Why would I purchase a home in Cyprus?

The country of Cyprus is located at the eastern end of the Mediterranean and lies around 100 miles off the southern Turkish coast. The island of Cyprus has developed as a tourist hot spot through its long season (twelve months long and a high season from May to September). It has also developed as an important business base through a strategy of low taxation for companies. Its long history has seen the country absorb an eclectic mix of influences from Ancient Greece through to the modern era when it became an important military and strategic base within the British Empire at the crossroads of Europe and Asia.

There is a strong British presence to this day and the Country has a large expat community (estimated at around 60,000). The British tourist trade accounts for the majority of the country's tourism income but there are growing numbers from Russia, Germany and the rest of Europe. The Cypriot average temperatures only dip below 70F (21C) between November and April and the country can boast an average of 300 days of sunshine per year. English is widely spoken by much of the local population, and the legal and land registry systems are largely based on British practices. The Cypriots also drive on the left side of the road, very convenient for British visitors.

Cyprus is very easy to get to from the England and return flights can typically be as low as £120 provided the key holiday periods are avoided. Flight costs are expected to drop when the much expected arrival of the cheap carriers commences.

With the country being so British-friendly, the weather so mild, the locals speaking the English language so much, the relatively cheap taxation system, the strong British military presence in a couple of locations on the island and the legal system being based upon a version of English Law, it is easy to see the attraction to the British looking for the good life in retirement, a peaceful holiday destination in which to relax or a great place to start a business.

In February 2006, the International Monetary Fund (IMF), predicted that Cyprus would be using the Euro single currency by April 2008. It's thought that the Cyprus property market will benefit enormously from this move. Property prices in Cyprus are currently rising at a staggering rate of up 20% annually.

Whilst there are no hard and fast rules governing the purchase method of property in Cyprus, one will typically buy through an agent or developer, or a partnership of both. There is nothing to stop a buyer dealing directly with a seller, but this is not recommended as the land registry system is somewhat bureaucratic and best tackled by a professional representative.

Obtaining finance for a property purchased in Cyprus is relatively straightforward, and thanks to the country's British connections, most bank staff speak reasonably fluent English. Typically, Cypriot banks will lend around 70%-80% of the value of the property. The country's accession to the EU means in theory that any restrictions on capital transfers or interest rates should no longer apply. In practice however, it is taking longer than expected for the domestic banking industry to fully adjust to its new environment.

In summary, these are some of the many reasons people buy in Cyprus :

• It was reported in 2004 that flight only tickets now outsell holiday packages to Cyprus indicating strong growth in the apartment and villa rental market. That said, many of the most expensive hotels in Cyprus were fully booked at the beginning of October 2005, so the tourist boom can be seen to be benefiting all aspects of Cypriot tourism.
  
  
• Now that Cyprus is part of the EU, its appeal as a tourist destination will continue to grow even further.
  
  
• Cyprus joined the EU in May of 2004 and EU citizens who are non-resident can now purchase two properties and this is likely to lead to considerable growth in demand and rising prices. A company registered in any EU member state with a registered office, or management, or a branch in Cyprus can buy property freely. A company can also be set up in Cyprus to purchase multiple properties.
  
  
• Currently Corporation Income Tax is 10% and Capital Gains Tax 10% for companies as opposed to typically 20% Income Tax and 20% Capital Gains Tax for individuals.
  
  
• The Cypriot legal system is based upon English Law. In addition Cyprus has a western, stable, democratic government.
  * Communication is easy as almost everyone speaks at least some English and many speak very good English.
  
• There is a low crime rate in Cyprus just 6% of that in the UK.
  
  
• There is a low cost of living and the inflation rate is around 3% and virtually no unemployment (just 3%).
  
• Good communication links and direct daily flights with most European capitals.
  
  
• Cyprus is clearly one of the most exciting property investment markets with capital gains of 15% or more per annum and with this expected to continue for several years to come.
  
• Rental returns show a level of 8%-12% on the current price of property.
  
  
• In February 2005, the International Monetary Fund (IMF), predicted that Cyprus would be using the Euro single currency by April 2008.

Investors wondering whether to invest in cyprus should read the following:

About Northern Cyprus

When we talk about Cyprus, we are only talking about the South. The country has been divided politically since, in Greek eyes, the Turks invaded and took control of the northern third of the island in 1974, and to all intents and purposes the island has remained two distinct countries ever since. Whilst moves are afoot towards a political settlement, and restrictions on movement and trade over the demarcation line have recently been lifted following Cyprus' entry into the European Union, it is uncertain when the island will become fully integrated. Assetz does not recommend buying in the North at present due to the complicated and risky land title ownership issues, yet to be fully resolved by a possible reunification.

With the process of rapprochement between the two communities underway, many brave (again mainly British), souls have chanced their arm with an investment in the northern property market. Whilst there are unquestionably many property bargains to be had in the beautiful and still largely unspoilt North, a note of caution: the risk of losing your entire investment is a very real threat unless you have a cast iron guarantee to the title. This is because the Turkish Republic of Northern Cyprus is legally recognised by very few countries except Turkey, and therefore the legal position of title deeds issued in the TRNC over the last three decades is precarious to say the least. A lot will depend on Turkey's entry into the European Union, if and when it happens.

Since border restrictions were lifted and Greek Cypriots have been allowed to cross the demarcation line, many have visited land or homes lost after the Turkish invasion, and may be expected to press for restitution or compensation in any negotiated bi-communal settlement. Therefore, buying in the north is probably only for the more determined or adventurous bargain hunter.

The political situation however, should in no way act as a deterrent to potential buyers in the South. In fact, the country has been rapidly growing in popularity for property investors and this has been borne out by steadily rising prices. So what do you get for your money? About 150,000 Cyprus Pounds (£180,000) will buy you a detached three bedroom dwelling, although expect to pay more for properties very close to the coast or with excellent views.