, drawn up no more than 5 days before the transaction. This will allow buyers to receive only reliable information about the legal status of the property.
5. Additional requirements for encumbrances — if the property is mortgaged, the land registry will accept the contract for consideration only if there is written consent from all interested parties and the buyer is fully informed.
6. Fighting loopholes for foreign companies — legislators plan to close down schemes that allow foreign citizens to bypass restrictions for individuals by registering local legal entities.

Thus, the main focus of the reforms is to ensure the transparency of transactions, reduce risks for buyers and make it more difficult for money laundering through the real estate market. At the same time, local residents and bona fide foreign investors will still be able to purchase housing, but in more controlled and safe conditions.

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Reforms in the field of construction and rental housing

In addition to tightening the rules for purchasing, the Cypriot authorities are taking steps to increase the volume of affordable housing and curb price increases. In particular, it is planned to:

1. Reduce the minimum area of ​​apartments in new buildings so that developers can build more residential units on each site.
2. Cancel mandatory quotas for types of apartments in tourist areas to give developers greater flexibility in meeting demand.
3. Launch the “Build to Rent” program — construction of residential complexes specifically for rent to company employees, which will reduce pressure on the private rental market.
4. Speed ​​up and optimize the procedures for obtaining construction permits for developers.

These measures are designed to stimulate developers to more actively develop the affordable housing segment, which is especially important for meeting the needs of the local population, primarily young families. At the same time, conditions will be created to meet the demand for rental housing from employees of numerous foreign companies in Cyprus.

Expected results and impact on the market

The Cypriot authorities expect that the measures taken will lead to a comprehensive recovery of the real estate market:

1. Transparency and legality of transactions will increase, risks for buyers will decrease.
2. The opportunities for money laundering and dubious transactions through the real estate market will decrease.
3. Speculative demand for luxury housing and land from foreign investors will decrease.
4. Price growth will slow down and housing availability for the local population will increase due to the development of the affordable new buildings and rental housing segment.
5. The market will become more balanced and sustainable in the long term.

At the same time, experts note that at the initial stage, the reforms may lead to a temporary cooling of activity in the market, especially in the luxury real estate segment. Some foreign investors focused on speculative transactions or dubious schemes will probably leave the market. However, in the long term, this will benefit the overall stability and investment attractiveness of the sector. For buyers of real estate in Cyprus, both local and foreign, the upcoming changes will require more careful preparation of transactions and interaction with professional consultants at all stages. Timely familiarization with the new rules and requirements will help to avoid potential problems and ensure a smooth and safe purchase of properties.

To summarize, the Cyprus real estate market is entering a period of large-scale changes. The planned reforms are aimed at comprehensively protecting the interests of buyers, increasing the availability of housing for local residents and ensuring balanced development of the sector. Although the innovations may create certain difficulties at the initial stage, in the long term they are designed to make the market healthier, safer and more sustainable. Tighter control over transactions, especially with the participation of foreign investors, should significantly reduce the risks associated with money laundering and dubious origin of funds. At the same time, measures to stimulate the construction of affordable and rental housing will help meet the needs of the population and smooth out price imbalances. Overall, despite possible short-term difficulties, the reforms of the Cyprus real estate market appear to be a necessary and timely step in response to the key challenges of recent years. If implemented correctly, they are capable of laying the foundation for a healthier, more transparent and socially oriented development of this most important sector of the country's economy.